Testamentary Trusts

Joe and Catherine had been able to build up their savings plans for retirement, but they were still unsure of their needs and whether they had provided adequately. They were deeply involved with a charitable organization that had made a significant difference in their lives and they wanted to give back in support.

Joe: "It's hard sometimes to make plans because you don't always know what's going to happen in the future. If you try to plan for everything, you become afraid to make a decision."

Catherine: "We take care of my little sister who needs additional help in life. If something happened to us, we would want that support to continue for her."

Joe: "At the same time, should circumstances change, we might need more of our assets than we think we will. We can't make an irrevocable decision and then regret it later."

Catherine: "Our advisor suggested setting up a charitable remainder trust to provide income for my sister. But, to keep flexibility, the trust won't be created until we pass away. This way, we can keep control of our assets and know that when we're gone, my sister will have income for life from the trust and after she goes, the trust assets are paid to our charity."

A testamentary trust only becomes effective and irrevocable at the time of your death. For Joe and Catherine, their will creates a testamentary charitable remainder trust and funds it from specified assets at their death (second to die) . The trust will then pay Catherine's sister an income for her life based on the value of the assets in the trust. When Catherine's sister dies, the assets remaining in the trust will pass to the charity Joe and Catherine have named.

If circumstances change in the future, Catherine and Joe can change their will. And they retain control over the assets during their lives to allow them the flexibility they need.

Now click here to meet Susan and Fred and learn more about charitable remainder trusts.

Please note, individual financial circumstances will vary. The information on this site does not constitute legal or tax advice. Donor stories and photographs are for purposes of illustration only. As with all tax and estate planning, please consult your attorney or estate specialist. All material is copyrighted and is for viewing purposes only. Use of this site signifies your agreement with the terms of use. The content in this Planned Giving section has been developed for Benedictine Health Foundation by Future Focus. Please report any problems to section webmaster. Revised: June 14, 2006 22:30.