What Are the Advantages and Disadvantages of a Testamentary Trust?

A testamentary trust enables the creator to determine how their money will be distributed at the time of their death, but this is not the right estate planning tool for everyone to use and you should always discuss the specifics of your situation with an estate planning lawyer. Other estate planning strategies might specifically be better aligned for high net worth individuals.

These include living trusts which can be more effective for avoiding the probate process and minimizing estate tax consequences. For those families who have more modern assets, a testamentary trust might be the most appropriate avenue. It is most frequently used when the creator of the trust has minor children and wants to exert some level of financial oversight and control of the assets if both parents pass away while the children are relatively young. A guardian known as a trustee is appointed to manage the trust and that person will be responsible for managing the assets inside. Another common use for a testamentary trust is Medicaid planning, although the specific strategy for this will depend on where you live.

Trusts are a very valuable estate planning tool when you have walked through their purpose and selected the right one with the help of a lawyer. Make sure that you communicate your individual and family goals to an attorney in Pasadena so that your trust and other estate planning tools align.

If you have a loved one who needs government benefits through Medicaid, a Medicaid trust or supplemental needs trust can help the beneficiary afford their necessary expenses without disqualifying them from the benefits they need. Schedule a consultation with a trust & estate planning lawyer in Pasadena, CA to learn more about this process.

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