What is a testamentary trust?

A testamentary trust is a type of trust that is created through a will and goes into effect only after the death of the person who created the will, known as the testator. This trust is designed to manage and distribute the testator's assets according to their wishes, as specified in the will.

The key feature of a testamentary trust is that it does not start functioning until the death of the testator, which distinguishes it from other types of trusts that may be established during the lifetime of the individual. Because it is part of the will, the terms and conditions of the trust, including who the beneficiaries are and what assets will be placed in the trust, are explicitly laid out in the testamentary document.

While a testamentary trust can provide benefits to various types of beneficiaries, including minors or individuals requiring special care, its fundamental characteristic is its establishment through a will and activation upon the testator’s death. This mechanism allows individuals to ensure their wishes regarding asset distribution and care for dependents are followed even after they are no longer alive.