In my initial conversations with new or prospective clients, I am often asked whether the client needs a will or a trust.  As discussed below, these are not mutually exclusive estate planning techniques, and sometimes the answer is “both”.

Most of my new clients understand what a will is.  Quite simply, a will, when properly drafted and signed by a competent adult, is a legal document which can be summarized as follows:

  • A will provides instructions for how the client’s property is to be distributed following the client’s death.
  • The client is referred to in his or her will as the “testator.”
  • The testator appoints an executor in the will, and the executor is the person named in the will to take control of and distribute the client’s property following the client’s death.
  • Likewise, the executor is required to follow the instructions set forth in the will.
  • To have “legal effect,” the will must be submitted to the appropriate court for the court’s review and approval.
  • This judicial process is known as “probate,” and, to at least a few clients’ surprise, a will does not avoid the need for probate.
  • In contrast, a will has to be probated in order for it to achieve its intended effect.

Fewer clients understand that they can use their will to create trusts for their loved ones.

So, for example, if a testator wants to make sure that his or her property is available to take care of his or her surviving spouse, if applicable, with any remaining property ultimately passing to his or her children, then the testator can accomplish this by including instructions in the will requiring the decedent’s property be placed into a testamentary trust for the benefit of the surviving spouse.

Another common use for a testamentary trust is to take care of beneficiaries with real or perceived limitations.  Since this may be a matter of the client’s opinion and highly subjective, the perceived limitations can include all sorts of scenarios though common concerns include youth/immaturity, substance abuse, an abusive or controlling son-in-law/daughter-in-law/domestic partner and, of course, actual physical or mental impairments.  This type of testamentary trust may provide for distribution of the property placed therein either upon the child attaining a certain age (or ages), over a number of years, when the impairment is removed, or not at all, among various other options.

Regardless of the intended beneficiary or beneficiaries, the testamentary trust must have a trustee which is the person or entity designated for this role by the will.  The trustee can be the beneficiary of the trust and/or another trusted individual and/or a professional trust department, and the testator may include instructions limiting the trustee’s ability to administer the trust property on behalf of the trust beneficiary.

While I can continue to describe endless scenarios where a testamentary trust may be useful, this is a blog and not a treatise, so I will wrap this up for now.  The main point is that a will and a trust can be, and often are, utilized together to accomplish one’s estate planning goals.

To conclude, if you have some questions or ideas as to how a testamentary trust might benefit your surviving loved ones, then give us a call at 512-263-5400, and we will be happy to discuss those questions/ideas with you!

By: Alan Meeks