Creating a Testamentary Trust in Your Will
When a parent dies, leaving a minor child, they usually want to leave something for the minor that will become their's at age 18. But, most parents do not feel their children are competent at the age of 18 to handle large sums of money, or expensive property, and prefer that it be held until they turn 21, 25, 30 or even older. This money is kept in what's called a testamentary trust (or children's trust).
A testamentary trust is created when you die, and is used to hold property for someone else's benefit. For instance, if you leave $10,000 to your 12-year-old child, you could have the property placed "in trust" and name someone to take care of that property for your child until certain conditions are met (e.g., your child reaches a certain age).
The person that manages this trust is called a trustee. The trustee may be the same person nominated to raise the minor children as a legal guardian or it may be someone else that has a better grasp of how to handle money or property. It is advisable to name an alternate trustee if your first choice is unable to serve. Many rules govern a trustee's behavior. For example, the trustee must act in the best interest of the beneficiary. The trustee cannot mishandle the property or use the property for his or her own benefit, but it is possible to leave the trustee a stipend, or payment, from the trust to compensate for their work.