Trusts — Alternatives
Testamentary Trust Instructions
A Testamentary Trust isn't a Trust at all, but instead is Instructions for the terms of a Trust to be created in the future through the Probate of your Last Will and Testament. Unlike a Revocable Living Trust (RLT), it does not exist during your lifetime — it springs into existence only after you die and your Will is admitted to Probate.
Cost savings is the only reason to kick the can down the road and create a Testamentary Trust — and cost savings is irrelevant with Legal Insurance, which negates the only possible reason for creating Testamentary Trust Instructions.
Revocable Living Trusts (RLTs) are considered the gold standard because they completely bypass the costly, slow, and public court process of probate. Testamentary Trust Instructions, which are built into a traditional Will, only take effect after you die and after your Will goes through Probate Court first.
How Testamentary Trust Instructions Work
Your Will names a Trustee and sets out the terms of the Trust — who the Beneficiaries are, what the Trust assets may be used for, and when distributions are made. When you die, your Estate goes through probate, and the Probate Court transfers the assets into the Trust according to your Will's instructions.
Because the Trust is created through Probate, the Court retains ongoing oversight. The Trustee may be required to file annual accountings with the Court, which adds administrative cost and reduces privacy compared to a Revocable Living Trust.
Why Testamentary Trust Instructions Are Inferior
- ✕Requires Probate: The Trust does not exist until your Will is validated by a probate judge.
- ✕Delayed Funding: Inheritances are frozen in court for months before reaching beneficiaries.
- ✕Public Record: Your private assets, debts, and distribution plans become public court documents.
- ✕Higher Fees: Executor fees, court costs, and ongoing probate attorney fees drain the Estate.
- ✕No Disability Protection: It offers zero management for your assets if you become incapacitated while alive.
Why RLTs Are the Gold Standard
- ✓Bypasses Probate: Assets transfer immediately and privately to your beneficiaries outside of court.
- ✓Total Control: You retain full ownership, ability to amend, or completely dissolve the Trust anytime.
- ✓Privacy Assured: Your asset distribution, values, and beneficiary identities remain entirely confidential.
- ✓Incapacity Planning: Specifies a successor Trustee to manage your finances instantly if you get sick.
- ✓Harder to Contest: Because it is an active operational contract during your life, it is much tougher to overturn than a Will.
Direct Comparison
| Feature | Revocable Living Trust (RLT) | Testamentary Trust |
|---|---|---|
| When it takes effect | Immediately during your lifetime | Only after death and probate |
| Probate court required? | No | Yes |
| Privacy level | High (completely private) | None (public court record) |
| Protects during incapacity? | Yes | No |
| Upfront setup cost | Higher | Lower |
Have questions about whether a Revocable Living Trust is right for your family? Schedule a free Zoom consultation with Christopher.