Testamentary Trust Example in Florida: A Plain Guide

What is an example of a testamentary trust? A testamentary trust is a trust created inside a will. It takes effect only after the person who made the will dies. Here is a simple case: a parent’s will leaves part of the estate to a trust for young children, and a named trustee manages the money until the children reach ages the parent chose. This guide walks through that example and the Florida rules that apply. Trust Counsel, PL is a Coral Gables firm that focuses on trusts and estates matters.

A Simple Example of a Testamentary Trust

The clearest testamentary trust example is a will that holds money for children until they are older. Picture a parent who writes a will with three parts. The first part names a trusted sibling as trustee. The second part leaves a share of the estate to a trust for the parent’s two young children. The third part sets the schedule: one-third at age 25, one-third at age 30, and the rest at age 35.

Three roles matter in this example. The parent is the person who made the will, called the testator. The sibling is the trustee, who holds and manages the trust property. The children are the beneficiaries, who receive money under the trust’s terms.

The trust does not exist the day the parent signs the will. The will creates it, and it takes effect at the parent’s death. A trust may be created by transfer of property to a trustee, including by will or other disposition that takes effect at the settlor’s death. Fla. Stat. § 736.0401

This example is only an illustration. The exact words of a real will control what happens, and every family’s situation is different.

What Is a Testamentary Trust?

A testamentary trust is a trust that a will creates, and it begins only when the will-maker dies. The trust’s instructions usually sit inside the will itself. They are not in a separate trust agreement signed during life.

A living trust works differently. A living trust, also called an inter vivos trust, is created and funded while the person who creates it is alive. That person, called the settlor in Florida law, moves property into the trust during life. A testamentary trust waits. Its property generally reaches it through the will and the probate process, although certain life insurance and death benefits may be paid directly to a trustee named in a will, outside probate (Fla. Stat. 733.808).

Trusts can be set up in several ways. The method matters because it decides when the trust starts and what paperwork it needs. Property can pass at death through a will, but it also passes outside a will, through funded living trusts, beneficiary designations, POD/TOD accounts and survivorship titling.

How to Know If a Trust Is a Testamentary Trust

A trust is testamentary when the will itself creates it. Start by reading the will. If the will says property goes to a trustee to hold for named people after death, the trust is testamentary.

Look for a few clues. First, check for trust language inside the will, such as a clause that holds property in trust for named beneficiaries after death. Second, check whether the family signed a separate trust document during the parent’s life. If no such document exists, the will probably holds the whole trust.

Sometimes the trust terms sit in a separate document. Florida law allows a gift by will to a trustee in that case, and the conditions for it are set out in Fla. Stat. 732.513.

Family members often use the word “trust” for any clause that holds property. The document’s own words matter more than the label. Questions about how a trust is classified come back to the document and Florida law.

What Are the Requirements for a Testamentary Trust?

A testamentary trust needs a valid will and the basic elements Florida requires for any trust. Each piece has its own rule.

The will must be in writing. The testator must sign at the end, or someone else must sign the testator’s name in the testator’s presence and at the testator’s direction. Florida’s will-execution rules, set out in Fla. Stat. 732.502, require attesting witnesses but also allow a testator to acknowledge a prior signature before the witnesses, and they recognize a nonresident’s will that was valid under the law of the place where it was executed, except a holographic or nuncupative will; electronic and remote witnessing are addressed in Fla. Stat. 732.522 and chapter 117.

The trust itself has its own tests. Under Fla. Stat. 736.0402, the requirements for creating a trust include a settlor with capacity who intends to create it, a definite beneficiary or a listed exception, and trustee duties to perform. The same person also cannot be both the sole trustee and the sole beneficiary.

The purpose must be lawful. Under Fla. Stat. 736.0404, a trust’s purposes must be lawful, not contrary to public policy, and possible to achieve.

