Testamentary trust

What it means

A testamentary trust is written inside the will. It has no assets and no effect until the will takes effect and the estate funds it.

It is commonly used to hold a share for a young beneficiary, or for someone who should not receive a lump sum.

Because it arises out of probate, it is usually subject to more court oversight than a trust created during life.

Why it matters

It does not avoid probate — the opposite: it depends on probate happening.

It is often the right answer anyway, particularly where the only concern is that a child should not receive everything at eighteen.

When you are likely to meet it

• When reading a will that leaves property in trust.
• When a beneficiary is a minor.
• When deciding between a will and a living trust.

How this varies by state

How much continuing court supervision a testamentary trust attracts is set by state law.

Related terms

• GrantorThe person who creates a trust and puts property into it.
• Guardian nominationNaming, in a will, who should raise your children — or care for a dependent adult — if you cannot.
• Pet trustA legal arrangement funding the care of an animal after its owner dies or can no longer look after it.
• ProbateThe court process that confirms who has authority to deal with what somebody owned when they died.
• Revocable living trustA trust you create during your lifetime, keep control of, and can change or cancel at any time. Property held in it does not go through probate.
• Special needs trustA trust that holds money for a person with a disability without disqualifying them from means-tested benefits.
• Spendthrift clauseA term in a trust preventing a beneficiary from selling or pledging their interest, and preventing their creditors from reaching it.
• TrusteeThe person or institution that holds and manages trust property for the people it is meant to benefit.
• UGMA and UTMA accountsCustodial accounts holding money for a child, which the child takes control of outright at an age set by state law.
• WillA written document saying who should receive what, and who should be in charge of seeing that it happens.

Sahvelo guidance that uses this

• Wills and trusts