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New York Testamentary Trust Will

A testamentary trust is commonly included in estate plans. Also known as a will trust or a trust under will, a testamentary trust is created by the terms of a will and provides for the distribution of an estate or part of an estate into a trust when the person who created the trust dies. Testamentary trusts are commonly used to create a trust to provide for a loved one who has special needs. This type of trust is known as a supplemental needs trust or a special needs trust. Testamentary trusts are also created to provide for children who stand to inherit from your estate before reaching age of majority. Some testators create testamentary trusts to benefit charitable organizations. A testamentary trust can even be set up as a “pet trust” to set aside property to be used for the care and needs of your pets. To learn more about the specifics of setting up a testamentary trust, contact an experienced New York testamentary trust will lawyer at the Law Offices of Stephen Bilkis & Associates.

Creating a testamentary trust

A testamentary trust is a trust contained in a last will and testament that provides for the distribution of all or part of an estate in to a trust that is created by the will. There may be more than one testamentary trust per will. Just like any other trust, there are 4 individuals or groups of individuals involved in a testamentary trust: the trustmaker, trustee, and beneficiary. The grantor, also known as the trustmaker, settlor, grantor, or creator, is the person who creates the trust to transfer his or her assets to the beneficiaries. The trustee is the person who will manages the assets or the funds involved in the trust based on the terms of the trust agreement, for the benefit of the beneficiary. The beneficiary or beneficiaries benefit from the trust. Beneficiaries of a testamentary trust are usually minor children or family members with disabilities. Beneficiaries can also be pets or charitable organizations.

To create a testamentary trust in a will, the testator, who is also the grantor of the trust, must designate a trustee and specify the beneficiaries. The testamentary trust must be contained in the grantor's will, so the trust can be created upon the grantor's death. You can create more than one testamentary trust in your will.

A testamentary trust is not automatically created upon the grantor's death. While other types of trusts such as living trusts may avoid probate, a testamentary trust must go through the probate process. When the grantor dies, the executor that he (or she) named in his will will initiate the probate process by filing the will with the Surrogate’s Court along with a petition for probate. Once the will is admitted to probate, the administration process can begin. He executor must inventory the assets in the probate estate, including any assets that are designated to fund the testamentary trust. He (or she) must also address claims against the estate, pay estate debts and expenses, and pay any taxes owed. Finally, the executor will distribute estate assets according to the terms of the will. At this point the executor will transfer to the trust assets that are designated for transfer to the trust will be transferred to the trust. If there are any other assets, the executor will distribute them according to the terms of the will. Practically any type of asset can be used to fund a trust, including stocks, bonds and other investments, houses, condos, and other real estate, cars, jewelry, and other property.

The trustee then takes over management of the assets transferred to the trust. He (or she) will generate distributions based on the terms of the trust. Since distributions from testamentary trusts are commonly not immediate, the trustee will be responsible for ongoing management of trust assets for the benefit of the beneficiaries until the trust terminates.

For example, Carol decided to include a testamentary trust in her will. At the time she created the will and trust, she had a 7-year-old daughter, and she wanted her daughter to receive her assets. Carol designates her sister, Lisa, as the trustee of her testamentary trust. With the help of an experienced testamentary trust will attorney in New York, Carol specified that upon her death, Lisa will manage her assets for the benefit of her daughter until her daughter reaches the age of 21. Carols want Lisa to be in charge of giving her daughter monthly income for education and expenses. When her daughter turns 21, she will receive the remaining assets, and the trust will terminate.

Role of the will

A will is essential to a testamentary trust. Unlike a living trust, a testamentary trust cannot be created during the grantor’s lifetime. It can only be created through a will, after the death of the testator/grantor. This means that in order for the trust to come into existence, the will must be valid. If the will is deemed invalid, then the trust will never be created. Reasons that a will might be invalidated include improper execution, lack of testamentary capacity, undue influence, fraud, and duress.

If a will is invalidated, not only will the trust no be created, your estate may be subject to New York’s intestacy rules. This means that your property will be distributed to your next of kin based on the rules of intestate succession. Your children are your next of kin, so your children will still receive your property. If your children are minor, their property will be managed by a guardian until they turn 18. However, if you wanted more controls over your children’s property, such as distribution at the age of 21, or conditions placed on distribution, that will not happen under intestate succession rules. Furthermore, if a purpose of your testamentary trust is to provide for your pet or a charitable organization, that will not happen if your will is invalidated. Thus, as an experienced New York testamentary trust will lawyer will explain, it is critical that your will is drafted and executed in a manner that is consistent with New York’s requirements.

Selecting the trustee of a testamentary trust

You, as the person creating the trust, may choose anyone to fill the role as trustee as long as the person is at least 18-years-old and is mentally competent. However, it is important to choose someone who you trust to act in the best interests of the children or others receiving the trust funds. A trustee can also be an institution. For more information about selecting a trustee, including a corporate trustee, contact an experienced New York testamentary trust will lawyer.

You should also name an alternate or successor trustee in case for any reason, the person chosen declines to take on the responsibility of trustee or is unable to. Otherwise the Surrogate’s Court will appoint a trustee.

Difference between a testamentary trust and a living trust

While both types of trust are effective ways to transfer wealth to others, there are major differences. A living trust, also called a revocable trust or an inter vivos trust is created while the grantor is still living. While the grantor includes the terms of a testamentary trust in his will, it does not come into existence until after the death of the grantor and the will is probated. A living trust is also funded during the lifetime of the grantor, otherwise it would be ineffective. On the other hand, a testamentary trust is not funded until after the death of the grantor and the will is probated.

A living trust avoids probate. Because the property that is transferred to a living trust during the lifetime of the grantor is not longer probate property, those assets avoid probate altogether. Probate assets must first go through the administration process before they can be transferred to a testamentary trust and before they can be distributed to the trust beneficiaries.

Contact the Law Offices of Stephen Bilkis & Associates

If you have questions related to creating a will that includes a testamentary trust, contact the Law Offices of Stephen Bilkis & Associates. With over 20 years of experience representing individuals, executors, trustees, beneficiaries, and heirs, we have the knowledge and resources to help you create a trust, a will, and overall estate plan that is consistent with your goals and the requirements of New York law. Contact an experienced testamentary trust will attorney serving New York in our office at 1-800-NY-NY-LAW (1-800-696-9529) to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: Manhattan, County, Suffolk County, Queens, Bronx, Brooklyn, Long Island, Staten Island, and Westchester County.

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