Because of the cost and sometimes complicated nature of a revocable living trust, some clients find it preferable to create a testamentary trust, particularly if he or she has minor children. A testamentary trust is a trust created under a will. As such, because wills generally go to probate, the will would need to be filed in the applicable probate court and the property would be distributed pursuant to the terms articulated in the will and trust. Obviously, one of the biggest drawbacks of a testamentary trust is that you or your estate will absorb the cost and aggravation of probate; thus, clients need to weigh whether it is more worthwhile to save and create a revocable living trust.
The basic operation of a testamentary trust is that it first sets aside assets to pay for the last expenses of the decedent. As is usually the case when minor children are present, a separate trust is usually created for each child whereby a nominated trustee holds the property and distributes it intermittently or upon the occurrence of a stated event. If there is a surviving spouse, then a Marital Deduction Trust and Will may likely be needed. It is also not uncommon that most of the ink in the actual testamentary trust provision of the trust will concern the rights, liabilities, and fiduciary responsibilities of the nominated personal representative.