A testamentary trust is created by a will. The will itself contains language that creates the trust and since a will does not become effective until death, the trust does not exist until death. Because of this, the assets that will eventually be passed into the trust through the will must first pass through probate.
There is no unnecessary expense to maintain or operate the trust during the estate owner's lifetime since the trust does not become effective until after the estate owner's death. Once established, the trust becomes irrevocable (cannot be changed or terminated).
Typical reasons to use a testamentary trust include:
- Provide flexibility as to property distribution and management;
- To control property for minors, spendthrifts, or incompetent individuals, and
- Provide life estate to one beneficiary with the remaining trust property passing to someone else at the income beneficiary's death.
State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company
(Licensed in New York and Wisconsin)
Home Office, Bloomington, Illinois
IL - 32
State Farm Bank®, Bloomington, Illinois, is a Member FDIC and Equal Housing Lender. NMLS ID 139716. The other products offered by affiliate companies of State Farm Bank are not FDIC insured, not a State Farm Bank obligation or guaranteed by State Farm Bank, and subject to investment risk, including possible loss of principal invested. Contact State Farm Bank toll-free at 877-SF4-BANK (877-734-2265). Callers who are hearing or speech impaired should dial 711 or use a preferred Telecommunications Relay Service.