In estate planning, there are a variety of ways to transfer your assets to loved ones upon death. One option is a testamentary trust. While the method isn't suitable for every situation, it does offer many benefits. Here's a more in-depth look at the process. 

What is a Testamentary Trust?

The purpose of a trust is to transfer assets into a separate account, usually accompanied by special conditions. A testamentary trust differs from the standard option because the movement of funds or property ownership doesn't occur until the death of the main party, known as the grantor. The trust is created via a will when the will is probated.

What's Involved?

To create a testamentary trust, you need first to outline your assets. Next, it's time to determine the beneficiaries and how the elements should be separated. At this point, it's important to outline a distribution process, such as when and how the funds or property will be transferred to your survivors. 

Typically, grantors set conditions based on age or accomplishment of the beneficiary, such as reaching an age of maturity or graduating college. To ensure these rules are followed, a trustee is chosen during estate planning. While the process is complex, a lawyer familiar with wills and probate law can provide guidance with each step.

Who Benefits From It?

The biggest advantage of a testamentary trust is the level of control involved. Grantors have complete control over their assets and how they're handled. For that reason, it's a popular estate planning option for individuals with young dependents. 

Since the account isn't created until death, life insurance can be used to fund the trust (however, the inheritance tax implications should be discussed with your lawyer). As such, testamentary trusts are ideal for planners on a budget. However, it's important to be as thorough as possible when outlining the measures because questions can't be asked when it's implemented.
 

If you need assistance approaching the estate planning process, reach out to David R. Webb, Attorney at Law in Lincoln, NE. The local probate attorney has provided personalized guidance to Lancaster County residents for nearly 40 years. Visit the law firm online to learn more about their will and probate law services, and request assistance today at (402) 477-7577.