As lawyers, we get so used to using terms that we often don't think to explain the terms we use. An example of this is when we talk about living trusts and testamentary trusts.
A living trust is a trust that you set up and fund (at least partially) during your lifetime. This kind of trust comes into existence while you are still alive.
A testamentary trust is a trust that you create through the terms in your will. Because a will has no effect until you die, a testamentary trust is not considered as being made during your lifetime even if you sign the will directing that the trust be set up at your death. You may want to create a trust in your will for tax purposes or because there are minor or disabled persons who may inherit from you or because you feel that one or more beneficiaries would not be able to manage the inheritance on their own.
A really interesting aspect of testamentary trusts is that at times it is possible to accomplish objectives through a testamentary trust that cannot be accomplished through a living trust. For example, if you live in Virginia and are concerned that your spouse may need longer term care and you don't want your spouse's ownership of assets or receipt of an inheritance to pay for expenses that Medicaid could be expected to cover, you can set up a Special Needs trust that will be more effective if created in your will than if created during your lifetime.
An elder law attorney can help you decide whether you need a trust and, if so, whether it should be a testamentary or living trust and what terms to include.
