Trust Under Will (Testamentary Trust)
Overview
A Trust Under Will, also known as a testamentary trust, is a legal arrangement created within a last will and testament that only takes effect after the death of the person who made the will (the testator). Unlike living trusts, which are established during the grantor's lifetime, a trust under will comes into existence only through the probate process.
Key Components and Structure
Creation Process
- Established through specific provisions in a will
- Must go through probate court to become effective
- Cannot be modified after the testator's death
- Requires formal court oversight during administration
Common Uses
-
Protection of Minor Children
- Managing inheritance until children reach maturity
- Structured distribution of assets over time
- Educational funding arrangements
-
Special Needs Planning
- Supporting disabled beneficiaries
- Preserving government benefits eligibility
- Providing lifetime care management
Advantages and Disadvantages
Advantages
- Cost-effective during lifetime (no setup costs until death)
- Flexible modifications while testator is alive
- Court supervision provides additional oversight
- Protection for beneficiaries from creditors
Disadvantages
- Must go through probate
- Public record due to court involvement
- Higher administrative costs after death
- Less privacy than living trusts
Common Duties and Responsibilities
Trustee Obligations
-
Asset Management
- Investment oversight
- Property maintenance
- Account administration
-
Distribution Management
- Following trust terms
- Making discretionary decisions
- Record keeping
-
Tax Compliance
- Filing trust tax returns
- Managing tax obligations
- Maintaining documentation
FAQ Section
Q: Can a Trust Under Will be changed after death?
A: No, once the testator dies, the terms become irrevocable.
Q: Who can serve as trustee?
A: Any competent adult or institution can serve, including family members, professionals, or trust companies.
Q: How long can a Trust Under Will last?
A: Duration varies by state law and trust terms, but many can last for multiple generations.
Q: Is court supervision required?
A: Yes, testamentary trusts typically require ongoing court supervision.
Summary
A Trust Under Will serves as a valuable estate planning tool for those seeking posthumous asset management and beneficiary protection. While it requires probate and court oversight, it offers flexibility during the testator's lifetime and can be particularly useful for protecting minor children or special needs beneficiaries. Understanding this instrument's features and limitations is crucial for making informed estate planning decisions.
Important Considerations
- Timing: Only effective after death and probate
- Cost: Lower initial costs but higher administrative expenses
- Control: Court supervision provides accountability
- Flexibility: Modifiable until death, then becomes fixed
Note: Always consult with a qualified estate planning attorney to determine if a Trust Under Will aligns with your specific circumstances and goals.
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Related Terms
Here are some related terms that are relevant to the estate planning term "Trust Under Will (Testamentary Trust)":
- Living Trust: A trust that is established and becomes effective during the grantor's lifetime, as opposed to a testamentary trust that is created through a will.
- Revocable Trust: A type of living trust that can be modified or revoked by the grantor during their lifetime.
- Irrevocable Trust: A type of trust that cannot be changed or terminated once it is created.
- Probate: The legal process of administering a deceased person's estate and distributing their assets.
- Executor: The individual or institution responsible for carrying out the instructions in a will and managing the probate process.
- Beneficiary: The person or entity that receives the benefits from a trust or will.
- Trustee: The individual or institution responsible for managing and distributing the assets held in a trust.
- Estate Planning: The process of arranging for the management and distribution of one's assets and liabilities during their lifetime and after their death.
- Last Will and Testament: A legal document that outlines a person's wishes for the distribution of their assets and the care of their dependents after their death.
- Intestacy: The state of dying without a valid will, in which case state laws determine the distribution of the deceased's assets.
These related terms provide context and additional information that may be relevant to understanding the concept of a "Trust Under Will (Testamentary Trust)."
