Question: Does a testamentary trust go into effect during or after probate? Do the responsibilities of a testamentary trust’s trustee begin after the will is filed for probate or after the probate process has been completed?
Loraine’s Answer: When used to describe a trust, the word “testamentary” often means that the trust is created by a Will, and that the terms of the trust are contained in the Will itself. When a testamentary trust is created by a Will, the trust goes into effect when the Will is admitted to probate, not before. Once the appropriate court has admitted the Will to probate, which means that the Will has been determined to be valid and that it has become legally binding, any testamentary trusts that are created by the Will can take effect, and the nominated Trustee can then begin to act with regard to the trusts. Please note, however: Just because a testamentary trust becomes effective when the Will has been admitted to probate, it does not mean that the trust is also immediately funded at that time- the funding may not be fully completed until the estate administration has been largely completed. If a trust is created by a Will, it is usually critical for the Executor of the estate and the Trustee nominated for the trust to work together to ensure that the trust is set up and funded correctly. Testamentary trusts are often used to provide for the benefit of surviving minor children, but they can also be used to provide an array of benefits for a surviving spouse, for adult children, or for other beneficiaries.
Trusts can also be “living” trusts (sometimes called inter vivos trusts). These are generally created by a document that is not a Will- often called a “trust agreement” or “declaration of trust.” A living or inter vivos trust takes effect during the Trust’s creator’s lifetime (Grantor), usually as soon as the trust agreement has been signed by the Grantor, unlike a testamentary trust that only takes effect when its Grantor dies. Inter vivos trusts can be either revocable or irrevocable. By default, testamentary trusts are irrevocable, since the Grantor is not alive to revoke them.
Key Estate Planning Takeaway: If you are nominated to serve as a Trustee, either under a Will or under a living trust document, it’s important to hire an experienced probate and trust attorney to help you understand how the trust works and your responsibilities as Trustee.
This “Q&A with Loraine” blog series features answers from Morgan + DiSalvo Partner Loraine DiSalvo to questions posted on www.avvo.com. A key takeaway from each exchange highlights an important facet of estate planning.