Testamentary Trusts and Life Insurance

Описание: Attorney Dan Krause talks about why testamentary trusts are important in estate planning. Dan also talks about how to take the very important step of changing beneficiaries on life insurance if you have a testamentary trust as part of your estate plan.
A testamentary trust is a trust that is created after death by a person's last will and testament in order to hold assets for a young or disabled person.
While we use "testamentary trust," this can also refer to a beneficiary trust created in a Revocable Living Trust.
This gives the ability to have a trusted person or institution (bank trust company) hold the assets until the child is mature enough to handle managing the assets themselves. Or, in case of a disabled beneficiary, perhaps for life. The assets in the trust may be used for schooling, medical treatment, food, clothing, shelter, etc. until the child reaches a mature age like 25 or 30, or whatever age is chosen by the person who made the will.
Once a person signs a will or Revocable Living Trust with testamentary trust provisions, it is important that they change their life insurance beneficiaries to coordinate with the plan. Instead of naming children as direct beneficiaries, you can include this language in the beneficiary designation form: "My trustee to fund trusts for the benefit of my children as set out in my Last Will and Testament," or "My trustee to fund trusts for the benefit of my children as set out in my Revocable Living Trust."

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