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Long-term Planning For Orange County
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The basics of testamentary trusts

When California residents create their estate plan, they may sometimes find it difficult to determine if they should set up a trust or use a will. In some situations, people may be able to use both of these options by establishing a testamentary trust.

A testamentary trust is usually created through a will. According to FindLaw, people can specify who will receive their assets and make changes to this plan up until their deaths. A testamentary trust typically takes effect once a person dies. Although most trusts do not need to go through probate, this is not always the case for testamentary trusts. This kind generally goes through probate and is considered an active trust once the probate process has finished.

There are many reasons why people may want to consider setting up a testamentary trust. SmartAsset.com says that although people may lay out their wishes in a will, a testamentary trust can provide more control over the ways these assets are handled. If people have young children, for example, they can generally name a person to manage their children's financial affairs and keep assets safe until the children are old enough to manage their own finances. Parents can also use this trust to specify when their children should receive particular assets. Additionally, people can sometimes choose to fund a testamentary trust with their life insurance.

It is important for people to remember that a testamentary trust may need to be supervised by a probate court. This is usually to ensure that the trustee is carrying out the terms of the trust correctly. Additionally, people typically need to give careful consideration to the trustee they appoint. Because this trustee will not be able to ask questions about the trust once it is formed, it is a good idea for people to pick someone who is capable of monitoring the trust and fulfillilng their requests.

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