What is a testamentary trust?

A testamentary trust is a specific type of trust established in a will that takes effect only after the death of the individual who created it, known as the testator. This means that the terms and conditions that govern the trust are set forth in the will, and the trust assets are managed by a trustee as per the instructions outlined therein.

The primary purpose of a testamentary trust is to manage and distribute a deceased person's assets according to their wishes, often providing for minor children or dependents until they reach a certain age or fulfilling other familial obligations. Since the trust is created by the will, it does not come into existence until the testator passes away, which is a critical aspect of what defines a testamentary trust.

In contrast, other types of trusts, such as revocable or irrevocable trusts, are generally created and take effect during the grantor's lifetime. A testamentary trust is unique in that it relies on the will to be established, distinguishing it from those other trust formations.