What Is A Testamentary Trust And When Should Massachusetts Residents Use One?
Most people have heard of a will. Many have heard of a trust. But a testamentary trust occupies a specific and useful space between the two that does not always get the attention it deserves. If you are working on an estate plan in Massachusetts and trying to figure out which tools make sense for your situation, understanding how a testamentary trust works is worth your time.
How a Testamentary Trust Differs From Other Trusts
A testamentary trust is a trust created through the terms of a will. It does not exist while the person who makes the will is alive. Instead, the trust comes into being after death, once the will is admitted to probate and the estate is administered. At that point, some or all of the estate assets are transferred into the trust and held for one or more beneficiaries according to the instructions left in the will.
This is different from a revocable living trust, which is created and funded during the person’s lifetime and typically allows assets to pass to beneficiaries without going through probate. Because a testamentary trust operates through a will, it does go through the Massachusetts probate process. That is worth knowing, because probate can take time and involves some degree of public record and court oversight.
The Massachusetts Uniform Trust Code provides the general framework governing trust creation and administration in the Commonwealth, including trusts of this kind once they come into existence after probate.
When a Testamentary Trust Can Be Useful
There is no single right answer, but certain situations tend to make a testamentary trust worth considering. A few circumstances where this structure can serve a meaningful purpose include:
- Leaving assets to minor children, so a trustee manages the inheritance until the children reach a specified age rather than a guardian receiving a lump sum
- Providing for a beneficiary with special needs without disrupting their eligibility for government benefits programs
- Protecting a share of an estate for children from a prior relationship in a blended family
- Leaving a longer-term inheritance for a young adult who is not yet ready to manage a large sum responsibly
- Supporting a surviving spouse while also ensuring that remaining assets eventually pass to children
In each of these situations, simply leaving property outright through a will may not produce the outcome the person actually wants.
What Goes Into the Trust Terms
The testamentary trust provisions in a will can be tailored to the specific family situation. The will names a trustee, identifies the beneficiaries, sets out when and how distributions are to be made, and specifies when the trust ends. The grantor has significant flexibility in how these provisions are written, which is one reason this structure works well for a wide range of family and financial circumstances.
Because the trust takes effect after death and cannot be adjusted at that point, getting the language right while drafting the will matters considerably.
Contact Us Today for Help
A testamentary trust can be a well-matched tool for certain Massachusetts families, but whether it is right for your situation depends on your goals, your family structure, and your assets. We are Norwood estate planning attorneys who help clients throughout the Greater Boston area build clear, effective plans. If you have questions about testamentary trusts or any aspect of your estate plan, please contact Fisher Law, LLC today for a confidential initial consultation.
Source:
malegislature.gov/laws/generallaws/partii/titleii/chapter203e
