Under a “simple” will assets are often distributed to the deceased’s children who then own those assets. If a child is involved in a family law property dispute, that child’s assets are exposed to the claim. Creditors can also claim against your child’s assets (which include your former assets) – as to which see further Asset Protection.
Your children may also “blow” their inheritance for which you worked so hard. But if your estate is left in a Testamentary Trust, it will be protected and conserved.
So, if your assets are gifted to your children so that your children own them, third parties (creditors) may claim against those assets.
If, however, assets are gifted to a testamentary trust over which your spouse and/or your surviving children have control (not ownership), then because the trust and not the children own the assets, third parties may not be able to seize the assets.
In the will you may impose conditions on how and when the testamentary trust makes distributions to the trust beneficiaries (who may be your spouse and/or children) which your spouse and/or children themselves may control or you may appoint others to this position.
A standard will afford none of these protections. A will with a testamentary trust gives control of the assets in the trust to your appointed trustee (surviving spouse or surviving children) but does not gift assets to them so that these assets are protected from third party claims.