A good trust is one that suits your needs and desires. For many parents with young children, a testamentary trust is exactly what you are looking for if you are concerned about your children being able to manage property if you were to die suddenly. Here are a couple of quick points about testamentary trusts and why they are useful.
The trust relationship.
Every trust is basically a specific legal relationship between certain people. When you create a trust you select who these people are and what property the trust will own. To create the trust you transfer property to the trust and select the trust manager, known as a trustee. The trustee will then manage that property so that the beneficiaries—whom you also select—can use it, even though they don’t own it. With the testamentary trust the beneficiaries are usually your young children.
Your testamentary trust choices are made in writing in your will or living trust. This means the trust only becomes effective after you die. After you die the trustee will then manage whatever property you’ve transferred for the benefit of your children. Also, you can specify limits about how that property is used. For example, if you want your children to attend college you can dictate that the trust use the property to pay for college expenses and only release the remaining property to the children once they graduate.
Testamentary trusts can be valuable tools in a comprehensive estate plan. Consult with an experienced and qualified estate planning attorney to get the best advice about how to proceed in creating one.
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020
- Best Places to Retire: State Taxation - March 25, 2020