Trusts are a great estate planning tool you can use to protect specific assets or look out for family members with special needs. There are many different kinds of trusts that can be tailored to your unique family circumstances. A trust can also help you make provisions for unique life situations.
One of the most useful trusts for families with unique needs is a testamentary trust. In this blog, we’ll outline what testamentary trusts can be used for and what to consider if you’re thinking about implementing one yourself.
Testamentary Trust: The Basics
If you’re looking for a practical way to protect specific assets or make sure family members with special needs are cared for after you’re gone, you may want to consider a testamentary trust. With this type of trust, your assets are managed and distributed to the beneficiary of your choice on your behalf.
A testamentary trust is included in your last will and testament. There are three parties involved:
- You
- The trustee (the person managing the assets in the trust)
- The recipient of the trust
What makes a testamentary trust a useful tool is that it ensures proper management and handling of assets. Establishing a testamentary trust can also help you avoid tax liabilities.
Testamentary trusts are often compared to inter vivos trusts, also called living trusts. The difference between the two is important: funds in an inter vivos trust are used and spent by the owner during their lifetime. A testamentary trust only goes into effect upon the owner’s passing. If you are not sure which option is right for your family’s needs, you should work with an experienced estate planning attorney who can learn about your unique circumstances and craft an estate plan that makes sense.
When to Consider Using a Testamentary Trust
While many people use a testamentary trust to take care of minors or family members with special needs, these trusts are useful tools in a variety of situations, including:
- Setting aside funds for your child’s education
- Designating funds for your children that you want to be managed in a secure way
- Setting aside funds to take care of children with disabilities
- Managing charitable contributions over a set period of time
For most people hoping to set aside funds for their children’s education, these funds are timed to run out when the child turns 25 or graduates. However, there are other ways to set up a trust for education; a lawyer can help you understand your options.
RELATED: Michigan Estate Planning Basics: Everything You Need to Know
Considering a Testamentary Trust? Don’t Forget to Consider Your Trustee
The trustee of the testamentary trust is one of the most important people involved. This person is responsible for carrying out your wishes, managing funds, and ensuring that the beneficiary or beneficiaries of the trust are getting the financial support they need.
When you’re choosing a trustee, it’s important to choose a trusted (no pun intended) person who knows you and your family well. You should feel confident the trustee will make good decisions on behalf of you and the trust’s beneficiaries. If you need help choosing a trustee, an estate planning lawyer can help identify the right person.
Need to Create a Trust or Make an Estate Plan? The Law Office of Kari Santana Is Here to Help
For over a decade, the Law Office of Kari Santana has supported the West Michigan community with estate planning and end-of-life needs. Whether you need to need to write a will, create a trust, or update your existing documents, you can feel confident that the Law Office of Kari Santana will work with you to create an affordable, efficient legal solution that’s tailored to your needs.
To learn more about how we support West Michigan families and what our team can do for you, please get in touch. You can call our Grand Rapids office at 616-717-5759 or use the quick and easy consultation form on this page.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.