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.