Pennsylvania adults should prepare for the future by having an estate plan. Sometimes just having a will isn’t enough. A testamentary trust can be another option for protecting your loved ones.
What is a testamentary trust?
A testamentary trust is established as part of a person’s last will and testament. It only takes effect after the person’s death. Testamentary trusts help to provide for people’s children, other surviving family members, or charities after they pass away. Even pets can benefit from this type of trust as their owners could set guidelines within the trust on how they want their pets cared for after they pass away.
How is a testamentary trust created?
When people create their wills, they can, at the same time, create testamentary trusts. The settlor (another name for the person creating the trust) names a trustee whose job is to oversee the trust and manage the funds held within it until those funds are distributed to the beneficiaries.
The trust becomes active during the process of probating the will. This occurs after the person who created the trust has passed away.
A testamentary trust is different from a living trust. A living trust is established during a person’s lifetime, and typically can be changed with assets being added or removed over the course of the person’s lifetime. However, unlike a living trust, a testamentary trust typically cannot be changed. This is because the person who set up the trust has passed and can not longer revoke it.
How long does the trust last?
A testamentary trust lasts for a set time. Usually, there is a provision in the will that says the trust expires once the beneficiary reaches a certain age. For example, if the person set up the trust to benefit their child, the trust might end once they reach 21 or 25 years of age, or more.
A testamentary trust might be a good option for protecting your children in the future, or might make sense for tax or other purposes. Consult with an experienced estate planning lawyer today if you believe a trust might be useful in your estate plan.