A testamentary trust will, or will trust, is an individual trust that a grantor (person who created the trust) writes into their will. Although testamentary trusts are created during the writing of a will, they do not come into being until the death of the grantor. A testamentary trust, while seemingly a type of will, is really a simpler and cheaper form of a revocable living trust. However, because this type of trust is created within a, a testamentary trust does not avoid probate as other types of trusts do.
How Testamentary Trust Wills WorkWhen the grantor dies, part or all of their assets are distributed to the beneficiaries through these testamentary trusts. While the testamentary trust will be taxed as whole, the beneficiaries of the individual trusts will not be taxed for the devise. This type of will is useful to provide young adults or minors with an inheritance, while at the same time protecting them from spending it all at once.The testamentary trust, like all other trusts, assigns a trustee who is in charge of distributing the assets in the trust. Sometime the distribution method will be left up to the discretion of the trustee, and sometimes the trust will have specific instructions. It is of utmost important that the grantor assign the trust to a trustee that is trustworthy. The named trustee of the testamentary trust can have many obligations once the trust comes into being. What Is a Trustee Responsible For?Aside from distributing the decedents assets, the trustee is generally responsible for decisions involving investment of the trust assets, and paying any taxes due or filing tax returns on behalf of the trust.
A testamentary trust also requires annual reporting to a probate court. Depending on how long the grantor wants the assets from the trust distributed to the beneficiaries, these obligations can last for years. Further, a trustee who is inexperienced with any or all of these types of obligations should seek the advice of an estate planning attorney.
Trustees Role in Testamentary Trust WillsWhile the trustee is the legal owner of the trust once it comes into being, they have a duty to act in the best interest of the beneficiary of the trust. This means that the trustee may not “invest” the trust assets frivolously, or use the assets to benefit him or herself. The obligation to report to the probate court on an annual basis provides a check on the trustee.
This way, the court can monitor the trustees activity with the assets of the trust, and insure that these obligations are not being abused.
A testamentary trust is one of many different kinds of trusts which is recognized under Connecticut trust law and which is created for the purposes of controlling and protecting assets. There are many benefits to a testamentary trust, as well as certain limitations.Because there are different types of trusts, each with their own pros and cons and purposes, it is important for you to talk with an experienced attorney about how a trust should fit within your estate plan.Nirenstein, Horowitz & Associates can help you to determine if you need a trust and can provide you with guidance on trust creation. We can also assist you in exploring all of the different estate planning tools available under Connecticut law that can help you to accomplish your goals.
Testamentary Trust Sample
Give us a call to speak with a Connecticut trusts lawyer to find out more about the ways in which our legal team can assist you. What is a Testamentary Trust?A testamentary trust is a trust that goes into effect only after the death of the trust creator. It is different from a living trust, which can be created and go into effect during your lifetime. Testamentary trusts are often created within the context of your last will and testament, so this type of trust is often called a will trust.When you make a will, your will can actually contain multiple testamentary trusts if you wish. The trusts that you create within your will can address the entirety of the estate that you are leaving behind or may address only a portion of the estate.
When a testamentary trust is created, it is usually done in order to appropriately provide an inheritance for a minor so you have control over who is going to manage assets left to a child. A child cannot take control of and manage an inheritance on his or her own if it is left to him when the child is under 18.A testamentary trust, like all trusts, bifurcates ownership and possession. A beneficiary is named who is intended to benefit from and reap the rewards of an inheritance. However, the beneficiary does not own the trust assets or control them. Instead, the trust that you create owns the assets and a trustee is named who is responsible for managing the assets on behalf of the beneficiaries. The trustee has a to act in the best interests of the beneficiaries and must use the trust assets for the intended purpose of taking care of the beneficiary, rather than for his own purposes or for self-enrichment.
Should You use a Testamentary Trust?Creating a testamentary trust can be a relatively simple process when making a will, provided you get help from an experienced attorney who understands Connecticut law. The testamentary trust is going to provide important benefits for a minor child who inherits, and/or is going to give the trust creator the opportunity for at least some continued control over trust assets, since the trust creator gets to choose the trustee who is going to be in charge of managing those assets.Without a testamentary trust, if you leave money to a minor, the court could appoint a guardian for that money who may be different from the chosen individual you would have preferred to manage funds.
Download Testamentary Trust Will Template Free
The money that was left to a minor would automatically become the minor’s, with no strings attached, once the child turned 18. This can be a bad thing if you don’t want a young child to just receive a large sum of money. With a testamentary trust, you can ensure a child does not inherit until some future milestone is met, like the child reaching a certain age or doing something like graduating from college or getting married.When you create a testamentary trust, the probate court does play a role in making sure the trust assets are being used accordingly. Testamentary trusts also do not have any role in, which other types of trusts can sometimes do. You will need to determine if a testamentary trust is the best type of trust for you or if there are preferred alternatives worth considering that may better suit your family’s needs.
Getting Help from A Connecticut Trusts LawyerNirenstein, Horowitz & Associates understands trust law in Connecticut and we can provide assistance with the creation of a testamentary trust and with all other issues related to trust creation or trust administration. To find out more about how a Connecticut trusts lawyer can help you, give us a call at 860-548-1000 or today.