Testamentary Trust: What you need to know

What is a Testamentary Trust?

Testamentary trusts are commonly known as Trust Will. These trusts are created as part of a Will and it only takes effect after your death. Unlike other trusts, a testamentary trust can only be established once you passed away. Your Will executor will administer the creation of your trust. Subject to your Will wishes, all or portion of your properties will be transferred to your testamentary trust. A trustee will be appointed to manage the trust properties and administer the distributions of your assets to your heirs.

Requirements for Testamentary Trust

There are three parties that are generally involved in a testamentary trust.

• Trustor/grantor – who creates the Trust Will. This is YOU.
• Trustee – your appointed individual or firm who will manage and administer your assets and properties 
• Beneficiary – your loved ones, immediate family members, relatives, friends, charities, or anyone you want to receive an inheritance from you.

How to Establish a Testamentary Trust

Establishing a Trust Will can be tricky. You need to have a fair understanding of what is a testamentary trust and all the considerations you need to make. Certainly, as the trustor/grantor, you also need to know your obligations. A credible Washington State testamentary trust attorney with a proven track record in estate planning will guide you in accomplishing the job. Our lawyers will assess your situation and tailor a solution that best suits your estate protection needs. In creating a Trust Will, below are a few of your obligations and the factors you need to consider.

• Your personal circumstances include your age, well-being, and financial situation
• Personal financial information. All your personal assets and properties, real estate holdings, stocks, securities, and other assets as well as all your obligations/debts and tax responsibilities 
• Family relationships and the status of your family’s financial 
• What you what to achieve? What is your main purpose for creating a testamentary trust?  
• How flexible will be your Trust Will? 
• Which properties and assets will be included? 
• Who will be your beneficiary? How much are you going to allocate for each? Which properties? 
• What will be the conditions that need to be satisfied by heirs? When or at what age can they access their trust? 
• What will happen to your properties in the trust if your beneficiary does not meet conditions? 
• What would be the guidelines or conditions for the trustee in administering and managing the trust? 

Why you need a Testamentary Trust 

There are several reasons why you should consider a testamentary trust. Before arriving at a decision, let’s discuss how will a testamentary trust will be of an advantage or disadvantage to you in protecting your family estate. 

Advantages of Testamentary Trust

• Minor children / incapable dependents – primary advantage of a testamentary trust is the protection of your minor children and incapacitated beneficiaries. A trustee will manage the trust assets distributed to them until they reach legal age or as indicated by the trust conditions 
• Amendability – your Trust Will can be revised or modified at any time while you are still alive since it only comes to exist after your death. It can be considered a revocable trust as long as you are living and can alter/cancel it. It only becomes an irrevocable trust once you passed away.  
• Affordability – establishing a living trust or inter vivos trust, a trust that can immediately take effect after drafting it is expensive. If you don’t have the financial capability or enough financial property to afford a living trust, Trust Will is the best low-cost option 
• Control – you can decide on who, when, or how your trust assets will be managed and administered after you die 
• Estate Tax Exemption/Reduction of Estate Tax – depending on the circumstances and facts, distributed trust property to the heirs may not be subjected to real estate tax. 
• Life insurance – testamentary trust can be funded with life insurance. Commonly, a permanent life insurance policy is used 

Disadvantages of Testamentary Trust

• Probate – trusts do not undergo the probate process, but testamentary trusts do. The main reason is that testamentary trusts are drafted as part of your Will. And all Wills undergo probate court. The trust will only be created and probate assets will only be transferred under the trust name after the probate proceedings have been finalized 
• Privacy – since testamentary trust goes through probate court, it will go public 
• Expenses – at first, testamentary trust appears less costly than a living trust, but undergoing probate makes it expensive. Aside from it will undergo probate, other fees you can incur include accounting fees, bank fees, legal fees, etc 
• Interpretation issues – because Trust Will only takes effect upon your passing, there might be cases where trustees are unable to interpret correctly the provisions of your trust. Clarification or reconfirmation is not possible since you are no longer around 
• Trustee refusal – in the event, your appointed trustee refused the responsibility, the court will appoint a trustee. Your surviving spouse or any of your family members can also volunteer as a trustee. Whether this is against your wishes or not, there’s nothing that can be done. 

Call our Testamentary Trust Attorney Now!

Due to overwhelming information about what is a testamentary trust, it could be challenging to plan, create and execute a trust without assistance from a Washington State estate planning attorney. Our reliable lawyer with expertise and familiarity in the complexities of a testamentary trust is what you need. The security and protection of your family and estate are at stake and you wouldn’t want to deal with an attorney with less experience in the field for legal advice.  

At Jones Legacy Law you can be assured that our primary focus is creating the future you want both for yourself and your family. Give us a call and allow us to help you make that dream come true.