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A Testamentary Trust is typically put in place for children so that when a parent dies, an appointed trustee will make sure money from things such as life insurance policies, etc are distributed to them correctly. The trustee will be responsible for the trust and distributing funds until the trust expires which is when the child turns 25 or finishes college.
If there is more than one child covered under the Testamentary Trust, there will need to be terms that spell this out for the trustee and the courts to see. Wishes for each child that will be receiving funds will need to be set up and will be different due to ages of the children included.
Setting up a Testamentary Trust is generally inexpensive, but there can be considerable cost involved depending on how many years the trust has to be monitored by a trustee. The trust will have to be examined every so often by probate court and there are legal fees involved in this. This is something to think about when setting up a Testamentary Trust as opposed to another type of trust.
It is very important when choosing a trustee to oversee a Testamentary Trust, that you choose someone who is trustworthy because the trustee is actually inheriting the assets and is responsible for distributing them. While the trustee is monitored by the courts, and this is usually sufficient to avoid any problems, if the trustee has reason to challenge the wishes of the Testator, sometimes the courts will concede.
When setting up the Testamentary Trust, be as specific and long term as possible so there is nothing really to have to figure out or question. The more specific the terms can be the better and easier it is for the trustee to make sure the wishes of the testator are carried out the way they wanted.
It’s important to have an attorney draw up all the terms of the Testamentary Trust in such a way, that it is unable to be overturned by a disgruntled family member or even a trustee who turns out to not be as trustworthy as the testator thought. There are certain things that an attorney will know how to do that in doing it themselves a person could miss. They will be certain to spell things out specifically and clearly so there are no unanswered questions as to the wishes of the testator.
Attorneys can be named as trustees over a Testamentary Trust but it doesn’t have to be an attorney. This could be a good solution for someone who wants to be sure their wishes are carried out without fail or being changed unless an unforeseen circumstance, such as an accident or a child becoming disabled that would possibly warrant some things to be altered or extended.
When a testator decides to set up this type of trust, they need to be very clear what they want done with their assets. Most of the time, a Testamentary Trust is created when there is substantial amounts of money to handle after their death. It is important to make sure that everything is in place as the testator wants it before they are in a position to either not be able to do it due to illness or after they die when nothing can be done at that point.
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