Define: Testamentary Trust

A testamentary trust is a type of trust that is created through a person’s will and only takes effect upon their death. It allows the person creating the trust (the testator) to specify how their assets should be managed and distributed after their passing.

Unlike a living trust, which is created and takes effect during the testator’s lifetime, a testamentary trust is established through a will and only becomes active upon the testator’s death.

Any individual who has the legal capacity to create a will can also establish a testamentary trust. This includes adults of sound mind.

Some benefits of creating a testamentary trust include the ability to provide for the financial needs of minor children or individuals with special needs, protecting assets from creditors, and ensuring that assets are distributed according to the testator’s wishes.

Yes, a testamentary trust can be modified or revoked by the testator at any time before their death, as long as they have the legal capacity to do so.

Any individual or organisation can be named as a beneficiary in a testamentary trust, including family members, friends, charities, or other entities.

Yes, like any other legal document, a testamentary trust can be contested. However, the grounds for contesting a testamentary trust are generally limited to issues such as lack of testamentary capacity, undue influence, fraud, or improper execution.

If a beneficiary of a testamentary trust dies before the testator, their share of the trust assets will typically be distributed according to the provisions outlined in the trust document or the testator’s will.

While a testamentary trust can be structured in a way that helps minimize estate taxes, it is important to consult with a qualified estate planning attorney to ensure compliance with applicable tax laws and regulations.

The duration of a testamentary trust can vary depending on the specific provisions outlined in the trust document. It can be set up to last for a specific period of time or until certain conditions are met, such as when a beneficiary reaches a certain age.