A Testamentary Trust is a specific type of trust that is created within a Last Will and Testament and comes into effect upon the death of the testator (the person making the Will). It is a legal arrangement that allows for the management and distribution of assets for the benefit of designated beneficiaries. Unlike an inter vivos trust, which is established during the lifetime of the grantor, a testamentary trust is activated upon the testator’s passing and is subject to the terms and conditions outlined in their Will.
How it Differs from a Standard Will
While a standard Will simply outlines the distribution of assets list of azerbaijan whatsapp phone numbers directly to beneficiaries after the testator’s death, a testamentary trust adds an additional layer of control and protection. Instead of transferring assets outright to beneficiaries, a testamentary trust holds those assets in the trust, with a designated trustee managing them on behalf of the beneficiaries. The trustee is bound by the terms specified in the Will, ensuring that the assets are used and distributed according to the testator’s wishes.
The testamentary trust provides several key advantages over a standard Will:
Asset Protection: By placing assets in a trust, they are shielded from potential creditors, lawsuits, and other financial risks that the beneficiaries may face.
Tax Planning: Testamentary trusts can be structured to minimize tax implications, potentially reducing estate taxes, income taxes, and capital gains taxes.