Testamentary Trusts and Why You May Need One


Many people have heard about the term “trusts”. Some people may incorrectly believe that trusts are only for wealthy individuals. In fact, trusts, and especially testamentary trusts, are an important estate planning tool for a wide range of individuals.

A testamentary trust is a trust that is created under a Will wherein the executor/trustee is directed to hold all or a portion of the estate assets for a specified period of time and for specified people (the “beneficiaries”). A testamentary trust is only activated on the person’s death.

As compared to leaving assets directly to the beneficiary under a Will, leaving assets in a testamentary trust can offer a number of benefits, including:

  • control over the timing and amount of distribution to beneficiaries;
  • flexibility in structuring payments to beneficiaries;
  • protection of the estate assets from potential third party claims against beneficiaries;
  • reduced probate fees, where applicable;
  • maintaining privacy; and
  • potential tax benefits.

Testamentary trusts are especially useful to deal with certain family dilemmas. For instance, in a blended family, a person may want to provide for his/her spouse during the spouse’s lifetime, but may also want his/her assets to eventually go to his/her children. A testamentary spousal trust can be used to support a spouse while protecting the ultimate interests of the children.

Our wealth preservation group can explore these advantages further with you to develop an estate plan that would accommodate your unique family circumstances.