How to Provide for Irresponsible Beneficiaries: Testamentary Trusts
Most of us want our wealth to provide for our loved ones after we die; however, problems can arise when a beneficiary is not responsible with money. You want to provide for them, but you do not want them to waste away their inheritance and be left with nothing. How can you provide for your loved one without fear of them blowing all of their inheritance at once? One solution is to create a testamentary trust.
What is a Testamentary Trust?
A testamentary trust is a trust that you provide for in your will. Unlike a living trust, the trust is created after you die and your will is probated.
Who Are These Trust Created For?
Typically, people create testamentary trusts to provide for minor children until they reach a certain age. However, a testamentary trust can also support irresponsible adult children, loved ones who have a disability, or a surviving spouse.
Do Testamentary Trusts Avoid Probate?
No. testamentary trusts do not avoid probate. The trust is established after the will has been probated. Then they are supervised by the court until the termination of the trust.
How Long Do Testamentary Trusts Last?
Testamentary trusts can last for as long as you like. Typically, these trusts last until the beneficiary reaches a certain age or dies.
How Much Does A Testamentary Trust Cost?
Testamentary trusts generally cost less to create than a living trust but more than a basic will. However, because testamentary trusts are court-supervised, there are court fees on top of standard trust administration costs. In North Carolina, the maximum annual accounting fee for testamentary trusts is $6,000, while the minimum is $20. The fee depends on the amount of new property that comes into the trust, usually money from investments.
Should I Create A Testamentary Trust?
In determining whether a testamentary trust is suitable for your estate plan, you should consult a licensed estate planning attorney. An estate planning attorney can discuss with you all of the pros and cons of having a testamentary trust and help you decide if it is the best choice for your unique situation. If you have any questions regarding testamentary trusts, if you want to talk with someone about whether a testamentary trust is suitable for your estate plan, or any other estate planning questions or concerns, please reach schedule a time to talk with me.