A Trust is a relationship where property is held by one party for the benefit of another party. There are many different types of Trusts. The scope of this section is limited to a discussion of Testamentary Contingent Trusts.
The provisions of a Testamentary Contingent Trust are established in a Will. The Trust is “Contingent” because it only comes into existence upon the occurrence of certain events.
For purposes of this section, a Will containing Contingent Trust provisions is suitable for married couples or single individuals who have young children. If the parents die while the children are young, estate assets are distributed to the Trustee of a Contingent Trust. The Trustee, who can be a friend or family member, or institution, is given legal title to the Trust, but has an obligation to act for the good of the beneficiaries. The Trust is governed by the terms already established in the Will.
During the term of the Trust, the Trustee will be making regular distributions to or for the benefit of the beneficiaries. The broad scope of the distributions is generally for the health, maintenance, welfare and education of the beneficiaries. For example, if the beneficiaries are very young, the Trustee would make distributions to the Guardians to be used to feed and clothe them. As the beneficiaries mature, distributions can be made for private school tuition, college tuition, purchase of a business or home, etc.
At some point, the Trust will terminate. The parents will establish the age(s) for termination in their Wills. Common ages for termination are to distribute half of the remaining assets of the Trust when the beneficiary reaches age twenty-five and the rest at age thirty. The parents can choose any ages they wish based on the maturity of their children.