925.244.1185
San Ramon, CA

Horizon Elder Law & Estate Planning Blog

Friday, October 29, 2021

What Are the Benefits of a Testamentary Trust?

A testamentary trust gives you flexibility that a living trust or will cannot provide by themselves. A testamentary trust is not a stand-alone document because it is part of a will or living trust. You can have more than one testamentary trust and still have a living trust.

A California elder law attorney can talk with you about your situation and explain what the benefits of a testamentary trust are and how you could include one or more of these trusts in your estate plan.

An Overview of Testamentary Trusts

You might want to make arrangements for your minor children in case you die before they grow up and become responsible adults. A testamentary trust is a practical way to do so without much expense and without having to make changes later. For example, in your will or living trust, you could create a testamentary trust that only goes into effect if your children are still minors when you die.

If you get to watch your children grow up into adults, you will not have to take any action to cancel the testamentary trust. A testamentary trust does not go into effect until after you die, and then only if the conditions of your testamentary trust exist at that time.

You can think of testamentary trusts as conditional arrangements. They will not exist unless specific conditions exist after your death.

A testamentary trust is not limited to situations involving minor children. You could set up a testamentary trust for other special circumstances like a disabled loved one or a relative who might not handle money prudently.

What Is the Difference Between a Living Trust and a Testamentary Trust?

If you have a living trust, during your lifetime you created a document that got signed, witnessed, and notarized. You transferred assets and property into the trust, which owns those items from that point. You named at least one trustee, most likely yourself, to manage the assets of the trust. Your successor trustee will take over when you die or at whatever time you select.

A living trust becomes effective as soon as you properly sign it. A living trust is not a testamentary trust, but a living trust can contain a testamentary trust. A testamentary trust cannot contain a living trust because you can only set up a living trust when you are alive, and a testamentary trust does not become effective until after your death.

Trustees and Guardians

A trustee manages the assets of a trust. Many people manage the assets of their own living trust during their lifetime. If you have a testamentary trust, you can name someone to handle the assets that get put into the testamentary trust after your death.

For example, you might have a life insurance policy that you want to be held in trust for your child until he turns 18 or 21, or whatever age you choose. You could also make some or all of the distribution of the proceeds contingent on a specific event, like getting a bachelor’s degree.

In your testamentary trust, you can name the person you want to serve as the guardian of your child if you do not survive until your child reaches adulthood. The guardian could be the trustee of the assets designated for your child or could be someone else. Some people make a bank the trustee of the assets and name a trusted friend or relative the guardian.

You can talk with a California elder law attorney about whether a testamentary trust would be beneficial in your situation. Contact our office today to schedule a consultation.


Archived Posts

2021
November
October
September
August
July
June
May
April
March
February
January
2020
December
November
October
September
August
July
June
May
April
March
February
January
2019
December
November
October
September
August
July
June
May
April
March
February
January
2018
December
November
October
September
August
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
2015



© 2021 Horizon Elder Law & Estate Planning, Inc. | Disclaimer
2333 San Ramon Valley Blvd., Ste. 145, San Ramon, CA 94583
| Phone: (925) 244-1185

Elder Law | Estate Planning | About

Law Firm Website Design by
Amicus Creative