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Protection From Beyond the Grave – Testamentary Trusts

In last week’s blog post, we took a closer look at the Revocable Living Trust and explored some reasons that you may want to utilize one when creating your estate plan.  As a refresher, a trust is essentially a contract between three parties.  The person who creates the trust is known as the Grantor.  Upon creation of the trust, the Grantor must then choose a person(s) or entity, called the Trustee, who will manage and distribute the assets of the trust. Finally, the person or persons who will benefit from the trust are called beneficiaries.

In addition to the Revocable Living Trust, another type of trust that is often utilized in estate planning is the Testamentary Trust.  Unlike a Living Trust, a Testamentary Trust is instead created upon the death of the grantor.  Additionally, the terms and conditions of the trust, as well as who will serve as Trustee(s) and who will be Beneficiaries of the trust are all contained in the Grantor’s Last Will and Testament.  All Testamentary Trusts are irrevocable, however, the terms of a Testamentary Trust will typically outline how the trust is to be managed and the circumstances under which the trust will terminate.

There are many reasons why an individual may want to create a Testamentary Trust.  One of the most common instances is where one or more beneficiaries are minors.  Rather than having a large amount of money or assets pass directly to a minor child under a will, a Testamentary Trust will allow a trustee to be in charge of managing and distributing the assets of the decedent as specified under the trust agreement contained in the will. These trusts may also be utilized when a person has a child with drug or alcohol problems or a child who has money management issues. Since a trust can contain very specific instructions, conditions and time frames for distributions of assets , it can allow an individual to protect his or her loved ones from “beyond the grave.”

One additional type of trust that can be created under a person’s will is a “Special Needs” or “Supplemental Needs” Trust.  This trust is specifically designed to help take care of loved ones who were born with a disability or are otherwise receiving Social Security Supplemental Security Income (SSI).  Once created, this specialized trust will allow a disabled child or adult to continue to receive government benefits that would have otherwise been lost due to excess resources.  Consequently, the trust must be carefully drafted to prevent a beneficiary from becoming over-resourced, while at the same time providing specific instructions for allowable monetary distributions for education and training, vacations, entertainment, furniture, clothing, etc.

At Zacharia Brown, when we are advising clients on a “Special Needs” or “Supplemental Needs” Trust, we stress the importance of choosing a trustee who has particular expertise in the stringent rules governing these trusts.  If the trust is not administered properly, the results can be disastrous for your loved one.  Our experienced attorneys work closely with all of our clients when creating trusts to ensure that all details are taken care of.  Contact us at 724.942.6200 or visit us at PittsburghElderLaw.com  to schedule an appointment and learn about trusts today.

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