Testamentary trusts are legal documents that outline the distribution of owned assets after your death. So, those who hire testamentary trust lawyers benefit as they may pass on their belongings in the most tax-efficient way or those who want to protect their assets from creditors or ex-spouses. They can also help reduce probate fees and allow you to choose who will manage your estate. However, legal matters are more often than not troublesome. Worry not because this guide details everything you should know about testamentary trust.
What Is It?
A testamentary trust is a legal arrangement you can set up after you die so that property and assets pass to your beneficiaries according to the terms of your will.
The terms of this type of trust can be precise, or they may direct whatever assets you leave behind to go into a specific fund or account. It is also sometimes called living trusts because they’re meant to supplement your living will and power of attorney documents, not replace them.
What Are Its Benefits?
Testamentary trusts can benefit your beneficiaries in several ways. They can:
- Protect your legacy by safeguarding assets from creditors, predators, and others who might try to take advantage of you and your family at an emotional time.
- Avoid probate and shrink the amount of time it takes for assets to be distributed after death.
- Help you avoid taxes on gifts made during life or upon death if adequately structured according to IRS rules. This is generally true even if there’s no estate tax when the beneficiary dies because many states have inheritance taxes that are triggered by large inheritances. In addition, some state laws allow for a deduction even if no federal estate tax is paid on the gift. Finally, many states have gift tax laws that exempt gifts up until specific dollar amounts per year, which means those gifts do not count toward this threshold either! These exemptions mean it’s easier than ever before!
How Do Lawyers Help With This?
You can create a testamentary trust yourself, but it’s always better to have the help of an expert. A lawyer will draft the document, make sure your assets are distributed appropriately and manage any assets that pass through the trust.
Additionally, many people who set up testamentary trusts would like their money to go to a particular charity or organisation upon their death. So, lawyers understand how best to achieve this goal while ensuring that you receive a fair amount in return for donating your money so it may be used for good works after your death.
Finally, testamentary trust lawyers can advise on whether the terms of your testamentary trust should be adjusted based on tax implications or other circumstances at hand after its creation.
Tips While Managing Testamentary Trusts
- Make a will.
- Make sure your will is up to date.
- Choose an executor of your estate who can carry out the terms of your will, such as selling real estate or liquidating stocks and bonds.
- Choose a trustee to manage any assets that do not go directly to heirs (such as real estate) and decide how those assets should be distributed among heirs.
- If you have children, choose someone who you trust. If something happens to you, this person should also be able to manage any minor’s funds until he or she reaches adulthood. Also, consider naming several people in case one cannot fulfil the duty for some reason, including yourself, although it may be hard on the kids when you’re gone! It’s also important that this person knows about all other people involved in caring for children (grandparents or nannies) so they can coordinate care if necessary later down the road when everyone gets older.