How do we set up a testamentary trust?

A fellow caregiver asked...

My father included a testamentary trust in his will. Once we probate the will, how do we set up the testamentary trust? What do we do after probating the will?

Expert Answer

Liza Hanks is the founder and owner of FamilyWorks Estate Planning, a law firm with offices in Campbell and Los Altos, California, and the author of The Busy Family's Guide to Estate Planning (Nolo, 2007).

Once probate is finished, you'll need to get a taxpayer ID number from the IRS for that testamentary trust. You can do this online at the IRS website or over the phone by calling 800-829-4933.  

You will need to supply basic information about the trust and the trustee who is in charge of managing the assets. Once you get the ID number, called an Employer Identification Number or EIN, the trustee can open bank accounts or brokerage accounts to hold the assets in that trust.

After that, the trust will be a U.S. taxpayer, and the trustee will be responsible for filing an annual 1041 trust tax return. The terms of the trust should identify the beneficiaries of the trust and direct how the money can be used for their needs. The trustee must keep very good records of all the money invested and distributed.