It Depends – How do I set up a testamentary trust?

In this edition of ‘It depends’, senior associate Steven Jell talks about setting up a testamentary trust.

VIDEO TRANSCRIPT

Hi, welcome to It depends. Today we’re going to talk about setting up and creating a testamentary trust.

What is a testamentary trust?

A testamentary trust is a type of trust created following a person’s death. Usually, it’s a discretionary trust created and included in the person’s Will, and it can be a really effective estate planning tool. There is another edition of It depends on the benefits of using testamentary trusts. Please check it out.

How do I create a testamentary trust?

So, it depends. If we’re dealing with a testamentary trust to be established under a person’s Will, then that trust doesn’t come into existence until that person has passed away. Their executor and trustees are responsible for pooling all assets, paying all debts and then transferring the assets according to the terms of the Will. The Will will generally include details regarding the assets to be transferred to the testamentary trust. Once those assets are transferred to the testamentary trust, the trust will then come into existence. There’s generally no additional documents that need to be prepared at that point in time for the trust to be created.

What if the Will does not include a testamentary trust?

If a Will does not include testamentary trust terms, then there is a second opportunity for the beneficiaries to create a testamentary trust following a person’s death. But the benefits in this situation won’t be the same in all circumstances. If you’re interested in including testamentary trust terms in your Will, then we recommend that you take proactive steps to include those terms prior to your death.

If you or any of your clients have any questions regarding testamentary trusts, please feel free to reach out to me or one of the team. Thank you for watching this edition of It depends.