High Caliber Legal Service

Pros and cons of a testamentary trust

On Behalf of | Dec 21, 2021 | Probate & Estate Administration |

Estate planning helps ensure your assets are passed along to your beneficiaries as efficiently and smoothly as possible when you die. While a will is a vital component of most Texas estate plans, more sophisticated planning includes trusts, which offer many benefits.

Most trusts are funded during your lifetime and distributed by a trustee according to your wishes. However, a testamentary trust is created after you die as outlined in your will and funded with assets contained in that document.

What are the pros?

Your will can include one or several testamentary trusts to benefit your spouse, children, a disabled family member or others. While your beneficiaries could receive outright distributions from your will, testamentary trusts offer many advantages, such as:

  • Naming someone you trust to manage assets for a beneficiary, such as a young child, detailing how you want the funds spent.
  • You can include specific instructions barring beneficiaries from transferring, selling or giving away their interest in the trust.
  • You can also designate who will receive the assets should your beneficiary die.

Testamentary trusts can last for a specific amount of time or the beneficiary’s lifetime. You can also allow the heir to take control of the trust at some point, such as when they reach a certain age.

What are the cons?

Along with the advantages, you’ll want to consider several disadvantages that exist, including:

  • Testamentary trusts do not avoid probate.
  • When probate is necessary, funding the trust can take several months.
  • Since probate is a public process, all assets and beneficiaries are part of the public record.
  • If any confusion or lack of clarity exists in the will, the testamentary trust may not be established and executed according to your wishes.

Is a testamentary trust suitable for your estate?

Trusts can be vital tools in Texas regardless of whether your estate is high value or more modest. Everyone’s wishes are different, so it’s crucial to explore options and craft an estate plan that meets your needs.

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