Question 1: What is a testamentary trust?
A testamentary trust is one commonly used form of trust, so-named because you create it through the terms of your last will and testament. Unlike a living trust, a testamentary trust is created after you die.
Question 2: How do I create a testamentary trust?
In order to create a testamentary trust, you will have to provide key information in your last will and testament. Just like every other trust, a testamentary trust requires you to name a trustee, beneficiary, and terms. Because you can only make a testamentary trust in your will, you must ensure that you create the will properly. If, for example, you fail to meet state legal requirements about will creation, the trust will likely fail because the will isn’t valid.
Question 3: Can I change the testamentary trust?
Yes and no. Because testamentary trusts do not come into existence until after you die, you will not be around to change the terms. Also, you cannot create a testamentary trust that gives your trustee the ability to change terms, though the trustee can have other powers as he or she manages the trust.
If you want to change the terms of the testamentary trust you have to modify them through your last will and testament. This usually requires you to create either a new will or an amendment known as a codicil. All such changes must meet the legal requirements of your state or they will not be enforceable.