Testamentary Trust in Your Will
By Ranju Kumar
This is a trust that you include in your will and only commences when you die. It basically means that incase of your death one person will take care of the wealth that you leave behind for your beneficiaries. This can only happen when you write a will and state in writing who is in charge (the trustee) and the terms under which they will mange your wealth for your beneficiaries. The testamentary trust has three important elements.
The first part is the individual who is in ultimate control of the trust usually referred to as the “Appointor”. The Appointor is a person who has the power to appoint and/or dismiss the trustee. Usually the Appointor is a trusted third party who you believe is going to act fairly. The second part is the Trustee, who is left in charge of making sure the terms included in the trust are followed. Importantly, the trustee of a testamentary trust is responsible for the financial management of the beneficiaries” inheritance. Therefore it is essential that you have the right person for this role. The last part of a trust is the beneficiaries who get the wealth that you leave behind when you die.
Before you decide to have this kind of trust, you should get estate planning advice from your lawyer to get all the necessary information. One of the advantages that attract people to them is the fact that your family will get to enjoy the benefits of their inheritance without the danger of losing their inheritance through divorce, bankruptcy or as part of a professional negligence claim settlement against them.
The testamentary trust can also protect the beneficiaries that you leave your wealth if they are not of sound mind, or if they use money carelessly. You should also keep in mind the fact that there will be some costs that you will incur in form of the administrative costs that are involved in maintaining the trust. Some money will be charged for accounting services that you will need when making trust taxation returns.
Make sure that the income that your estate makes is adequate enough to necessitate a testamentary trust. In case you are not sure about this, you can include it as an option in your will so that the trustee will make the decision, whether it is necessary or not.
The person that you choose as a trustee can be your partner, the person who executes your will or your children. This person will have complete control of the trust. Therefore make sure that you know the person well. The trustee should also be trustworthy enough to have the best interests of the beneficiaries. You can have a variety of trusts and have different trustees for each of them. Get a testamentary trust today and make sure that your wealth goes to the right people once you are dead.
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