A testamentary trust is a specification in your last will and testament that instructs the executor of your estate to create the trust. After your death, your will proceeds through the probate process to determine its validity. Once the probate process is complete, the trust becomes active and your executor transfers the assets into the testamentary trust. It is important to note that more than one testamentary trust can be included in your last will and testament.
Typically, testamentary trusts are established for young children, relatives with disabilities, or other beneficiaries set to inherit a large sum of money from an estate. Testamentary trusts generally have low upfront costs and can be funded with life insurance proceeds after you die. They may also be used to reduce estate tax liabilities and can ensure the proper management of your assets after your death. Unlike other trusts, you can continue to make changes and the assets will remain in your control, until after your death when the trust takes effect.
When you create your testamentary trust, you can include specifications for when the trust will terminate, and your beneficiaries receive control of their trust allocations. Until then, the trust remains active and your designated trustee will continue to manage the assets. During the active period of the trust, the probate court may conduct periodic reviews to ensure that the trust is managed properly.
A last will and testament that includes a testamentary trust may be contested during the probate process. Therefore, if you are considering creating a testamentary trust or have questions about one, you should seek the advice of an experienced estate attorney. The trust and estate attorneys at Parisi, Coan & Saccocio, PLLC, provide full-service handling of estate planning, probate, and estate administration to clients residing in New York and North Carolina.