What does a testamentary trust entail?

A testamentary trust is specifically a type of trust that is established through a will and comes into effect only upon the death of the grantor (the person who created the trust). This means that the trust's provisions are not active during the grantor's lifetime; rather, they are executed after the grantor has passed away. It is designed to manage and distribute the grantor's assets according to their wishes stated in the will.

The nature of a testamentary trust allows for a clear structure for asset management and distribution for beneficiaries, which might be minors or individuals who require guidance in managing their inheritance. This trust can include specific instructions about how and when the assets should be distributed, providing an effective way to control the use of the trust assets long after the grantor’s death.

In contrast, a trust created during the grantor's lifetime, a charitable trust, or one established solely by a judge does not fit the definition of a testamentary trust, emphasizing the importance of understanding the unique characteristics of different types of trusts in estate planning.