Timing matters too. Under Fla. Stat. 733.103, a will is effective to prove title once it is admitted to probate in Florida or in the state where the decedent was domiciled. A person named as trustee does not take on the role automatically; whether and how the trusteeship has been accepted can depend on the terms of the trust and on what the named trustee has done.

How to Set Up a Testamentary Trust

You set up a testamentary trust by writing its terms into a will that meets Florida’s signing rules. The drafting work is where most of the choices get made.

Start by writing the trust terms into the will. Include the trust’s purpose, the trustee’s powers, and the ages or events for each distribution. Next, name a trustee and a successor trustee, in case the first choice cannot or will not serve.

Name each beneficiary clearly. According to ACTEC’s video on trusts for children, trusts can control when and how beneficiaries receive assets, and the settlor’s wishes should be clearly stated in the trust document.

Sign and witness the will the way Florida law requires. A will that is not properly signed cannot carry the trust. Store the original where it can be found, and tell the named trustee that the will exists.

Choices such as the trustee’s powers and the distribution ages depend on the facts of the family. Those choices should be made with the family’s real situation in view.

Does a Testamentary Trust Avoid Probate?

Generally, no. A testamentary trust usually goes through probate first, because the will must be admitted before it can move property. Florida law says that until a will is admitted to probate, it cannot prove title to or the right to possession of the testator’s property.

After the will is admitted, the estate’s assets are administered. The personal representative (often called an executor) gathers the probate assets and carries out the will’s instructions. Assets that the will directs into the trust then pass to it. A personal representative’s compensation is governed by Fla. Stat. 733.617, which addresses compensation for ordinary services.

A funded living trust is different. Property moved into it during life can be managed under that trust, rather than through the probate estate.

What Assets Are Not Part of a Probate Estate?

Assets with a named beneficiary usually pass outside the will. Retirement accounts and life insurance policies often name a beneficiary on a form. The form, not the will, controls those assets.

For co-owned property, the form of title matters: under Fla. Stat. 689.15, a right of survivorship exists where the instrument expressly provides for it, as in a joint tenancy with right of survivorship, or where spouses hold as tenants by the entirety, and such an interest generally passes to the surviving owner outside probate; a tenancy-in-common interest carries no survivorship right, so it is usually administered in the owner’s estate unless, for example, it is titled in the name of the trustee of a funded trust or is protected homestead that descends under Fla. Stat. 732.401.

Assets held in a funded living trust are generally managed under that trust. They do not pass through the probate estate.

Reading each account and deed helps show which assets the will actually controls.

Who Serves as Trustee and What the Role Involves

A trustee manages trust property and makes distributions under the trust terms and Florida law. Under Fla. Stat. 736.0701, a person named as trustee accepts the trusteeship by substantially complying with a method of acceptance provided in the trust instrument or, if the instrument provides no method or the method is not exclusive, by accepting delivery of trust property, exercising powers or performing duties as trustee; a designated trustee who does not accept within a reasonable time after learning of the designation is deemed to have rejected the trusteeship.

Trust Counsel’s attorneys can serve individually as trustee or personal representative. The firm advises and represents trustees, personal representatives and beneficiaries. The firm itself does not serve as trustee or personal representative.

Pay for the role follows the trust terms first. If the terms do not specify the trustee’s compensation, a trustee is entitled to compensation that is reasonable under the circumstances.

Courts have a role in some matters. A judicial proceeding may review trustees’ fees, appoint or remove a trustee, or settle accounts. Fla. Stat. § 736.0201 A trust is not under continuing court supervision unless a court orders it.

Talk With a Coral Gables Trusts and Estates Attorney

If you found a will with a trust clause you did not expect, you may feel stuck. Maybe you are reading a parent’s will after a death and trying to understand what the trust means for the children. Or you are planning a trust for a minor child and wondering whether it must wait until death.

You don’t have to sort out these questions on your own. Call (305) 707-7126 or schedule online through the contact page. Our only office is in Coral Gables, Florida. Leslie V. Marenco is the attorney responsible for this page. The first consultation is free, confidential, and carries no obligation to continue.