Testamentary Trust Frequently Asked Questions

A testamentary trust is a type of trust that only comes into existence through the probate process. In this article, we will go over five frequently asked questions about testamentary trusts.

What is a Testamentary Trust?

A testamentary trust is a type of trust that is created through a Last Will and Testament. It does not officially come into existence until your death and authentication from the probate court. Through the probate process, assets are transferred into the trust and managed by the trustee for the beneficiaries.

Does a Testamentary Trust Avoid Probate?

While other types of trusts, like revocable living trusts, avoid probate, a testamentary trust does not. In fact, its very existence hinges upon a probate that will authenticate the will, confirm validity, and formally establishing the trust.

When Does the Trust Take Effect and How Long Does It Last?

The trust becomes effective once the probate is complete. This takes several months or longer. The trust will stay in effect until the conditions you specify are met. Such as your beneficiaries attaining a certain age.

Who Can Be Trustee?

You have several different options about who can serve as your trustee. This includes a trusted individual such as a friend of family member, a professional advisor, or a financial institution. It is also a good idea to have a backup trustee named in case your first choice is unwilling or unable to serve.

What are the Disadvantages?

One of the main disadvantages is the lack of privacy that comes with a testamentary trust. This is because probate records are open to the public. Second, unlike revocable trusts, there is a delay in asset distribution because of waiting on the probate process. Lastly, continuous court supervision can result in expensive legal and accounting fees.

Setting Up a Testamentary Trust

If you feel a testamentary trust, verses a revocable living trust, is right for you, meet with a qualified estate planner who can help you get your will set up. The sooner you start planning the better.

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