The Details of a Testamentary Trust

Creating an estate plan can be a difficult process for many reasons, including the fact that you need to learn more about all your options. If you don’t do this, you could miss out on something that could improve your situation.

As you know, there are many types of trusts to choose from. While some don’t have anything to offer, others could be perfect for you, your family, and your finances.

Many people have heard of a testamentary trust, but for one reason or another they never consider learning enough to decide if this is what suits them best.

A testamentary trust, unlike most others, is included within a last will. It is used in a similar manner as others, as to ensure the proper distribution of some or all of an estate upon your death.

Here are a few important questions to answer as you think about using a testamentary trust to your advantage:

1. Who is a testamentary trust typically created for?

While you can use a testamentary trust for almost anyone, it’s most common for it to be created for a relative with a disability, a young child (or children), or somebody who stands to inherit a large sum of money after your passing.

2. What is the best way to create a testamentary trust?

This all depends on who you are and how much you know, but most people find that working with an estate planning attorney is in their best interest.

When you take this approach, you can create a testamentary trust at the same time as your last will. Not only do you have to create the trust, but you need to appoint a trustee and name a beneficiary.

Since there is more to this than meets the eye, you don’t want to take a DIY approach.

3. When does the trust go into action?

It’s important to remember that a testamentary trust does not kick in until the probate process is complete. This is one of the primary ways that a testamentary trust is different than other types.

4. Who should you name as the trustee?

There is no right or wrong answer to this question. Instead, you should consider all your options as to ensure that you make an informed decision.

You can choose almost anyone to act as a trustee, but this is one of the most important decisions associated with a testamentary trust. You need to select somebody who is reliable and trustworthy, as they are responsible for acting in the best interest of the beneficiary.

5. What is the cost associated with creating a testamentary trust?

Believe it or not, it can be quite affordable to create a testamentary trust, being that you can take on the process during will preparation. This is in contrast to other types of trusts, such as an irrevocable or revocable trust, that calls for a much more detailed process (leading to a higher cost).

Once you answer these five questions as they pertain to your situation, you’ll have a better idea of how a testamentary trust can help and if it’s the right estate planning strategy for you and your family.

Even if you never decide on a testamentary trust, you should still learn enough to understand what it’s all about.

Tip: if you have any questions, you’ll want to consult with an estate planning attorney. This is the best way to avoid a situation in which you miss out on something that could have improved your situation.

If you’re still on the fence, if you don’t know what approach you should take with your estate plan, don’t hesitate to download our free report entitled “Fifteen Common Reasons To Do Estate Planning.”

Once you have this report in your hand, you’ll better understand why you need to take on estate planning without delay. You’ll also find that there is help to be had and that you aren’t faced with nearly as many challenges as you once thought.

At our law firm, we don’t want you to take any risks with your estate plan. It doesn’t matter if you’re interested in a testamentary trust or another approach, you have to do whatever is best for you and your loved ones.

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Stephanie Thompson, Estate Planning Attorney of Krueger Hernandez & Thompson SC

As the owner of Krueger Hernandez & Thompson SC, it is Stephanie’s mission to address each client’s goals for their estate plan. By identifying their wishes and concerns she can educate, guide, and counsel on the different tools and options that will effectively and efficiently accomplish those goals.

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