The purpose of a testamentary trust is to manage the deceased's Assets according to the wishes they outlined in their will.
Testamentary trusts can serve various purposes, such as providing financial support for minor children until they reach a certain age, ensuring the care of family members with special needs, managing assets for Beneficiaries who may not have the capacity to handle them, or imposing conditions on distributions.
A testamentary trust is different from a Trust because it is established during the Grantor's lifetime instead of created within their will and taking effect after their death. When written prior to death it is known as a Living Trust.
Key characteristics of a testamentary trust include:
Customization: The deceased has flexibility in customizing the terms of the testamentary trust to suit their specific goals and the needs of their beneficiaries. This may include specifying the timing and conditions of distributions, the purpose of the trust, and other relevant details.
Trustee: The Trustee of a testamentary trust is responsible for managing the trust's assets and carrying out the instructions specified in the deceased's will. The trustee's duties include making investment decisions, distributing income, and adhering to its overall terms.
Beneficiaries: The beneficiaries of a testamentary trust are individuals or entities named in the will who will receive the benefits from the trust. These beneficiaries might include Surviving Family members, friends, charitable organizations, or other entities.
Probate: The assets intended for a testamentary trust typically go through the Probate process before being transferred into the trust. Once assets are transferred, they are managed and distributed according to the trust's provisions.
Creating a testamentary trust requires careful drafting of the will to ensure that the trust's terms are clear, legally enforceable, and aligned with the testator's intentions. It's best to consult with an experienced Estate Attorney when considering one.