When it comes to estate planning, many believe that they have to choose either a trust or a Will to divide their estate between their heirs. However, it is possible to place a trust within a Will. This trust is referred to as a testamentary trust. This trust only goes into effect after death, unlike other trusts that deal with assets over a lifetime. However, is there a benefit to setting up a testamentary trust?
Benefits of a Testamentary Trust
The major benefit of a testamentary trust is that it doesn’t go into effect until after you die. This means you can revoke or edit the trust completely until then. Additionally, it means you don’t have to administer that trust because it has not yet gone into effect.
In many instances, a person may want to create a testamentary trust to provide a benefit for younger children or grandchildren. Also, the testamentary trust can provide protection from your heirs’ creditors, so the trust may be a good vehicle for protecting assets that you pass to the next generation. Finally, the testamentary trust can ensure that the members of a blended family are treated equitably after one of the spouses dies.
Setting up a Testamentary Trust
Setting up a testamentary trust is pretty simple. It is created by including trust provisions in your Will, and then upon your death, your executor, will place the appropriate assets from your estate into the trust. From that point, the person or banking institution that you have designated as your trustee will manage the assets for the beneficiaries that you designated in your Will. The creation and funding of the trust upon your death is very simple, and it can provide substantial benefits to your family.
While testamentary trusts are flexible and beneficial to many, they can occasionally be just as complicated as a regular trust. If you are considering a testamentary trust, contact us today to see what we can do to help walk you through the process.