When you think about a will, you likely imagine a fairly simple document that outlines the assets a deceased person had when they were alive and who those assets will go to upon their death. A more complicated approach is to create what's known as a testamentary trust will. This is a will that only creates a trust upon the death of the grantor or the individual whose will is being executed upon their passing.
If that sounds like something pretty complicated, then it might be a good idea to ask a will attorney for help. Let's take a look at the uses for this type of will and some of its implications.
Who Uses These Wills?
This approach is commonly used in cases where there are concerns about how money and assets might be handled. It's not unusual, for example, for this type of will to be used if an individual has dependent minor children. The trust can be set to last until certain conditions are met, such as the beneficiary hitting a certain age. It is possible to set up multiple trusts for multiple beneficiaries.
A slightly less common scenario is when uncertain financial outcomes are left hanging before someone dies. For example, someone involved in a catastrophic auto accident might set up a testamentary trust will because there's a pending injury settlement. Creating a trust ensures that the settlement will go directly into the trust and be managed. Expected life insurance settlements are another reason to consider this type of trust.
Some people consider this kind of will because they want maximum control of assets while they're still alive. It's unwise to use this approach without also having a will in place to address questions about possible incapacitation scenarios.
One of the main implications of using a testamentary trust will is that a trustee will be in control of the money. A trustee doesn't have to be named, but that means a probate court will appoint one. Cost-wise, having a trustee will likely take more value out of an estate through fees and administrative costs. A will attorney isn't going to encourage you to set up this sort of trust unless there are specific and highly compelling reasons for going to the bother, though. It is possible to use a mixed solution, disposing of some assets through a simple will and setting up a testamentary trust to deal with others.Share