Testamentary Trust

A testamentary trust is written into your will and does not exist until you die. Because the will creates it, everything funding it must first pass through probate—so understand what you are choosing: a testamentary trust gives you control over how your heirs receive money while giving up every advantage of the living trust. No probate avoidance. No privacy, because the will and the trust terms become public record. No help if you become incapacitated, since the trust does not exist while you are alive. In some states the trustee then answers to the probate court for years afterward, filing periodic accountings that a living trust would never require.

Given a choice, fund a revocable living trust instead (section “Revocable Living Trust”) and let it hold the same terms. There is one situation where the testamentary version genuinely earns its place: as the backstop inside your will for a minor or spendthrift beneficiary who might otherwise inherit outright. If an asset you forgot to retitle passes under the pour-over will, or a beneficiary dies and their share redirects to a young grandchild, that testamentary trust catches the money instead of handing a nineteen-year-old a check. Write it in as insurance, then do the funding work so it never has to operate.