Testamentary trust - Financial definition
Concise definition of the term testamentary trust
A testamentary trust is a legal arrangement established by a will that goes into effect upon the testator's death, managing and distributing the deceased's assets according to specified instructions.
Comprehensive definition of the term testamentary trust
A testamentary trust, created as part of a will, becomes operational after the testator's death and is subject to probate. This type of trust is often used to manage estate assets for beneficiaries who are minors, have special needs, or require financial oversight. Common practical applications include providing for a surviving spouse, ensuring long-term care for dependents, and preserving family wealth across generations. Unlike living trusts, testamentary trusts offer the advantage of flexibility in estate planning but can incur probate costs and delays.