Many people believe that their only option to plan their estate is to create a Will. While Wills are generally the most foundational estate planning document, there are other options that may be right for you. One such choice is a Trust Fund. There are many types of Trusts available, so understanding your choices is critical if you’re considering establishing one. One such choice you should look into is a Testamentary Trust Fund. The following blog explores how these work and what you should consider when establishing a Trust. You’ll also discover how a Medina County, Ohio Trust preparation lawyer can help you establish these documents to ensure they are legally binding.
How Does a Testamentary Trust Work?
A Testamentary Trust is a kind of Trust Fund that works in tandem with the Will of the deceased. Unlike other Trusts that are established by the creator prior to their passing, Testamentary Trusts are established upon the passing of the estate owner. As the Trust is established in conjunction with your Will upon your passing, it is an Irrevocable Trust. This means the terms and conditions of the Trust cannot be changed once it is established. Even though it cannot be changed, an Irrecovable Trust offers additional protections from creditors, as the assets held in an Irrevocable Trust are not considered part of your estate. As such, they cannot be accessed by creditors should a lawsuit be filed against your estate.
How Do I Know if This is Right for Me?
Typically, these kinds of trusts are beneficial for those with minor children. When you create a Will, leaving assets to minors can pose a wealth of problems. You’ll need to appoint someone to manage these funds on behalf of your children until they become legal adults when they are legally entitled to the full funds. It’s no secret that giving 18-year-olds large sums of money can have negative outcomes, so creating a Testamentary trust allows you to ensure the funds are held for them until they are ready. One stipulation you can create is waiting until the child reaches a certain age, like 21 or 25, before they can take over control of the funds. Before then, the Trustee appointed can manage the funds in the best interest of the child.
Another benefit of this kind of trust is that it can help reduce your estate taxes. As mentioned, a Testamentary Trust is Irrevocable, so the assets are not considered part of your estate. This means their value is not taken into consideration when determining estate taxes, allowing your Beneficiaries to reap the full benefits of their inheritance.
Creating a Trust Fund is something you should consider for a number of reasons. Not only can it help ensure that your beneficiaries are protected, but it can help ensure your assets are too. If you’re interested in establishing a Testamentary Trust Fund in Ohio, ensuring you have an experienced attorney from Krause Law to guide you through this process is critical. Connect with us today to learn how we can assist you in this process.
