A testamentary trust can be created after you die.

Some people really like the idea of using a trust in their estate planning.

The control over the eventual inheritance distribution is appealing.

These individuals are often torn between the appeal of a trust and the work it takes to maintain a trust.

According to a recent The News-Enterprise article titled “Trusts can be created after death,” a testamentary trust can be a good solution.

A testamentary trust is created after your time on this earth is over.

The most commonly known type of trust is an inter vivos trust, more commonly known as a revocable living trust (RLT).

Such a trust is created while the grantor (also known as a trustmaker, settlor, or trustor) is still alive.

Once created, the grantor then "funds" the RLT with assets now and/or via beneficiary designations postmortem.

Result?

This removes the assets from the probate estate if the grantor is later incapacitated and at death.

Although this "funding" process can be tedious and is an ongoing "process," it is not typically overwhelming unless the estate it quite large and complex.

The RLT becomes "irrevocable" upon the death of the grantor and the inheritance can either be paid outright and free of trust to the beneficiaries or administered as an "inheritance trust" according to instructions specified by the grantor in the trust itself.

If probate is not a concern (and there will be probate required anytime there are orphaned minor children), then an alternative approach to an RLT is the testamentary trust.

With a testamentary trust, provisions and terms can be the same as those created under the inheritance trust once the RLT becomes irrevocable upon the death of the grantor.

The terms of the testamentary trust are actually contained within the last will and testament itself.

The executor funds the testamentary trust with probate assets when the probate case is closed and then commonly becomes the trustee.

As with the RLT "inheritance trust," the testamentary trust can be drafted as a “trigger” trust.

In this case, a testamentary trust will only be created if certain criteria are met.

One example is to have a testamentary trust created if one of your beneficiaries becomes disabled, regardless whether eligible for public assistance..

Testamentary trusts do have their disadvantages.

Because these trusts are created as part of probate, a testamentary trust does not afford estate privacy.

Instead, the testamentary trust and the assets it administers will be part of the public record.

With a RLT, your trust and its assets can remain private while you are alive and even after your death.

If your dependents or an heir with disabilities require immediate access to finds after you die, then a testamentary trust may not be the best solution.

Before any assets are distributed, probate typically must be completed.

This can take awhile.

If you are unsure whether a testamentary trust is right for your family, work with an experienced estate planning attorney to develop the best plan to meet your needs.

Bottom line: when it comes to estate planning, there is no one-size-fits-all solution.

Reference: The News-Enterprise (Feb. 8, 2022) “Trusts can be created after death”