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One type of trust that you may not know about is a testamentary trust. Many individuals put these in their estate plans, making them effective upon death. If you would like to learn more about whether a testamentary trust is the right option for you, here are a few points to consider.  

What Is a Testamentary Trust?

This trust is created through a person’s last Will and Testament. The trust activates at the death of the individual (testator) who established it. Often, they will use it to address unique circumstances or provide for specific beneficiaries.

There are many benefits to this type of trust. It is more cost-effective and more straightforward to establish than a living trust. Plus, you can usually fund these trusts with an insurance policy. 

Since these trusts must be administered according to the testator’s wishes, they offer asset protection for as long as stipulated in the terms. 

Unfortunately, unlike other trusts, this option will not avoid probate. That can be a time-consuming and costly process for your loved ones. 

Estate Planning Role

One of the key benefits of testamentary trusts is the control they offer over asset distribution. The testator can specify exactly how their assets will be distributed after death. This trust can be useful for people with beneficiaries who are under the legal age, individuals with special needs, or those needing financial protection.

In addition to controlling distribution, testamentary trusts allow the testator to retain control of the management of the assets. They can set specific conditions and timelines for when and how the assets will be distributed to the beneficiaries.

Another benefit of testamentary trusts is their potential for tax advantages. With careful planning and structuring, testamentary trusts can be used to help reduce the impact of estate taxes.

Establishing a Testamentary Trust

The process begins with the creation of a valid last Will and Testament. This legal document expresses your wishes and establishes the testamentary trust.

Next, you need to appoint a trustee in your will. This individual or entity will be tasked with managing and distributing the assets of the trust following your instructions. You will want to select someone you trust for this role.

You need to specify the terms and conditions of the trust in your will. These provisions should detail when and how the assets will be distributed to the beneficiaries.

Once the testator passes away, the trustee is responsible for:

  • Asset management
  • Beneficiary communication
  • Legal compliance
  • Accounting and reporting

When you need a valuable tool in your estate plan, think about a testamentary trust in Wisconsin. You can maintain control over the distribution of your assets and provide for the financial well-being of loved ones. 

Protect Your Estate With a Testamentary Trust 

If you want to make sure that your testamentary trust is legally valid and well-managed, a knowledgeable estate planning attorney can assist with the process. From creating the trust to overseeing the assets, these professionals can help you achieve your estate planning goals.

To learn more about a testamentary trust or another option, contact Collins Law Firm. We serve Southeastern Wisconsin and the Milwaukee region. Contact us to book your free consultation by calling (414)-207-6292.

Talk to someone about your estate plan today. Free and Confidential.

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