A trust is a formal arrangement made with a trusted person, or trustee, which conveys property as directed by you. Trusts can be created during your lifetime, which is known as an inter vivos trust. But trusts can also be created upon your death. Such trusts are known as testamentary trusts, and as is the case with most everything in this world, there are positives and negatives that go along with it.
A testamentary trust is created through your Last Will and Testament. As the Will does not go into effect until the time of your death, the trust does also not exist until then. Generally, these trusts are created for young children, relatives with disabilities, and others who may be inheriting a large sum of money.
So, why should you create a testamentary trust?
Testamentary trusts, as an item in your will, fall under the jurisdiction and oversight of the judge and the court. This gives your trust several extra pairs of eyes that determine whether legal requirements have been met. Oversight also ensures that your trustee will cooperate accordingly, lest they violate a mandate of the court.
This is particularly helpful, as it ensures that your wishes will be followed to the letter and that your beneficiaries will not have to deal with any daunting issues brought about by mistakes in fulfilling legal requirements.
As this is an item in your Will, the trust is funded during probate, and thus falls under probate proceeding. During the probate proceedings, assets will be transferred to the trust by a probate lawyer. As it is passing through probate court, the trust will also be held to the Florida probate filing fee. Probate also takes time, with small estates lasting in probate court for over a week, while medium-sized to larger estates can take up to two months.
Also, the terms of your testamentary trust will be a matter of public record, so anyone can see what you’re looking to do with your money. This can be a con for anyone who values their privacy.
At the end of the day, whether a testamentary trust or an inter vivos trust is right for you is dependent upon your personal preference. Do you want to avoid probate? Do you think you’ll need court oversight? Is having your trust as a matter of public record problematic for you? Once you answer those questions, you’ll have a better understanding of what kind of trust you want, and how the process will work for you and your trustees.
The Orlando Law Group specializes in the creation of both inter vivos and testamentary trusts. Call us today at 407.512.4394 to schedule a consultation.