What is a testamentary trust?

A testamentary trust is a trust created by a person’s will that takes effect upon the person’s death. The purpose of the trust is to control how the person’s assets are managed and distributed after they pass away. In Texas, the person creating the trust is referred to as the “settlor” or “testator.” The trust is created when the settlor states their wishes in their will. The testamentary trust can be used to manage assets for the benefit of the settlor’s beneficiaries, either during their life or after they pass away. For instance, the settlor may set up a trust that pays a certain amount to their beneficiary every month. The trust can also be used to manage specific assets, such as real estate or stocks, or to protect assets from creditors or tax liabilities. The settlor may also appoint a trustee to act on behalf of the beneficiaries when necessary. The trustee has a fiduciary duty to administer the trust according to the settlor’s instructions and is subject to oversight by the probate court. The trustee is also responsible for filing tax returns, distributing assets, and preparing reports to the court. In Texas, testamentary trusts are regulated by the Texas Estates Code. It is important for settlors to work closely with an experienced attorney to ensure that their estate plans are in order and their wishes are fulfilled.

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