Planning for the future means making thoughtful choices about how your assets will be handled after you’re gone. You may want to provide financial support for loved ones, protect inheritances, or set conditions on how funds are used. A testamentary trust allows you to do all of this while keeping control over how your estate is distributed. Because this trust is created within a will, it only takes effect after your passing. With the right planning, you can ensure that your wishes are carried out and that your beneficiaries are taken care of.
What Is a Testamentary Trust?
A testamentary trust is a type of trust created through a will. Unlike a living trust, it does not take effect until after you pass away. The will outlines the terms of the trust, including who will manage it (the trustee) and who will receive the benefits (the beneficiaries). Once the probate process is complete, the trustee is responsible for distributing assets according to your instructions.
This type of trust allows you to maintain control over how your estate is handled, ensuring that funds are managed and distributed over time rather than given in a lump sum. It can be useful for protecting inheritances, supporting minor children, or providing for beneficiaries with specific needs.
Who Can Benefit From a Testamentary Trust?
A testamentary trust can provide security and structure for a wide range of beneficiaries. It allows you to control how assets are distributed and ensures that your loved ones receive support on your terms. This type of trust may be a good option for:
- Parents with young children. A trust ensures that minors receive financial support while a trustee manages the funds until they reach a responsible age.
- Beneficiaries with special needs. A trust can provide financial assistance without affecting eligibility for government benefits.
- Those concerned about financial responsibility. If a beneficiary is not financially savvy, a trust can protect assets from being mismanaged.
- Protecting assets from outside risks. A trust can help shield an inheritance from creditors, divorce, or legal disputes.
A testamentary trust allows you to provide long-term financial security while maintaining control over your estate.
How Does a Testamentary Trust Work?
A testamentary trust is created through a will and only takes effect after you pass away. It does not operate immediately like a living trust. Instead, the terms of the trust are outlined in your will, including who will serve as trustee and how assets should be distributed.
After your passing, the will must go through probate. Once the court approves the will, the trustee gains control over the trust and follows the instructions you left behind. They manage the assets, make distributions to beneficiaries, and ensure funds are used as intended.
This type of trust offers flexibility. You can structure it to release funds over time, set conditions for distributions, or provide lifelong financial support. It can hold a variety of assets, including cash, property, and investments. Because the trust is part of your will, you can modify it whenever you update your estate plan.
Potential Drawbacks to Consider
While a testamentary trust offers many benefits, there are some factors to keep in mind before including one in your estate plan:
- Probate is required. Since the trust is created through a will, it must go through probate before it takes effect, which can delay access to funds.
- Ongoing trustee responsibilities. The trustee may need to manage assets, make investment decisions, and oversee distributions for years, depending on the trust’s terms.
- Lack of privacy. Probate is a public process, meaning trust details may become part of the court record.
Despite these considerations, a testamentary trust remains a valuable tool for many estate plans, especially for those wanting structured asset distribution.
How We Can Help You Set Up a Testamentary Trust
At OC Wills & Trust Attorneys, we help individuals and families create testamentary trusts that reflect their goals and priorities. We will draft a clear, legally sound will with trust provisions tailored to your needs. Whether you want to provide for minor children, protect assets, or ensure responsible financial management, we will guide you through the process. With careful planning, a testamentary trust can give you confidence that your wishes will be honored and your loved ones will be supported.
Secure Your Legacy with a Testamentary Trust
A testamentary trust ensures that your assets are managed and distributed according to your wishes, providing long-term protection for your loved ones. At OC Wills & Trust Attorneys, we will help you create a customized estate plan. Contact us today to start planning for your family’s future.
