An example of a testamentary trust is a trust set up by a parent or grandparent for a young child or a person with disabilities, notes HG Legal Resources. Someone else handles the funds in the trust until the child is able to take control of the money.Continue Reading
A testamentary trust is set up by the testator. Until the testator's death, the testamentary trust is reversible and amendable, but after the testator dies, it cannot be reversed or revoked. The testator appoints someone to handle the trust fund and should that person decline the responsibility, the court may appoint someone to perform as a trustee.
This type of trust is usually set up to expire when a person reaches a certain age or when he or she finishes college. Testamentary trusts have their own set of rules and are taxed separately from other trusts. These funds may help pay for a child's specific needs, such as education.
In order to create a testamentary trust, one must consider the possible long-term costs with maintaining the trust. The testator should contact an attorney to have the appropriate paperwork drafted and to talk about the advantages and disadvantages of such a trust. Spouses are encouraged to set up their wills at the same time, so that each mirrors the other, states HG Legal Resources.Learn more about Law