The distinguishing characteristic of a testamentary trust is that it is created in your will. Therefore, unlike a living trust, you cannot be the beneficiary; the beneficiary or beneficiaries will be other people or institutions. The principal of a testamentary trust can be anything you would deposit into any other trust, that is, any property that you own or have a future interest in:
While most people set up testamentary trusts to benefit their families, you may name anyone a beneficiary, including friends, the college you attended, or even a pet. For example:
You can direct in your will that an investment portfolio that generates income be deposited into a trust and direct that the income go to your wife and/or your children and/or a friend.
You can direct in your will that the title to your antique car be deposited into trust and be given to your best friend’s son when he reaches 16.
Note that after your death, use of the property in or receipt of income from the trust passes to beneficiaries as part of the probate process. If your will is challenged, enforcement of the trust may be delayed, or even denied, should your will be declared invalid.
Yes, as with a will, you may amend or revoke a testamentary trust at any time prior to your death. This is because prior to your death, the trust doesn’t yet exist, and the property that will become part of the trust after your death is still yours during your life. Once you die, a testamentary trust becomes unchangeable and irrevocable, unless you direct the trustee as to why, when, and how it may be amended or revoked.
