Idaho Estate Planning Using a Testamentary Trust as Part of Your Will

By Lane V. Erickson, Idaho Estate Planning Attorney

The fact that you are reading this article is a good sign you have an interest in your estate planning. My goal through the articles that I write, and post is to provide answers to many of the questions I am asked by the clients I meet with about Idaho estate planning. Today’s article is focused on describing how a testamentary trust can be used as part of your last will and testament.

The purpose of a last will and testament is to give an individual the ability to provide instructions on who they want their money, property, and other assets to be transferred to when they die. In other words, a Will is all about giving your stuff to other people after you pass away. The problem is, sometimes there are people we want to give stuff to, but we can’t give it directly to them for different reasons.

We don’t expect you to understand when you should and shouldn’t give property directly to someone. We also don’t expect you to understand when a testamentary trust might be helpful to you, your family or loved ones. We help our clients determine if a testamentary trust is needed by having them fill out our free Estate Planning Questionnaire. You can download a copy for yourself. It comes as a PDF document and is fillable which means that you can type directly into it with the information it asks you to provide.

You’ll see that the Questionnaire is simple to fill out and asks you to describe yourself, your children, your other family members, and any other individuals that you may want to leave a portion of your estate to. We also ask specific questions about the people that you want to appoint to various positions by describing what those positions are and how they can be helpful to you and your loved ones.

You can download and save the Questionnaire to your computer and then email it back to us when you have it filled out as best you can. We then schedule a free 30-minute consultation in our office, by phone or by video call, which you prefer. During this free consultation we go over the information in your Questionnaire and ask you specific questions to help us know what is important to you and what you want to accomplish. One part of this discussion is all about trusts, including testamentary trusts.

The most common and frequently used types of testamentary trusts are usually focused on helping minor aged children, who are children under the age of 18, or children or other family members who may have a disability or handicap. This could also include family members who have addictions, or other destructive behavioral issues. In all of these circumstances, many people feel that leaving money or property directly to such a person through a Will could lead to a bad result.

For example, with minor age children if you leave a portion of your estate directly to them in your Will that money or property is actually given to their legal guardian until they reach the age of 18. When that person reaches the age of 18 the guardian has no choice. They are required by law to deliver to that person whatever it is that you’ve left them in your Will. For most people this is a bad idea. In other words, most parents would agree that children who reach the age of 18 aren’t mature enough yet to handle a lump sum distribution of money or property, even if it is small. A testamentary trust can be used for minor aged children to determine the age at which distributions will actually be made directly to them. In the meantime, the trust could be used to help the child with their education, their health, their maintenance and support based on the description and instructions left in the trust.

Likewise, if you have a family member or a loved one who has a disability, they may be receiving benefits from a federal or state program. Leaving money or property directly to this person may cause them to lose those benefits. Or, if they have addictions, you may not want to leave a lump sum of money or property directly to them because it may only feed their addictions.

In all these circumstances you can use a testamentary trust in your Will that will hold the money or property you want to be used for this person without giving it directly to them. You also have the ability to provide specific directions on how and when the money or property will be used and whether it will ever be distributed directly to these individuals.

The second thing that you should know about a testamentary trust is that it’s only actually created and used if it’s needed. For example, if you set up a testamentary trust in your Will for your children because they are under the age of 18, you could specify that a distribution be given directly to this child at the age of 25. If you live for a couple of more decades before you pass away, and your child is now over the age of 25, then the testamentary trust is not needed because the distribution can already be given directly to that child when you die.

The idea behind a testamentary trust is that it is used when it is needed. If it is not needed, then it is simply ignored. Really this means that you get the best of both worlds. You can create a plan that can be used if needed, but if not needed you fall back to the regular plan stated in your Will.

Finally, you have the ability in your Will to state specifically who will be appointed as the trustee of your testamentary trust if it is needed. This person could be the person you appointed as your personal representative or it could be an entirely different person. You can decide who you want to appoint as the trustee and as the successor trustee.

In other words, you stay in complete control of when and whether your trust is set up at who will be in charge of administering the trust based on the directions you leave. As with other Truss, if the individuals you named as trustees are either unable or unwilling to serve, and there are no named trustees, then the beneficiaries of a trust will have the ability to nominate a person who can be appointed as the trustee by a court.

Testamentary trusts can be a useful estate planning tool. If you have questions about whether a testamentary trust is right for you, we can help. We’ve assisted numerous individuals in adding a testamentary trust as part of their Will and we are confident that we can answer your questions and help you too.

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.