What is a testamentary trust and how does it work?

A testamentary trust is a type of trust that is set up through a will. It is created when the person who writes the will (known as the testator) specifies in the will that a trust should be created when they pass away. The trust is then administered by a trustee, according to the instructions in the will. In Texas, a testamentary trust is treated as an irrevocable trust, meaning the assets in the trust are not subject to the taxes of the testator’s estate. The trustee is given the authority to manage and distribute the assets in the trust to the designated beneficiaries. The trustee must carry out the instructions of the testator in the will, following the state laws that govern trusts in Texas. The main purpose of a testamentary trust is to provide financial support for the beneficiary. The testator can specify must they want the trust assets to be used for, and for how long. They can also set restrictions on how the trust can be used and can provide directions for when the trust should be terminated. Although a testamentary trust can be revoked before the testator passes away, once it has been set up, it is legally binding and cannot be changed. Testamentary trusts can therefore be an effective way to ensure that the testator’s wishes are followed after they have passed away.

Related FAQs

What is a durable power of attorney?
What is a revocable living trust?
What is a transfer on death deed and how does it work?
What is a funeral directive and why should I have one?
What are the tax implications of estate planning?
What is a generation skipping trust and how does it work?
What is a guardianship and why should I consider it?
What is a charitable lead trust and how does it work?
What is an estate freeze and how does it work?
What are the different types of estate planning documents?

What is a testamentary trust and how does it work?

Related FAQs

Related Blog Posts