Testamentary Trust

Testamentary trusts are trusts that take effect at your death. Although you may desire to make a substantial gift to the Marriott School, your circumstances may not allow you to complete such a gift until you have provided for your spouse or others.

Charitable Remainder Unitrusts, Charitable Remainder Annuity Trusts, Charitable Lead Trusts, Charitable Gift Annuities, and nonqualified trusts can be established by Will or Revocable Living Trust at your death. As an example, you and your spouse can arrange to create a charitable remainder trust when the last of you dies to provide income to your children for 20 years, after which the amount left in the trust will go to benefit the Marriott School. A substantial part of the value of the asset transferred can avoid estate and gift taxes.

The typical donor:

  • Needs assets available during life
  • Wants to benefit heirs first with an income stream followed by a significant gift
  • Creates a gift as part of an overall estate plan

Gifts features and benefits:

  • Full or partial gift or estate tax deduction
  • Flexible estate planning
  • All assets available during life
  • Revocable during life

How Do I Make a Gift of a Testamentary Trust?

Gifts made through a testamentary trust should be structured as part of your overall financial and estate plan. They can be an integral part of your gift planning and also meet the special needs of your heirs. Because these gift types may be complex, you should always involve your legal and financial advisors to implement a workable plan. LDS Foundation’s professional staff is available to counsel with you and your advisors in meeting your goals.

Other Facts You Should Know about Testamentary Trusts

Testamentary trusts often mesh with other aspects of an individual’s overall estate and gift plan. Here are a few related concepts to consider:

Generation-skipping trust is a trust that transfers payment down to grandchildren. For example, a grandmother creates a trust giving income to her children and the trust assets ultimately to her grandchildren. Because she “skipped” her children and passed the property to the next generation, there are special limitations and transfer taxes that should be considered.

Incapacity is the lack of legal ability or power to do something. Examples might be a minor child that does not have the legal right to vote or make contracts, or an intellectually handicapped child that has special needs after you are gone, such as income for life.

Spendthrift trust is a special-needs trust in which a trustee looks after property or other assets on behalf of a person who spends money unwisely. This arrangement protects a person’s property against himself or herself, or against creditors.

Sprinkling trust is a trust that gives the trustee discretion to distribute income to many people at different times. This mechanism is often used to make distributions “as needed” to children or grandchildren for purposes such as schooling or missions.

Will substitutes include devices such as life insurance, joint-ownership of property, trusts, and other devices to partially eliminate the need for a will.