Testamentary Trusts

Testamentary trusts are created by a will to provide a greater level of control over the distribution of assets to beneficiaries. There are also tax advantages available through testamentary trusts, making them an effective estate planning tool.

Pros:

• Trickle the Inheritance: A testamentary trust allows the Grantor to control how and when a beneficiary receives their inheritance. Whether a monthly distributions, or lump-sums once they reach milestones.
• Tax Advantages: When trust beneficiaries receive distributions from the trust’s principal balance, they don’t have to pay taxes on the distribution. The IRS assumes this money was already taxed before it was put into the trust. After money is placed into the trust, the interest it accumulates is taxable as income—either to the beneficiary or the trust.