Understanding the Testamentary Trust

Charleston Estate Planning | Testamentary Trust

In spite of the many advantages of simple wills, a testamentary trust can provide some useful provisions that the simple will does not offer the last will & testament. A testamentary trust can be thought of as a fiduciary relationship where the deceased grantor will give explicit guidelines for the estate disposition to a surviving party, known as the personal representative. Testamentary trusts are most useful when a grantor wants to leave some or all of their assets to a beneficiary, but only until a specified time after their passing.

Some particularly salient uses of testamentary trusts might be:

  • If you wish to provide extended care for a spouse or children over an extended period of time rather than through a lump sum
  • If you wish to allocate money to children or grandchildren only once they reached adulthood
  • If you wish to leave behind a flow of contributions to a non-profit organization via a charitable trust
  • If you wish to provide extended care for a loved one with special needs through a special needs trust
Appreciating assets are another important factor to consider when constructing a testamentary trust. In addition to reduced estate taxes and other tax benefits, a testamentary trust can pose significant financial advantages through the delay in estate disposition. By establishing a time period to preserve the estate property and assets, a grantor can create a safeguarded time-frame for assets to acquire greater value over time. Many assets do not gain value through the passage of time, but some real estate properties, collectible memorabilia, stocks, or precious metals are some financial sources that could possibly appreciate over time. A testamentary trust allows grantors to secure these appreciating assets under the ownership of loved ones while guaranteeing that these assets may accrue value even after their passing. Our Charleston estate planning attorneys can provide legal counsel for individuals, professionals and families in the structuring in the last will and testament and the incorporation of testamentary trusts with the simple will.