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Can I Put a Trust in My Will? What you should know about Testamentary Trust

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Can I Put a Trust in My Will? What you should know about Testamentary Trust - Anderson Leblanc Upland Attorneys

Can I Put a Trust in My Will? What you should know about Testamentary Trust

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Story by HG.org

Many people choose to have either a trust or a will. However, others may actually include a trust within a will. This is often referred to as a testamentary trust. This type of trust does not go into effect until the testator’s death. Other trusts are set up during the lifetime of the person making it. There are important things to understand about a trust of this nature.

Basics

Testamentary trusts are usually contained in a last will and testament. They provide for the distribution of the entirety or a portion of the estate. The funds used to create a testamentary trust are usually the life insurance proceeds of the decedent. A testamentary trust is created by a settlor, the testator. It appoints a trustee to manage the property and funds in the trust for the benefit of a particular person or group of people.

Effective Date

In order for a testamentary trust to be effective, the will must be probated. The executor settles the estate, which occurs after the testator’s death. A testamentary trust can also be established by another trust that instructs a testamentary trust to be created after the testator dies.

The testamentary trust remains effective until the date that it is set to end according to the trust provisions. This may be when the child reaches a certain age, graduates from college or reaches another milestone.

Beneficiaries

Typically, testamentary trusts are created for the benefit of the testator’s children. However, a testamentary trust can be established to help family members with disabilities, a surviving spouse or other individuals that the testator names.

Revocability

A testamentary trust is revocable during the testator’s lifetime. Because the trust does not go into effect until after the testator dies, the testator may amend or revoke his or her will and the trust inside of it during the testator’s lifetime. The testator can completely revise the last will so that no testamentary trust is part of it or tear it up so that the terms are no longer effective. The testamentary trust only becomes irrevocable when the testator dies while the testamentary trust was part of an effective will.

Probate Process

Traditionally, trusts avoid the probate process because they take the property that the testator owns and transfers it so that the trustee owns the legal title to it. This helps avoid the probate process because the probate case is only concerned with property that the testator owns at the time of death.

However, a testamentary trust does not avoid property because the property cannot be transferred to it until the testator’s death. Additionally, the property is still in the testator’s name at the time of his or her death.

Roles of the Parties Involved

The probate court may check on the status of the testamentary trust while the probate case is pending. The trustee is responsible for following the instructions of the trust. The trustee is named in the trust instrument. However, the trustee can refuse this position if he or she so desires. If the trustee declines the position, the successor trustee is appointed. If the successor trustee does not want to serve in this role or there is no named successor trustee, someone else can volunteer for the position. Alternatively, the court can appoint a trustee.

The trustee owes a duty to act faithfully to the beneficiaries. He or she must closely follow the instructions included in the trust. The trustee also has the duty to act prudently in regard to the investments of the trust.

Additional Considerations

A person may choose to establish a testamentary trust for various reasons. The costs associated with this type of trust are often less because there is less oversight over this type of trust during the settlor’s lifetime. Testamentary trusts may be preferred over other types of trusts when the value of the property that comprises the trust is limited or when it is only one type of asset, such as proceeds from a life insurance policy.

Legal Assistance

Individuals who would like to draft a testamentary trust may wish to contact an experienced estate planning lawyer. He or she can explain the advantages and disadvantages of this estate planning tool. He or she can draft a testamentary trust and a will if this is what you decide to do and if he or she agrees with this approach. If you have an existing testamentary trust or will, he or she can review these documents for you and explain if any changes are necessary.

Read the original article at HG.org

ABOUT THE AUTHOR
Story by HG.org
HG.org was one of the very first online law and government information sites. It was founded in January of 1995 by Lex Mundi, a large network of independent law firms. The objective of HG.org is to make law, government and related professional information easily and freely accessible to the legal profession, businesses, and consumers.

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