What is the difference between a living trust and a testamentary trust?

The difference between a living trust and a testamentary trust is an important one to understand in estate planning law in New York. A living trust (also known as an inter vivos trust) is a trust that you establish while living. This legal arrangement allows you to transfer ownership of your assets to the trust, and designates a person to manage those assets on your behalf. This is a revocable trust, meaning that it can be changed or cancelled by you, the trustor or grantor, at any time. A testamentary trust is created only in the event of the grantor’s death. It is established through the grantor’s will, and assets are distributed to the trust as part of the grantor’s estate plan. This type of trust is irrevocable, meaning that it cannot be changed or cancelled by anyone other than the grantor. Unlike a living trust, a testamentary trust can be used to name a trustee to manage an estate for minor beneficiaries until they reach a certain age. It also allows the grantor to set up certain restrictions for the beneficiaries or designate certain financial goals, such as education savings or other long-term investments. In both cases, the trust documents outline specific instructions for how the asset should be managed. It’s important to understand the differences between living trusts and testamentary trusts so you can make the best decisions for estate planning in New York.

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What is the difference between a living trust and a testamentary trust?

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