Testamentary Trust

• A. A trust with no spendthrift provisions.
• B. A trust funded during life and operative immediately.
• C. A trust created by will and takes effect after death.
• D. A trust that cannot be modified.

Answer: (C)

A testamentary trust is a trust created by a will and takes effect after death. It isn’t in existence or funded while the person is alive; instead, assets are placed into the trust as part of the probate process when the will is executed. This distinguishes it from a living or inter vivos trust, which is funded during the person’s lifetime and can operate immediately. Features like spendthrift protections can appear in both testamentary and living trusts, so the absence or presence of such provisions doesn’t define a testamentary trust. Likewise, whether a trust can be modified isn’t the defining factor, since testamentary trusts are established by the will and become irrevocable upon death. The defining idea is that it’s created by the will and takes effect after death.