A testamentary trust might be a key part of an estate plan
December 22, 2025
In New York, many people view estate planning as either having a will or a trust. The choice is often based on which is deemed better for their situation. The easiest estate planning document to use is a will. However, people with more complicated circumstances could want to establish a trust.
But in some instances, the individual wants a combination of both. A testamentary trust could be useful for people who want to maintain a semblance of control over how assets are distributed. It will also be a protective device over the assets. There are other benefits. But before moving forward with this type of estate plan, it is vital to have help with deciding if it is the wisest option.
How does a testamentary trust work?
The testamentary trust is part of the will. It will go into effect after the person has died and the will has gone through probate. This is an important distinction because many people choose a trust instead of a will specifically to avoid probate.
Still, the testamentary trust gives the testator substantial benefits of both a will and a trust. They can control how the assets will be distributed. If, for example, the heir is under 18 or is not of sufficient maturity to handle the new responsibilities regardless of their age, then the trust can distribute them through a trustee. It can also be used for those who have special needs and even for pets.
The testator will select a trustee to oversee the assets. It should be a person who will adhere to the testator’s objectives and understand their goals. A key part of a testamentary trust is that the testator can update it as needed. It is also easier than a creating a trust.
Experienced advice can help with creating the ideal estate plan
Whether to use a will or trust is up to the individual and how they want to distribute their assets. Myriad factors will be considered as they decide what best suits their needs. A testamentary trust might be beneficial, but it is not necessarily for everyone. For guidance, it is important to have advice from experienced professionals who understand all areas of estate planning.
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After agreeing to be an executor of your loved one’s estate, you likely saw it as a final act of love. However, this role comes with fiduciary responsibilities you must meet. Under the eyes of New York law, you must act with care and diligence that a prudent person would exercise in managing their own affairs. Committing a mistake could make you liable for losses. Understanding the breach of fiduciary duty Fiduciary duty refers to the strict legal obligation to manage a decedent’s estate with loyalty, care and good faith. Failing to uphold this can cause the beneficiaries, heirs or creditors of the estate to sue you for a breach of fiduciary duty. Common pitfalls can include: Stealing or mismanaging the estate funds Refusing to communicate or update interested parties Delaying the estate administration unreasonably Selling estate assets under market value Favoring one interested party more than the other Committing any of these mistakes can make an interested party prove that you are unfit for the role, removing you from your position as executor. Protecting yourself from errors Despite the difficulties involved, you still want to honor the wishes of your loved one. Start by being proactive. Here are a few tips you can consider to move forward: Research laws related to estate administration. Document all actions you take during the probate process . Work with professional appraisers to accurately value complex assets. Never mix estate funds with your own. Taking the role of executor can be a heavy burden to carry, but you do not have to face this alone. Seeking legal guidance from an attorney can be a valuable resource. They can offer helpful insights on maintaining your fiduciary duty.
In New York, there are many people who have substantial assets that they want to pass along to loved ones after they are gone. This is why it is so important to move forward with comprehensive estate planning strategies. However, there are common missteps people might make because they are not fully aware of the law and the available options. Estate taxes are a primary concern. While the basic exclusion amount where people can avoid paying an estate tax on what they have inherited is currently at $7.35 million, a testator still must be cognizant of pitfalls that could leave loved ones with an unexpected tax bill. This is when they should know about the New York estate tax “cliff” and how to avoid it. Estate tax can be unexpected and costly Under state law, if an estate goes beyond the excluded amount and reaches 105% of its value, then the entire value of the estate can be taxed. Currently, that means that if a person’s estate is worth $7.7 million or more, they will need to pay the estate tax. It can come to a significant amount. There are, however, ways to avoid the estate tax “cliff.” Among the available options are lifetime gifting, a spousal trust, irrevocable trusts, or so-called “Santa Clauses” by having charitable bequests. With lifetime gifting, the taxable estate can be reduced. New York does not have a gift tax. It does have a claw back if the gifts were given within three years of the person’s death. Spousal planning would include a bypass trust. After a spouse dies, their assets up to the relevant estate tax exemption would be put in a trust for the survivor to use as needed. The “Santa Clause” will gift the amount that goes beyond the exemption to charity. The tax would then be eliminated, and could be avoided. Preparing for estate taxes and avoiding them A critical part of estate planning is understanding the nuance and aspects that people frequently forget. That includes taking steps to make sure heirs will maximize what they retain without needing to worry about massive payouts in estate taxes. For help with considering the available options, it is important to have qualified assistance from experienced professionals who provide experienced representation and personal service.
As you embark on your estate planning journey, you might find yourself concerned that those close to you will wind up challenging its validity. They might do so because they’re disgruntled with what they’ve received as an inheritance, or they’re made because they’ve been cut out of the asset distribution scheme altogether. Regardless of their justification, their attempts to invalidate your estate plan documentation can put your vision of the future in jeopardy. How can you reduce the risk of an estate challenge? Fortunately, there are several steps you can take to reduce the risk of your estate plan being successfully challenged. These include: Visiting your doctor close in time to your estate plan’s execution so that they can create medical documentation that specifies your mental clarity at the time Utilizing multiple witnesses during the execution of estate plan documentation so that they can attest to your mental state at the time of your estate plan’s creation Avoiding over involving the person who is set to inherit the most from you in the estate planning process so that you don’t give the perception of undue influence Writing down your justifications for why you’re distributing your assets in the way dictated by your estate plan Using no-contest clauses to dissuade disgruntled heirs from challenging your estate plan documentation Modifying your estate plan when warranted to do so Naming an estate executor and trustees upon whom you can depend Discussing your intentions with your family members Know how to protect your interests throughout the estate planning process There’s a lot to think about as you navigate the estate planning process . While that can seem daunting at first, you can break the process down into more manageable pieces. Your estate planning attorney can assist you with this so that you’re making the informed decisions that advance your interests.
In New York, many people boil estate planning down to the simplest solution. Namely, that is a will. However, there will be different circumstances and situations that warrant flexibility when crafting a plan. For some, a trust might be a better option. But they can also use the Uniform Transfers to Minors Act (UTMA), which is not a formal trust. If a person has a minor child or a relative under 18 or 21 who they are concerned about and want to care for, they can establish a trust for them. However, if the person providing the funds and assets dies or becomes incapacitated before the minor becomes an adult, they will need to have a custodian to oversee it. This is a key role, and it is imperative to name a trustworthy person to perform it. Factors to consider when nominating a custodian Under New York State law , the custodian will oversee the assets for a specific amount of time. It could be until the minor is 18 or 21. The custodian will control the property, handle the funds, invest it in reasonable ways, and use it to benefit the minor. That can include their education, health care, ensuring they have a safe environment, and distribute funds to their benefit as the custodian sees fit. The custodian is obligated to maintain records of all steps and transactions they take in overseeing the property. In total, the custodian is expected to protect the interests of the minor even if the minor objects. The grantor needs to pick someone they believe will focus on the minor and ensure they are adequately cared for. In some cases, there are objectives the grantor wants to be met like enrolling in college. The custodian can be entrusted with ensuring that happens before releasing funds to the minor. Once the minor reaches the predetermined age when they are no longer under the custodian’s care, the assets will transfer to them. Understand the various factors involved with a trust under UTMA Using UTMA could protect a minor and establish conditions until they reach adulthood. However, this could be a risk. In some instances, the minor might have technically become an adult, but they are not yet prepared to handle the freedom that accompanies access to a significant amount of money and assets. When weighing options with how to protect minors as part of an estate plan , having professional assistance can give guidance and advice based on the circumstances.