Estate planning is not just for the very old. Every adult should have a will, regardless of their age. Other estate planning tools are likely beneficial to you and your loved one’s as well. For example, if you have young children (or young grandchildren), a testamentary trust enables you to have some control over how and when your assets will be passed down to them. The attorneys at Strategic Counsel Law Group, L.C. can assist you in creating financial stability for your children or other loved ones when you are gone.
The Main Benefits of a Testamentary Trust
Testamentary trusts are useful for parents and grandparents of minor children. In the event of your passing, a testamentary trust can be used to distribute assets to your beneficiaries as you see fit. For example, you may wish for a certain amount of assets to be distributed at specific mile-points: graduating from high school, when it comes time to pay for college, marriage, when they have their first child, etc. In short, a testamentary trust provides a financial safeguard that the assets will not be spent frivolously by a minor or other party. As such, the benefits of a testamentary trust include:
- Provides a high degree of control for the trustor over the assets
- Decreases the chance of irresponsible spending by too-young beneficiaries
- Flexibility—you can make changes to it during your lifetime
- There is no limit to the number of beneficiaries you can name in the trust
- Testamentary trusts do not negatively impact pensions
- No income taxes on income distributed from the trust
The Drawbacks of a Testamentary Trust
The main disadvantage of a testamentary trust is that the assets will not be immediately available to beneficiaries due to the probate process. Testamentary trust assets must go through probate, unlike assets within other trusts. However, since it is likely that the grantor did not want these assets to be immediately available in the first place, this delay may not matter. Probate, of course, does come with other negatives: it is public record and there is a chance that the will (and therefore the assets set aside to be placed in the testamentary trust) can be contested.
Testamentary Trusts Do Not Exist Until the Individual Passes Away
Unlike many traditional trusts, which are created and funded by the grantor during their lifetime, testamentary trusts are created after the deceased person dies. A testamentary trust is just part of the instructions left in the testator’s will, to be created after they pass away. Within these instructions, an executor is named in the will. The executor will be instructed to create the trust.
Call a Testamentary Trust Attorney Today
Testamentary trusts are a particularly useful estate planning tool for parents of young children. If you should pass away unexpectedly, a testamentary trust provides a financial safety net for your children as they reach specific milestones in their lives. Our testamentary trust attorneys at the Strategic Counsel Law Group, L.C. can help you get started today. Call 813-286-1700 to schedule a free consultation.
