Minor Children – Parents of minor children often establish testamentary trusts for minor children who cannot hold and manage assets. A testamentary trust for a minor child can be arranged so that the child will not receive the full value of their inheritance until adulthood. Such a testamentary trust can be arranged so that the child will receive their inheritance in stages – for example, the trust can be arranged so that the child will receive 50% of their inheritance when they reach adulthood and then the other 50% when they reach the age of twenty-five. Trustees of such trusts are typically authorized to distribute money at any time for different reasons such as to provide for any education or health care needs that the child may have. Trustees can be authorized either to pay only income made on the trust or to also pay out the capital making up the trust.
Beneficiaries with Disabilities – Persons making wills may establish testamentary trusts for beneficiaries with disabilities. Trustees of such trusts are typically given absolute discretion as to how much they distribute to the beneficiary so as to maximize any government disability benefits that are received by the beneficiary.
Spouses – Persons making wills may establish spousal trusts if their estate is expected to be large, there are children from a previous marriage, or the would-be beneficiary spouse is sick, incapacitated, or otherwise unable to adequately manage finances. This kind of trust can provide income from a deceased spouse’s estate to a surviving spouse until the surviving spouse dies, at which point the trust property can be distributed to other beneficiaries.