BOZEMAN — Montana State University Extension has released a new MontGuide fact sheet discussing testamentary trusts.

Dr. Marsha Goetting (MSU Photo)
Dr. Marsha Goetting (MSU Photo)

According to Marsha Goetting, MSU Extension family economics specialist, a person can create a testamentary trust in a written will. A testamentary trust is one that is established according to the instructions contained in a last will and testament. The will maker names a trustee to manage the assets on behalf of the beneficiaries, adds co-author, Edwin Eck, Professor Emeritus in the Alexander Blewett III School of Law at the University of Montana.

“A person can change the terms of the testamentary trust at any time before death by making a new will or adding a codicil to the existing will,” Goetting said. “A codicil is a supplement, amendment or addition to a will. The codicil may explain, change, add to, subtract from, qualify, alter or revoke provisions in a will."

One use of a testamentary trust is to provide property management for a beneficiary who lacks management experience. For example, Montana law permits minor children to inherit property. Although a court may appoint a conservator to manage the child’s inherited property, the conservatorship ends when the minor child reaches age 18. The conservator then releases the property to the child.

“Some parents and grandparents consider 18 to be too young for a child to take control of a large sum of money or other property. These relatives may choose to leave assets in a testamentary trust for the child’s benefit,” Goetting said. “The child may receive income from the trust for purposes outlined in the will. Then the trustee can give the money or property when the child achieves financial maturity.”

Another use of a testamentary trust is to care for a disabled spouse. A caregiver may create a testamentary trust in the caregiver’s will to benefit the caregiver’s spouse. The trustee named in the will manages property for the disabled spouse who does not have the capacity to make financial decisions. The trustee can also use the funds to pay for health insurance and living costs for the surviving, disabled spouse.

Additional information about testamentary trusts is available from MSU Extension at Paper copies are available from county or reservation Extension offices.

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