What is a 'Testamentary Trust'

A testamentary trust is a legal and fiduciary relationship created through explicit instructions in a deceased's will. A testamentary trust goes into effect upon an individual's death and is commonly used when someone wants to leave assets to a beneficiary, but doesn't want the beneficiary to receive those assets until a specified time. Testamentary trusts are irrevocable.

BREAKING DOWN 'Testamentary Trust'

For example, a parent might create a testamentary trust to leave assets to their minor child so that the child would not receive the assets until he or she became an adult and could manage them responsibly. A trustee will manage the testamentary trust's assets until the beneficiary receives control of them.

RELATED TERMS
  1. Testamentary Will

    A testamentary will is a traditional will, sometimes referred ...
  2. Living Trust

    A property interest created during a person's life that allows ...
  3. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  4. Personal Trust

    A trust created for a person or persons. Personal trusts can ...
  5. Beneficiary Of Trust

    A beneficiary of trust is a person for whom a trust was created, ...
  6. Bare Trust

    A basic trust in which the beneficiary has the absolute right ...
Related Articles
  1. Managing Wealth

    What's a Trust?

    A trust is a fiduciary relationship in which one party gives another party the right to hold property or assets on behalf of a beneficiary.
  2. Managing Wealth

    Surprising Ways a Trust Could Help Your Family

    Everything you always wanted to know about setting up trusts, in handy glossary form.
  3. Managing Wealth

    Pick The Perfect Trust

    Trusts are an estate plan's anchor, but the terminology can be confusing. We cut through the clutter.
  4. Retirement

    How To Set Up A Trust Fund In The U.K.

    A guide to the whys and wherefores of setting up this most versatile of estate-planning instruments in the United Kingdom.
  5. Managing Wealth

    How to Set Up a Trust Fund in Canada

    You don't have to be rich to make use of a trust fund. Rules can be complex; here's what you'll need to discuss with your lawyer.
  6. Financial Advisor

    Passing an IRA to a Trust: The Good and Bad

    Creating a trust is a common estate planning tactic, but naming a beneficiary to an IRA to a trust may have unintended consequences.
  7. Retirement

    How To Set Up A Trust Fund In Australia

    No, they're not just for the super-rich. But you need to know the rules.
  8. Managing Wealth

    Which Retirement Plans Need a Family Trust?

    Many people think family trusts are only for the very wealthy, but if your retirement assets exceed $500,000, you may want to consider the option.
  9. Financial Advisor

    Incentive Trusts: How to Avoid the Pitfalls

    Incentive trusts can motivate beneficiaries to accomplish constructive goals, but they can also end up creating dilemmas.
  10. Financial Advisor

    Irrevocable Trusts: New Trends You Need to Know

    Several improvements and additional provisions have been added to irrevocable trusts in recent years making them considerably more versatile than before.
RELATED FAQS
  1. What is the difference between an intervivos trust and a testamentary trust?

    Understand the differences between a testamentary trust and an inter-vivos (living) trust, and learn why each is important ... Read Answer >>
  2. How is maintenance of standard of living for survivors accomplished in estate planning?

    Understand what elements of an estate plan can assist in creating certainty for survivors that allows them to maintain their ... Read Answer >>
  3. What are the keys to setting up a trust fund?

    Setting up a trust to secure your assets for a beneficiary allows you to set the terms under which the beneficiaries are ... Read Answer >>
Hot Definitions
  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  2. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  3. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  4. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  5. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  6. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
Trading Center