A testamentary trust is written within a will, or it’s written within another document that has been incorporated into a will by reference. Such a trust goes into effect at the death of the will creator (a.k.a, the settlor). One of the primary reasons why estate planners seek the benefits of a testamentary trust is because it protects a minor child’s bequeathed assets.
In order to complete a testamentary trust, several different parties will be involved. These parties include:
- The settlor: As referenced above, the settlor is the individual who created the trust as a way of transferring his or her assets over to the beneficiaries named in the testamentary trust. This person may also be referred to as the trustor or grantor.
- The trustee: The trustee is the individual identified within the trust who will assume the legal responsibility of managing the trust’s assets and handling the trust in a way that complies with the instructions laid out within the trust. The trustee will hold legal control, or title, to the assets owned by the trust; however, he or she must control them in accordance with the directions of the trust.
- The beneficiary: The beneficiary or beneficiaries are those named who shall benefit from the trust in a specific way. These individuals, when it comes to a testamentary trust, are usually children or family members who have disabilities.
- The probate court: The probate court will have jurisdiction over the administration of the estate. The probate court will ensure that the trust is properly handled by the trustee.
Are you thinking about creating a testamentary trust? These are excellent documents that can benefit estate planners in many different circumstances. As you understand more about how they work and how to create one, you’ll be better equipped to evaluate whether such a document is right for your needs.
Source: FindLaw, “Placing a Testamentary Trust in a Will,” accessed March 02, 2018