Rumana Mahomed, FPSA®, and Daniel Marsh, FPSA®, discuss testamentary trusts in this video.
A testamentary trust is a trust created through a person’s will and only comes into effect after their death, unlike an inter vivos trust, which is established during a person’s lifetime. Testamentary trusts are primarily designed to protect vulnerable beneficiaries, including minor children and ageing or frail dependants, ensuring that inherited assets are used according to the deceased’s wishes. They can also provide ongoing financial support, such as covering medical expenses, with the will determining how any remaining assets are distributed after a beneficiary dies.
Because the trust deed is effectively the will itself, it is difficult to amend once the testator has passed away, highlighting the importance of careful and comprehensive will drafting. The discussion also emphasises the need to include a robust trust clause, clearly nominate trustees in the will, and confirm that those trustees are willing and able to accept the appointment when the trust comes into existence.
