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Estate, Powers and Trusts, § 3-3.7: Testamentary Disposition to Trustee Under, or in Accordance With

There are a variety of goals that you can accomplish with your last will and testament. Typically, the primary objective of creating a will is to memorialize which loved ones are to receive property from your estate. In other words you can create specific bequests to your loved ones. You could also name the person who will serve as your executor. Your executor is the person responsible for managing your estate during probate based on the terms of your will. Another goal that you can accomplish with your will is to create a trust. A trust is an agreement in which a person, referred to as the trustor or settlor, transfers legal title to his (or her) property to a trustee for the benefit of one or more beneficiaries. A trust that is created in a will is referred to as a testamentary trust. A testamentary trust only becomes effective upon your death. While testamentary trusts are often created for the benefit of relatives such as minors, you can also create them for the benefit of any person or an organization such as a charity. In order to ensure that your a testamentary trust is created in the manner that is consistent with New York law, contact an experienced New York will lawyer to discuss your concerns.

Testamentary disposition to trustee under, or in accordance with

Just like a living trust, the property that you can put in a testamentary trust can be just about anything such as personal property like jewelry, an antique car, or other collectibles. You also include stocks bonds and other investments. It is common for houses, condos, and other real estate to be placed in a testamentary trust. Whether the property that is held in the trust is cash, securities, real estate, or personal property, it is up to you as to when the principal or the income of the property is to be paid out to the beneficiaries. You are in control of that.

Reasons to create a testamentary trust

There are a variety of reasons to create a testamentary trust. Whether a testamentary trust is right for you depends on a variety of factors that should be discussed with an experienced New York will lawyer. One of the most common reasons is to hold money and other property for minors. If a testator creates a will while his (or her) children are still minors, it might contain language ordering that all bequests of minor children is to be transferred to a trust and managed for their benefit. The will may further direct that title to the property in the trust is to be turned over to the children once they reach a certain age such as 18 or 21.

Another reason to create a testamentary trust is to provide professional management of property for a person who does not have the ability or time to manage the property themselves. For example, if a beneficiary is mentally incompetent, a trust may be the best way to provide for the person’s future. Similarly, if you have a loved one who may not manage money very well, your testamentary trust can be a spendthrift trust. Spendthrift trusts are designed to help prevent someone from spending money quickly and foolishly.

Creating a testamentary trust

Just like creating any other estate document, it is important that the will and the trust are created with the help of an experienced will attorney in New York. If the will is not properly executed, then the testamentary trust will fail. In addition, a poor drafted will or trust agreement may result in delays in probate as well as disputes among beneficiaries and other interested parties.

Related Statutory Provisions
  1. Who may make wills of, and exercise testamentary powers of: Estates, Powers and Trust, § 3-1.1
  2. What property may be disposed of by will: Estates, Powers and Trust, § 3-1.2
Estate, Powers and Trusts, § 3-3.7- Testamentary disposition to trustee under, or in accordance with

(a) A testator or testatrix may by will dispose of or appoint all or any part of his or her estate to a trustee of a trust, the terms of which are evidenced by a written instrument executed by the testator or testatrix, the testator or testatrix and some other person, or some other person, including a trust established for the receipt of the proceeds of an annuity or pure endowment contract, or of a thrift, savings, pension, retirement, death benefit, stock bonus, or profit-sharing plan or system or a funded or unfunded life, group life, industrial life or accident and health insurance trust although the settlor has reserved any or all rights of ownership of the insurance contracts, regardless of the existence, size or character of the corpus of such insurance trust or other trust;  provided that such trust instrument is executed in the manner provided for in 7-1.17, prior to or contemporaneously with the execution of the will, and such trust instrument is identified in such will.

(b) The testamentary disposition or appointment is valid, even though:

(1) The trust instrument is amendable or revocable, or both, provided, however, that the disposition or appointment shall be given effect in accordance with the terms of the trust instrument, including an amendment thereto, as they appear in writing on the date of the testator's death and, where the testator so directs, including amendments to the trust instrument after his death, if the instrument evidencing such amendment is executed and acknowledged in the manner herein provided for executing and acknowledging the instrument which it amends.

(2) The right is reserved in such trust instrument (A) to exercise any power over any property transferred to or held in the trust or (B) to direct during the lifetime of the settlor or any other person, the persons and organizations to whom or in whose behalf the income shall be paid or the principal distributed.

(3) The trust instrument or any amendment thereto was not executed and attested in accordance with the formalities prescribed by 3-2.1.

(c) The property so disposed of or appointed by will becomes a part of the trust to which it is given, and title thereto vests in the trustee to be administered and disposed of in accordance with the terms of the trust instrument.

(d) Any disposition or appointment to the trustee made by a testator who died prior to the effective date of this §, which would be invalid under the applicable law of this state pre-existing the effective date of this §, shall be construed to create a testamentary trust under and in accordance with the terms of the trust instrument which the testator originally intended should embrace the property disposed of or appointed, as such terms appear in such trust instrument at the date of the testator's death.

(e) A revocation or termination of the trust before the death of the testator shall cause the disposition or appointment to fail, unless the testator has made an alternative disposition.

Contact the Law Offices of Stephen Bilkis & Associates

If you have concerns about the best way to pass property to a loved one, contact an experienced will attorney serving New York to discuss you specific situation. While a testamentary trust has a number of advantages, there may be other options to consider in light of your overall estate plan. The attorneys at the Law Offices of Stephen Bilkis & Associates have years of experience representing clients in matters related to drafting wills and other estate documents, as well as matters related to will challenges, estate litigation, and estate administration. Contact us at 800-696-9529 to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: the Bronx, Brooklyn, Long Island, Manhattan, Nassau County, Queens, Staten Island, Suffolk County and Westchester County.

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