Happy Sunday!

Every month all of the attorneys on the team get together for a happy hour.

It’s a great time to bond outside of work.

And, although we are outside of the office, we invariably talk about estate planning and probate subjects (we’re law nerds in the office and out of the office – you never lose that).

This week at our happy hour we somehow got to talking about testamentary trusts, and why I hate them. :)

So I thought I’d share those thoughts with you.

First, what is a testamentary trust?

A testamentary trust is a trust that is put inside of a will. It is a singular document, called a will, and inside of that document is all of the language you’d put into a standalone trust.

Pretty straightforward, right?

Now, here’s why I hate them. Two reasons why I hate them.

First, with a testamentary trust you have no privacy.

When you die your Will is required to be filed with the court. When that happens it becomes a public document.

Now everyone knows who your kids are and that they’ll have access to assets at 25, 30, and 35 (or whatever your trust directs).

With a standalone trust ALL of that is private.

Second, with a testamentary trust you MUST go through probate.

See, the trust doesn’t exist until you die. So nothing can move into the trust after you die.

The only way to do that is with probate (you can’t use beneficiary designations, etc., because there is nothing to designate – the trust doesn’t exist yet).

No one wants to go through probate. It’s expensive and takes a long time.

And, if you’re going to pay for a trust and set one up, you might as well get the full benefit.

That’s why I hate testamentary trusts.

Now, if you are a client of ours, you might be wondering “do I have a testamentary trust?”.

If we created your plan, the answer is 100% no.

I won’t let you do it. :)

That’s how much I hate them.

Rant over. :)

Have a great week!

Cheers.

Christopher Small
Founder/CEO
CMS Law Firm LLC

PS – don’t keep this estate planning stuff to yourself – you know it’s important and we LOVE referrals!