A testamentary trust is a trust that usually becomes effective after the grantor passes away, Nolo explains. Usually testamentary trusts are trusts made within a will, and beneficiaries are typically minor children.
Many wills have provisions for the establishment of trusts, AllLaw notes. The intent of these trusts is usually to ensure proper management of an inheritance for beneficiaries who are unable to manage it themselves. The trust may or may not come into effect when the grantor passes away, depending on the set up of the trust.
Trusts set up for minor children are usually part of a parent's or grandparent's will. A mother may use her will to leave property to her spouse, and young children would be alternate beneficiaries, meaning they'd only inherit the property if the husband didn't survive the wife. The trust sets out the terms of the trust, names a trustee, and states the age at which the children can gain access to the assets in the trust. If the children are past the age set out in the trust upon the death of the parents, they inherit the assets outright, AllLaw explains.
Adults who have children with special needs may also set up a testamentary trust in their wills to ensure there are funds available after the parents have passed away to care for the child, states AllLaw.