A: A testamentary trust is a trust established upon the testator’s death, as specified in their will, unlike a living trust, which is created during their lifetime. Testamentary trusts are often used to manage a minor beneficiary’s inheritance, allowing a trustee to hold and distribute assets according to specified terms, such as reaching a certain age. One advantage is that this structure protects and manages assets for the minor’s benefit, potentially avoiding premature or irresponsible spending. However, a limitation is that testamentary trusts require a formal probate process to be created, which can add time, expense, and reduce privacy. This may make them less suitable for those seeking to avoid probate altogether.
Q: What is a testamentary trust, and should we create one as part of our estate plan?
