How it works.
Your will names a trustee and sets the rules: who the trust is for, what the money can be used for, and when beneficiaries receive it outright. After your death, the will goes through probate and the property passes to the trustee, who manages it under your instructions.
Why parents use one.
- Without one, a minor's inheritance can require a court-supervised guardianship of the estate (Texas) or conservatorship (New Mexico), and the child generally receives everything outright at 18.
- You choose the age — 21, 25, 30, or in stages.
- You choose the trustee, who can be someone other than the guardian raising your children.
- The trustee can pay along the way for health, education, and support.
Guardian vs. trustee
Many parents name one person to raise the children and another to manage the money. That separation adds a check and lets each person do what they're best at.
Staged distributions
For example, a third at 25, half the balance at 30, and the rest at 35 — so one mistake at a young age doesn't consume the whole inheritance.
Spendthrift protection
Both states recognize spendthrift provisions, which generally keep a beneficiary's creditors from reaching the trust before money is paid out (Tex. Prop. Code § 112.035; NMSA § 46A-5-502).
Life insurance
Naming the testamentary trust as beneficiary of your life insurance puts the policy proceeds under the same rules, instead of paying a minor directly.
Testamentary vs. living trust.
| Testamentary trust | Revocable living trust | |
|---|---|---|
| Created | In your will; begins after your death | Now; begins when you sign and fund it |
| Probate | Property goes through probate first | Funded property avoids probate |
| Cost now | Lower — it's part of your will | Higher — a separate trust plus funding |
| Incapacity | Doesn't help during your life | Your successor trustee can manage if you're incapacitated |
For many young families, a will with a testamentary trust, paired with life insurance payable to that trust, is the most cost-effective way to protect children.
Pricing.
A simple will is a flat $600 per person. A will that creates a testamentary trust is quoted after your consultation, because the trust terms vary. Related documents are flat-fee:
Texas
New Mexico
Part 1 of the NM Advance Health-Care Directive$150
Part 2 of the NM Advance Health-Care Directive$100
Flat fees are per person and cover preparation of each document. The first hour of an estate planning consultation is free; if a consultation runs longer than one hour and you don't purchase an estate planning package, additional time is $300 per hour, prorated to the nearest quarter hour. Court filing and county recording fees, if any, are separate. Prices effective through December 31, 2027.
Common questions.
At what age should my children inherit?+
Can the guardian also be the trustee?+
What happens if I name my children directly on my life insurance?+
Does a testamentary trust avoid probate?+
Texas estate planning services are provided by Jeff Barnett, Of Counsel (Texas Practice), of Barnett & Leuty, PC, Austin, Texas, licensed in Texas. New Mexico estate planning services are provided by Shawn Barnett, Managing Attorney, licensed in New Mexico. This page provides general information, not legal advice; reading it does not create an attorney-client relationship.