Testamentary Trust

Also known as: Trust created by will

In one sentence

A trust created within a will that takes effect after the person dies.

Plain English

A testamentary trust is a set of instructions written into your will that creates a trust only after you pass away. Unlike a living trust that operates during your lifetime, this trust springs into existence when your will is executed (carried out). It allows you to leave money or property to beneficiaries under the management of a trustee, often useful when leaving assets to minor children or people who need financial guidance.

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Example

In her will, Sarah established a testamentary trust leaving $200,000 for her two young children. The trust names her brother as trustee to manage the money and distribute it for the children's education and living expenses until they turn 25.

Used in a sentence

“The testamentary trust in his will ensures his grandchildren's college education is funded and managed by a responsible trustee.”

Related terms

Executor

The person appointed to carry out the instructions in a will.

Probate Estate

Property owned by a deceased person that passes through the court-supervised probate process.

Disclaimer

A legal refusal by a beneficiary to accept an inheritance or gift.

Revocation

An offeror's withdrawal of an offer before it's accepted, ending the power to form a contract.

Marital Deduction

A federal tax benefit allowing unlimited transfer of property between spouses without estate or gift tax.

Probate

The court process of validating a will and distributing a deceased person's estate.

Intestate Succession

The legal process of distributing a deceased person's property when they leave no valid will.

Elective Share

A surviving spouse's right to claim a portion of the deceased spouse's estate despite the will.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.