Everyone knows what a Last Will and Testament is, but did you know that you can set up a trust in your United Kingdom will? You can. Trusts of this type go by the name of testamentary trusts, but some people refer to them as will trusts or trusts under will.
SmartAsset.com explains that, just like with a living trust, you can make changes to your testamentary trust any time you wish during your lifetime by simply changing your will. Contrary to your living trusts, however, your testamentary trust only comes into existence once you die.
Your testamentary trust involves the following parties:
- You as the grantor, also called the settlor
- Your designated beneficiary who ultimately will receive the trust’s assets
- Your designated trustee who will manage the trust’s assets until (s)he distributes them to the beneficiary
- The Probate Court
Creating the trust
Actually, you can establish more than one testamentary trust in your will. For instance, if you have young children at the time you make your will, you may wish to set up a testamentary trust for each child so (s)he does not receive its assets until (s)he reaches whatever adult age you specify. You can specify in your will how and to what extent the trustee should spend the assets or the income they produce for the benefit of any underage child until (s)he becomes old enough to receive the assets themselves. In addition, you can specify that one of the assets can be the proceeds of your life insurance policy or policies.
Bear in mind that one possible downside to a testamentary trust is that it must go through probate since it is part of your will and therefore your estate. If the trust needs to remain in existence for many years due to the young ages of your children when you die, probate court costs could add up and deplete the ultimate value of the trust.
This is general educational information and not intended to provide legal advice.
