Most people in California who are thinking about undergoing the estate planning process have many questions regarding the different documents. Some of the most commonly discussed documents are wills and trusts. One very beneficial type of structure to set up is a testamentary trust.
What is a testamentary trust?
Estate administration experts recommend organizing a testamentary trust as part of your last will and testament. Unlike living trusts, a testamentary trust becomes officially set up at the time of your passing. This allows you the freedom of making changes to it up until your death.
Just like other types of trusts, a testamentary trust allows a person to stipulate how their assets are to be disbursed. One of the most common reasons that people set up a testamentary trust is to bequeath their assets to certain beneficiaries long after their own demise, even years after their passing. For example, a person may set up a testamentary trust for their grandchildren that specifies the grandchildren are to be given a sum of money once they turn 18 years old. Even if the grantor passes away prior to the grandchild turning 18, the grandchild will not receive the assets of the testamentary trust until their 18th birthday.
The parties involved in a testamentary trust
A testamentary trust has three main parties. The first is the grantor, also called the settlor. This is the person who initially owns the assets and sets up the trust. The second party is a beneficiary who will receive an asset. The third party is called the trustee. This person handles the trust until the point at which the beneficiary takes ownership of the asset.
A testamentary trust can be a great way to disperse your assets in a particular manner after your passing. Due to the complexity of this type of trust, it’s always important to seek the help of an estate attorney. Such a lawyer can answer your questions and ensure that the trust is structured properly to hold up in court after you’re gone.