Are Testamentary Trusts Worth It?

As you begin to research different kinds of trusts in North Palm Beach, you may stumble upon the phrase “testamentary trust.” Perhaps you already have a basic idea of what these trusts are, but you’re not sure whether they will truly help you achieve your estate planning goals. While further research may help you determine the suitability of a testamentary trust, a consultation with a Palm Beach trusts lawyer could be more productive.

What Exactly Is a Testamentary Trust? 

Technically speaking, a testamentary trust is not a trust which exists at the time it is referred to in an estate document. Instead, it is a set of instructions to create a trust in the future. This trust is “testamentary” because these instructions go in your Last Will and Testament. In other words, a testamentary trust is something that you add to your Will and the testamentary trust comes into being after you pass away.

Why Would I Need a Testamentary Trust? 

A testamentary trust might be popular for people who cannot afford to create a trust at the present time. Compared to a Last Will and Testament, a typical trust is complex and more expensive to set up. Some residents might be attracted by the idea of a trust – but they may lack the funds to create one.

A testamentary trust is an ideal solution for those who are reluctant to spend legal fees on a stand-alone trust. Keep in mind, however, that you are simply delaying the cost of creating the trust. Although you will have passed away when the trust goes into effect, those legal fees will still be due. Instead of paying the legal fees today, you are simply passing them on to your beneficiaries.

In other words, the cost of your testamentary trust will come out of your family’s inheritance. For many clients, this is acceptable. Many seniors today prioritize enjoying their wealth while they are still alive, and boomers seem to agree with this sentiment more than younger generations. Additionally, the need for the trust may only arise under certain circumstances and not others. This contingent language can be written into your estate documents.

That being said, testamentary trusts are not only for boomers. They are also quite popular among younger parents with minor children. For these parents, transferring wealth during life is simply not an option. Even if it were possible, the children could not spend or use the funds until they turn 18. A testamentary trust ensures that the children will inherit certain assets in a controlled manner. If the parents wish, they may also stipulate that the children will only receive assets once they complete a college degree (or any other condition) or when they reach a mature age.

Can a North Palm Beach Estate Planning Lawyer Help Me Establish a Testamentary Trust? 

A North Palm Beach estate planning lawyer may be able to help you establish a testamentary trust. However, it may be wise to consider alternative options before you move ahead with this estate planning strategy. To learn more about your options, contact Kitroser Lewis & Mighdoll today.

Sources: 

investopedia.com/terms/t/testamentarytrust.asp#:~:text=A%20testamentary%20trust%20is%20a,the%20beneficiaries%20of%20the%20trust.

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/Sections/0736.1106.html