A will generally identifies certain people as beneficiaries of assets that will be distributed in full when the estate is settled.
A testamentary trust is a way to establish trust provisions that provide for ongoing management of assets for the named beneficiaries for a period of time. Unlike a revocable living trust, which is effective during the trust creator’s lifetime, a testamentary trust does not spring into being until the will is administered after the person’s death.
Testamentary trusts can be used to provide for long-term management of assets and are often used when beneficiaries are minors. The trust provisions generally give a named trustee the authority to make distributions for the beneficiary’s health, education, support, and maintenance. Testamentary trust provisions should also identify under what conditions a lump sum distribution could be made. For instance, this may occur when a child reaches a certain age.
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