What is a testamentary trust and how does it work?

A testamentary trust is a type of trust created through an individual’s will. It comes into effect upon that individual’s death and involves the distribution of his or her assets for the benefit of others. When setting up a testamentary trust, the individual will state the goals for the trust and name the beneficiaries. The individual will also name a trustee to manage the trust, usually for a specific period of time. In Maryland, the testamentary trust will become effective upon the death of the individual. The trustee will take possession of the assets indicated in the trust. The trustee is responsible for managing the assets in accordance with the terms of the trust. The trustee must also ensure that all the taxes and expenses of the trust are paid on time. The trustee is responsible for providing the trust beneficiaries with the income, if any, from the trust assets. In addition, the trustee may authorize payments to the beneficiaries from the trust assets for specific purposes such as education and medical expenses. The trustee is also responsible for ensuring that all the beneficiaries named in the trust receive what they are entitled to in accordance with the wishes of the individual who set up the trust. When the trust ends, the remaining assets are distributed to the beneficiaries as dictated by the individual who set up the trust. Testamentary trusts are an effective way to ensure that the assets of an individual are distributed to their specified beneficiaries in a timely and transparent manner.

Related FAQs

What should I do if I find a mistake in my estate documents?
What is a transfer on death deed and how does it work?
What is an estate plan disclosure statement?
What is a marital deduction and how does it work?
What is probate, and how can I avoid it?
How do I set up a living trust?
How can I prepare for long term care expenses?
What legal documents will I need to establish my estate plan?
What happens if I don't have an estate plan?
What is an estate inventory and why should I create one?

What is a testamentary trust and how does it work?

Related FAQs

Related Blog Posts