Most adults know that they should have an estate plan in place so that their loved ones have a road map to follow when they pass away. One of the primary purposes of an estate plan is to outline where assets will go when the creator dies.
There are different ways to lay out the plan for assets. One of these is through a testamentary trust, which is a powerful tool for anyone who wants a simple way to manage how assets are distributed after death.
How does a testamentary trust work?
A testamentary trust only goes into effect after the creator dies. It’s created through their last will and testament. Because it’s a part of the will, this type of trust doesn’t become active until the will goes through the probate process. This provides a layer of protection for the beneficiaries because the court will oversee the trust’s administration.
The testamentary trust should name a trustee who is responsible for managing the assets in the trust. This person must follow the instructions that are laid out in the trust, distribute the assets to the beneficiaries and keep records of everything.
Since a testamentary trust goes through the probate process, it takes longer for beneficiaries to receive their inheritance than some other options, such as living trusts. Some people opt for a testamentary trust because of the strong controls that are present for it.
Creating a comprehensive estate plan can be challenging, particularly if there are considerable assets or many beneficiaries. Working with someone who understands your circumstances and can help you to sort through the different tools available to get those assets where they need to go after your death might help to make the process easier.