Testamentary Trusts

A testamentary trust is a type of trust that doesn't go into effect until the grantor (the person who made the trust) dies. Usually this type of trust is made within a will—often to create a trust for minors. When a trust is included in a will, the trust isn't actually created until the will goes into effect (after the will maker's death).

Compared to Living Trusts

Non-testamentary trusts take effect when the grantor signs the trust, has it notarized, and transfers property into the trust. This type of trust is called an "inter vivos" or "living" trust because it goes into effect during the grantor's lifetime. Inter vivos trusts can be either revocable or irrevocable.

• Revocable inter vivos trust: A trust that 1) goes into effect during the grantor's lifetime, and 2) can be revoked at any time. The most common type of revocable inter vivos trust is a living trust designed to avoid probate. Learn more about Revocable Living Trusts

• Irrevocable inter vivos trust: A trust that 1) goes into effect during the grantor's lifetime, and 2) can't be revoked after it is finalized. This type of trust is usually used to transfer ownership of property to reduce taxes. Learn more about Irrevocable Living Trusts

In contrast to these types of trusts, a testamentary trust doesn't take effect until death of the trust maker, and at that time the trust becomes irrevocable. In other words, grantors are free to make changes to their testamentary trusts while they're still alive. But a new or amended will is required to change the terms of a testamentary trust contained in a will.

Testamentary Trusts for Children

Testamentary trusts are most often used to leave money to children through a will. This type of trust is called a "child's trust."

Minors can't receive substantial gifts directly; money or property left to minors must be managed by an adult. Using testamentary trust in a will allows you to leave a gift to a child and also to name a trusted adult as trustee of that gift. The trustee manages the trust until the minor becomes old enough to manage the property. (The age at which the minor receives the property outright is determined by the trust maker and is stated in the trust.)

You can also use a testamentary trust to leave property to children as a group in a "pot" trust. And while leaving property to children through a testamentary trust can be a practical way to leave gifts to children through a will, it isn't the only way—for example, in most states you could use the Uniform Transfers to Minors Act instead.

Learn more about Leaving an Inheritance for Children.

See Sample Children's Trusts will provisions.

Testamentary Trusts Do Not Avoid Probate

The primary purpose of most living trusts is to avoid probate. Unlike living trusts, testamentary trusts don't avoid probate. A testamentary trust created through a will must go through probate before the trust is created. The executor will probate the will and, as part of the probate process, will create the trust.

Learn more about Executors and Probate and How to Avoid Probate.