Testamentary Trust

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.

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RELATED FAQS
  1. Do beneficiaries of a trust pay taxes?

    Learn how interest income from a trust is taxed, and understand when this money is taxable to the trust and when it is taxable ... Read Answer >>
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    Because most states protect life insurance policies from creditors, most buyer questions come from the confusion created ... Read Answer >>
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  4. What are the requirements that a trust needs to meet to be qualified?

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