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Should you consider a testamentary trust?

On Behalf of | Nov 18, 2019 | Estate Planning |

As you’re working through the process of estate planning, you may decide that you want to have a living trust or testamentary trust. The two trusts are slightly different from one another and can help you protect your assets.

A testamentary trust is one set up in your last will and testament or contained within your living trust, while the living trust is set up while you’re alive.

Why should you consider a testamentary trust?

A testamentary trust can be added to your living trust to add to that trust upon your death. A testamentary trust only is created at the time of your death, and it’s used to specify which funds or assets should be distributed after your death.

A testamentary trust does not avoid probate court, which is something important to realize. If you want your loved ones to avoid probate, then this may not be the right choice for you and something that you’ll want to discuss with your attorney.

What is an example of a testamentary trust?

One good example of when to use a testamentary trust is if you have a minor child. If you want to leave them money for monthly expenses, you’d include that information in your trust and assign a trustee to the account. The trustee, an adult, takes care of making the monthly payments to your child until the age at which you’d like the remaining funds distributed.

Your attorney can talk to you more about testamentary trusts and if they’re the right choice for your estate based on your specific situation.