A testamentary trust can ensure children or others who need help managing the proceeds of your will are protected.
Start your estate plan today
by Michelle Kaminsky, Esq.
Writer and editor Michelle earned a Juris Doctor degree from Temple University's Beasley School of Law in Philad.
Updated on: April 25, 2024 · 2 min read
With so many types of trusts out there, you might be wondering what sets a testamentary trust apart from the rest.
Below you'll find answers to commonly asked questions regarding the testamentary trust.
A testamentary trust is a trust contained in a last will and testament.
It provides for the distribution of all or part of an estate and often proceeds from a life insurance policy held on the person establishing the trust.
There may be more than one testamentary trust per will.
Generally, testamentary trusts are created for young children, relatives with disabilities, or others who may inherit a large sum of money that enters the estate upon the testator's death.
A testamentary trust is provided for in a last will by the “settlor,” who appoints a “trustee” to manage the funds in the trust until the “beneficiary,” or person receiving the money, takes over.
The trust kicks in at the completion of the probate process after the death of the person who has created it for the benefit of his or her children or others.
Note: This differs from “inter vivos” trusts, which are created during the lifetime of the settlor.
A testamentary trust lasts until it expires, which is provided for in its terms. Typical expiration dates may be when the beneficiary turns 25 years old, graduates from university, or gets married.
From the time of the settlor's death until the expiration of the testamentary trust, the probate court checks up on the trust to make sure it is being handled properly. Depending on how long this time frame lasts, legal fees could add up, so this should be a consideration when deciding whether to opt for a testamentary trust.
The person creating the trust may choose anyone, but it should be someone the person trusts to act in the best interests of the children or others receiving the trust funds. If, for any reason, the person chosen declines to take on the responsibility of trustee, someone else may volunteer or the court will appoint a trustee.
Not necessarily, which is why it's crucial that the settlor chooses someone trustworthy. However, if the trustee violates the terms of the trust, he or she could be liable for damages.
If you create a Last Will and have minor children, it is common to hold their assets in a testamentary trust until they reach an age of your choosing. But, everyone's circumstances are different and you can talk to an attorney for legal advice.
It is generally inexpensive to include testamentary trust provisions during will preparation.
Start your estate plan todayThis article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.
You may also like
'Inc.' in a company name means the business is incorporated, but what does that entail, exactly? Here's everything you need to know about incorporating your business.
October 9, 2023 · 10min read
By knowing what other trademarks are out there, you will understand if there is room for the mark that you want to protect. It is better to find out early, so you can find a mark that will be easier to protect.
July 31, 2024 · 4min read
Over 70 percent of Americans put off writing a will until its too late. With the holidays upon us, how can you effectively start the conversation with your family so that they stay protected and don't end up a statistic?
June 12, 2024 · 3min read
