What is a testamentary trust?
A testamentary trust is a type of trust that is created through a valid will. It is an arrangement that comes into existence upon the death of the testator (the person who created the will) and is used to manage assets left to a beneficiary (recipient of the assets). In Arkansas, testamentary trusts are governed by Arkansas’ Uniform Trust Code, which provides the rules for how the trust is set up, what type of assets can be held in the trust, and how distributions are made. When a testamentary trust is created, the testator appoints a trustee to manage the trust and carry out the testator’s wishes for how their assets are to be used. The trustee must invest and manage the assets of the trust according to the provisions of the trust document. The trust document specifies when and how funds are to be distributed to the beneficiaries, which can be immediate or deferred. The trustee also has a fiduciary responsibility to the trust and must act in the best interests of the trust and the beneficiaries. Testamentary trusts typically allow the testator to provide for minor children, manage assets for the benefit of others, or provide tax savings for their heirs. In Arkansas, testamentary trusts have a specific period of time during which they exist, which is typically the lifetime of the beneficiaries. When that period ends, the trust is usually terminated and the remaining assets are distributed to the beneficiaries.
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