Testamentary trusts are created under a last will and testament, and become effective after the grantor’s death.
Careful planning for your assets can save you and your heirs from having to “probate your assets” and may save your beneficiaries time, court costs, and attorney’ fees. When leaving gifts to children under eighteen years old, a testamentary trust can be useful in avoiding the cost and burden of a financial guardianship for the child’s share.
A Living trust is different because it becomes during the grantor’s lifetime and has two distinct planning formats:
- Revocable trust allow the grantor the rights to revoke the trust after it becomes effective and modify its terms or provisions.
- Irrevocable trusts prevent the grantor from revoking the trust after it becomes effective or to modify its terms or provisions. This type of trust is often complex and may require intensive review and professional advice, including CPA’s and tax lawyers.