What is a testamentary trust?

A testamentary trust is a type of trust established through a will or trust document. It is a legal arrangement that establishes a relationship between a person (the grantor) and another person (the trustee) to manage the grantor’s assets for the benefit of another person or persons (the beneficiaries). In Illinois, a testamentary trust is created when a grantor includes the trust language in his or her will or trust document. The trust becomes effective upon the grantor’s death. The grantor’s will or trust document will dictate who will serve as the trustee and what assets the trust will contain, as well as how the assets are to be managed and distributed. The trustee of the testamentary trust is responsible for carrying out the instructions the grantor gave in the will or trust document. The trustee can be given broad or narrow power to manage the trust assets. For example, the grantor might choose to give the trustee complete discretion to make decisions, or might restrict the trustee’s actions by providing specific instructions. In addition, the grantor can provide instructions regarding when and how the trust assets are to be distributed to the beneficiaries. The trustee must follow the grantor’s instructions. Testamentary trusts are beneficial because they allow people to manage their assets after they pass away and ensure that assets are distributed to beneficiaries in accordance with the grantor’s wishes. Testamentary trusts are also useful for reducing taxes on the assets held in the trust.

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What is a testamentary trust?

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