Testamentary Trust Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Testamentary Trust, written in plain English, along with examples of how it is used.
What is Testamentary Trust?
A trust formed as per the indication given in the will after the death of the person who created the will.
History and Meaning of Testamentary Trust
A testamentary trust is a type of trust that is created according to the provisions specified in the will of a person after they die. The trust is formed with the assets of the deceased individual, which are then managed and distributed by a trustee for the benefit of the named beneficiaries. The terms of the trust can vary depending on the wishes of the testator (the person who created the will), and can be tailored to suit the specific circumstances of their beneficiaries.
The main purpose of a testamentary trust is to provide for the long-term management and distribution of assets, particularly for beneficiaries who may not be capable of managing their own financial affairs. The trust can also provide greater flexibility in terms of tax planning and asset protection.
Examples of Testamentary Trust
John creates a will and specifies that his assets, including his savings and investments, will be placed in a testamentary trust for the benefit of his two young children. The trust will be managed by a designated trustee and will provide for their education, health, and general welfare until they reach a certain age.
Mary creates a will and specifies that a portion of her estate will be used to fund a testamentary trust for her elderly parents. The trust will provide for their care and support for the rest of their lives, and any remaining assets will eventually pass to their designated charity.
Tom creates a will and specifies that his assets will be placed in a testamentary trust for the benefit of his spouse, who is not financially savvy. The trust will provide for her needs for the rest of her life, and any remaining assets will eventually pass to their children.
Legal Terms Similar to Testamentary Trust
Living Trust - A trust that is created during the lifetime of the individual and is managed by a trustee for the benefit of designated beneficiaries.
Charitable Trust - A trust that is designed to support a specific charity or charitable cause.
Special Needs Trust - A trust that is created to provide for the long-term care of a person with a disability or special needs.