Setting up a testamentary trust is a wonderful way for protecting your property and passing it on to your progeny.
Back in the days during the feudal period, in England, the landowner would leave his estate to go and fight in the Crusades. Before they left, they would assign their property to a trusted person to keep and care for until hey got back. This would be on the promise that they would get the property back when they returned.
English common law did not recognize these arrangements, and often, when the landowner returned from the Crusades, his trusted acquaintance would not give his property back to him. Unfortunately, the crusader had no legal recourse. His only alternative was to petition the king who referred him to his Chancellor. The chancellor had the authority to decide what was “just and equitable.” He would consider it “unconscionable” that the present owner could renege on their promise to relinquish the property back to the original owner. Therefore, he would decide in favor of the crusader.
This became known as the Lord Chancellor’s court. He would continually decide in favor of the Crusader.
The Crusader became the “beneficiary’ and the companion became the “trustee.” Over time, this process developed into what we know as the trust.
Today, we have all kinds of trusts. One common trust is called the “testamentary trust.”
The word “testamentary trust,” means trust in a will.
The testamentary trust is created by rules spelled out in a person’s’ will and is activated upon the person’s death. This trust addresses an estate acclimated by a person over that person’s lifetime. Its purpose is to pass on property to someone, like a child or infant. The property is kept safe until that child or infant is capable of taking care of themselves.
The testamentary trust is concerned more about property than tax advantage.
The person who is responsible for the care of this property until the trust is active is the trustee. They are usually controlled by a “letter of wishes,” which accompanies the trust. These are the desires of the grantor in the mater of the trust.
Probate courts are necessary components in a testamentary trust, as they must assure that the trustee is fulfilling their obligation.
It is important to note that a trustee of a testamentary trust must meet regularly with the probate court to prove that they are handling the trust in accordance with the grantor’s wishes. This will probably result in considerable fees if the trust lingers on for a while. These fees are deducted from the principle of the estate.
If you have valuable property and wish to pass it on to your children who are too young to take advantage of it now, you might consider a testamentary trust. These trust are part of a will and are more interested in taking care of a young person or infant, rather than tax advantages.
By setting up a testamentary trust, you can leave property to a specified beneficiary after your death and assure it gets to them rather than being distributed by probate to persons you do not wish to have it.