After cremations services, wills and trusts created by the deceased will be executed or will go into effect. There are many different kinds of trusts that can be created to protect assets and to assign legal and financial ability to those we leave behind.
One of the types of trusts that can be created is a testamentary trust. The creator of the trust is the grantor. Testamentary trusts can be activated independently of a will being executed, but many parents have testamentary trusts written within their wills to create trusts for their minor children. While wills themselves are in effect as soon as it’s created, testamentary trusts are not in effect until the creator of the will has died.
When the grantor of a testamentary trust has died, the testamentary trust takes effect. This type of trust is irrevocable after the grantor’s, which means that it can’t be changed (no one who is in the trust as beneficiaries when the trust is created can be changed and no one new can be added) nor can the trust be cancelled.
However, unlike an irrevocable trust, which can’t be changed by the person who created it once the trust is created, a testamentary trust can be changed at any time by the grantor as long as they are alive. It is only unchangeable after the grantor’s death.
A testamentary trust lets you leave assets to your minor children that they can inherit and use while they are still minors. In a will without a testamentary trust, when assets are left to minor children and you die before they reach majority, the court will control your bequests until they reach the state’s legal age of adulthood (18 or 21, depending on the state).
Testamentary trusts, which are also known as children’s trusts, differ in that you as the grantor can leave assets to your minor children to inherit, but you name a trustee to manage those assets until the children are old enough to be able to own and manage them. As the grantor, you decide at what age your children will inherit their portion of your estate.
For example, if parents want to leave family property and financial assets to their minor children, then they would create a testamentary trust that states what portion of that each child receives, at what age they will inherit it, and who will manage those assets until the children have reached the age specified. Usually, a family member is appointed as the trustee of testamentary trusts, but sometimes godparents are tapped for this responsibility as well.
Unlike revocable and irrevocable trusts, none of your assets need to be transferred into a testamentary trust while you are alive. After you die, the assets automatically transfer into the testamentary trust.
One thing to note about testamentary trusts is that creating them does not mean your will won’t go into probate court after you die, which can take time, since the validity of your will is at issue and to be determined, and it can deplete some of the assets of your estate.
To avoid this possibility, you may want to consider creating a living trust instead for your minor children. With a living trust, you actually transfer your assets to the person whom you name as a trustee for them to manage until your children reach adulthood.
Help you find community legal resources are part of our cremations services, so you can depend on our compassionate and experienced team at Hopler & Eschbach Funeral Home to help you. You can visit our funeral home at 483 Chenango St., Binghamton, NY 13901, or you can call us today at (607) 722-4023.