• Catherine Spain

Updated: Oct 9, 2019

Many people understand that by setting up a revocable living trust as part of a trust-based estate plan, they can simplify the probate of their estate when they die, lightening the load for their survivors. Not as many people may know that they can instead opt to put a testamentary trust inside of the Last Will & Testament of a will-based estate plan, which will subject the trust to probate court supervision.

Surprising to readers may be the fact that a mere provision inside a Last Will & Testament can qualify as a trust. A trust does not have to be a stand-alone document. Also surprising might be the idea of voluntarily subjecting a trust to probate court supervision. Considering that testamentary trusts are commonly used to provide for minor or disabled children, however, it is not surprising that court supervision may be desired.

A trust involves three parties: The trustor who creates the trust, the trustee who manages the assets held in trust (“corpus” or “res”), and the beneficiary for whom the trust is established. A testamentary trust will not take effect until the trustor dies, after which the estate executor will transfer property from the estate into the trust. While the testamentary trust is in effect, the trustee will manage the assets and the probate court will require periodic accountings.

The probate court may also be needed as problems arise. For example, if the appointed trustee declines to serve, the probate judge will appoint a new trustee, usually after holding a hearing to identify an appropriate person. At the trust's expiration, which is usually tied to a specific event such as the beneficiary graduating from college or attaining a certain age, the court will oversee the transfer of what remains in the trust to the beneficiary.

The word “testamentary” derives from the Latin testamentum, to bear witness, and witnesses remains central to what makes a will a will. (While including witnesses in the signing of revocable living trusts is recommended, it is not universally required.) In Connecticut, a Last Will & Testament must be witnessed and signed by two competent adults.

Witnesses help to ensure the validity of the document, and after overseeing many will signings over the years, I think of witnesses not as bystanders, but as active participants in a legacy-defining rite. This is especially clear when the will contains a testamentary trust.

  • Catherine Spain

Updated: Oct 9, 2019

Behold the step-up in basis! Property owned at death is valued at fair market value, regardless of when the decedent obtained it, eliminating capital gains, and saving heirs in capital gains taxes. Had the decedent sold the property during his lifetime, he would have had to pay capital gains tax on any increase in the property's value. The capital gains taxes are forgiven when he dies, however, because property owned at death receives a step-up in basis.

  • Catherine Spain

“Do-it-yourself” estate planning is popping up everywhere, with various companies and websites claiming to provide forms that allow you to create your own will, trust, or contract without hiring a lawyer. If a lawyer were the same as a scrivener, using forms from a website might make sense. But a lawyer is so much more than a scrivener.

A lawyer is a counselor and advisor with whom you build a relationship of trust over time. A lawyer values you not as a customer, but as a client to whom she owes professional duties of confidentiality and care. For example, a good estate planning attorney will not simply ask for your wish list and transform it into a legal document. Rather, she will engage you in a meaningful dialogue about your individual and family goals. She will focus on key issues that may be facing you, your family, and your future. She will talk to you about possible solutions, and explain how customized legal documents can solve particular problems or address certain issues you may or may not be aware of.

As another lawyer once put it: "Improper drafting and execution is the biggest risk for the do-it-yourself estate planner.  Wills are among the most solemn and important legal documents.  Because they represent the wishes of a person after death, they must be drafted with precision and executed properly."

Instead of taking your chances with online templates, consider enlisting the services of a qualified estate planning attorney who will spot issues for you and your family over time, even over generations. Remember, a good lawyer values you as a client to whom she owes professional duties of confidentiality and care.