What is a testamentary trust?
A testamentary trust is a type of trust created in a will and funded after the death of the person who wrote the will, known as the testator. Testamentary trusts are commonly used in California to help provide a financial safety net for surviving family members and other beneficiaries. Testamentary trusts are set up with a document known as a trust agreement, which is created by the testator and must be followed after their death. This agreement outlines who will be the trustee, who will receive the money held in the trust, and how the money should be used. Money held in a testamentary trust can be used to pay for beneficiaries’ living expenses, education costs, or even to provide long-term care. Because the money in a testamentary trust is generally held in trust for the beneficiary, it is subject to certain limitations. Testamentary trusts may also be subject to estate taxes, depending on the amount of money held in the trust. Finally, testamentary trusts must be properly administered and managed in order to ensure that the wishes of the testator are fulfilled. Testamentary trusts are a valuable way to provide for family members and other beneficiaries after the death of a testator. By understanding the limitations of testamentary trusts, California residents can make sure to take advantage of this powerful tool to ensure their loved ones are financially taken care of in the future.
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