Testamentary Trusts are trusts that are in a Last Will and Testament. These Trusts have Settlors (who set up the Trusts by writing them in their Wills), Trustees (who manage the Trusts after the Testator passes away and the estate has been administered) and beneficiaries (who receive benefits from the Trusts). Testamentary Trusts can be used to take care of assets for minors (who may be children or some other relative of the Testator), to take care of assets for an individual with special needs, or to take care of a pet. Testamentary Trusts may be set up for some other purpose, such as for charity.
Testamentary Trusts only go into effect after the death of the person who wrote the Will (the Testator). These trusts are only funded after the estate of the Testator has been administered, which means that the assets have been collected, the debts and taxes are paid and the remainder is distributed outright or in trust to the named beneficiaries. Once funded, the Trustee may only use the trust funds as permitted by the Trust. For example, a support trust for a minor child can be used by the Trustee to pay for the child's health, education, maintenance or support. This means that the Trustee could pay for things such as clothes, medical care, college or post high school education. The Trustee is not allowed to use the Trust funds for the benefit of anyone but the named beneficiary.
To determine if Testamentary Trusts are appropriate as part of your estate planning, it is best to discuss your family situation with an experienced elder law attorney.