A testamentary trust differs from a living trust because a will creates it. This means that it does not go into effect until the person’s death, allowing the person to change or revoke it at any time just like any other part of the will before they pass away. After the person’s death, a directive for how, when and why the trustee should amend or revoke the trust is the only way that anybody can change it.
The testamentary trust can include any property that the person owns or any property in which the person has future interest. This could mean vehicles, real estate, jewelry, investments and personal papers.
When preparing the will, the party can name any person, company, charity or pet as the beneficiary for the testamentary trust. The party will be able to receive any income from the trust and use the property within it after the court passes it to the party during the probate process. If anybody challenges the will, though, it can delay the transfer or even deny it if the court declares the will invalid.
During the estate planning process, an attorney can help the person decide whether a testamentary trust is the right tool for how he or she wants the estate to be handled. Different tools allow a person to transfer assets to other parties in different ways. Since every situation is different, this option may not be right for everybody. This information is not a replacement for the services of an attorney, and an attorney could answer any questions that a person may have about this and other estate planning tools.
Source: New York City Bar, “Testamentary Trusts“, November 12, 2014