What is a testamentary trust?
A testamentary trust, or a will trust, is a trust created through a last will and testament. It is a legal vehicle through which a person’s assets are managed and distributed to their beneficiaries after their death. Upon the death of the person who established the trust, the estate is divided into two parts. The first is the trust fund, which contains all the assets and investments that were designated in the will. The second part is the estate proper, which is typically made up of the testator’s clothing, home, and other non-trust assets. In California, all trusts are subject to the state’s disability planning law, which outlines the rules pertaining to special needs trusts. A testamentary trust can be used to establish a special needs trust, which is a trust specifically created to provide support for people with disabilities. Trusts established in this way are managed and supervised by a trustee and provide financial resources for the disabled individual’s care and well-being without reducing their eligibility for public assistance programs. Testamentary trusts can also be used in California as a way of avoiding probate. If the testator’s estate is worth more than $150,000 (or $300,000 for married couples), a testamentary trust can be established to ensure that the testator’s assets are distributed according to their intentions. By avoiding probate, the trust can become effective immediately upon the death of the testator, which can help prevent delays and reduce costs.
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