Let’s cut through the #lawland jargon: a trust is simply a legal arrangement where one person (the trustee) holds and manages assets for the benefit of others (the beneficiaries). It’s not a company. It’s not a bank account. It’s a legal way to manage assets, like money or property, with built-in rules.
At the core, every trust has:
✅ Trustee who is the person (or company) in charge of managing the assets.
✅ Property the assets held by the trust.
✅ Beneficiaries who are the people who can benefit from assets held by the trust.
✅ Rules which are often set out in a trust deed or will.
So why do people use them?
Top 3 Reasons People Set Up Trusts
1. Tax Flexibility
Trusts give you the option to distribute income in a tax-effective way. For example, you might be able to allocate income to family members in lower tax brackets.
2. Asset Protection
A well-set-up trust can protect assets from creditors, bankruptcy, or even relationship breakdowns. That’s huge when you’re thinking long term, especially if your kids aren’t quite “money wise” yet or don’t make the best relationship choices.
4. Support for Vulnerable Beneficiaries
If a beneficiary is too young, financially immature, has a health issue or going through a tough time (like a divorce or legal battle), a trust can hold off on giving them a lump sum and protect the gift.
So What Is a Testamentary Trust?
A testamentary trust is one created in your Will and only kicks in when you pass away. You get to set rules about how your assets are managed and distributed after you’re gone.
Think of it as your backup plan for the people you love. It’s one of the most powerful tools in estate planning, but most people still don’t know it exists.
Unlike a basic will that just says, “give my house to my son,” a testamentary trust allows for:
✅ Smarter tax strategies (especially if minor kids are involved)
✅ Better protection from lawsuits or messy divorces
✅ Long-term control over how your assets are used
Who’s It For?
If any of these sound like you, a testamentary trust might be worth discussing:
✅ You’ve got kids or grandkids under 18
✅ You’re leaving assets to someone with financial, legal, or relationship challenges
✅ You want to pass on a business, property, or inheritance of more than $500,000
Want to Know If It’s Right for You?
If you’re already doing the responsible thing by having a Will, you’re ahead of most people. But adding a testamentary trust could be the difference between protecting your legacy and handing over a legal mess and big tax bill.
Want to know if a testamentary trust makes sense for you? Click here to fill out this short form and we’ll review your situation.
