Living Trust vs Testamentary Trust
Compare living trusts and testamentary trusts — when each takes effect.
Overview
A living trust (inter vivos) is created during your lifetime and funded immediately. A testamentary trust is created by your will and only comes into existence at death. Living trusts avoid probate; testamentary trusts go through probate as part of the will.
Choose Living Trust when...
Use a living trust as the primary vehicle for assets and probate avoidance — the more common modern setup.
Choose Testamentary Trust when...
Use a testamentary trust within a will for specific purposes — typically managing inheritances for minor children or beneficiaries with special needs.
Our Verdict
Living trusts are the better all-around choice for the bulk of estate planning — probate avoidance, privacy, and incapacity coverage. Testamentary trusts are useful as targeted vehicles within a will, particularly for naming a trustee to manage assets for minor children or beneficiaries with specific needs. The two often coexist: living trust for assets, testamentary trust as a backup.
Frequently Asked Questions
What is the difference between Living Trust and Testamentary Trust?
A living trust (inter vivos) is created during your lifetime and funded immediately. A testamentary trust is created by your will and only comes into existence at death. Living trusts avoid probate; testamentary trusts go through probate as part of the will.
When should I choose Living Trust over Testamentary Trust?
Use a living trust as the primary vehicle for assets and probate avoidance — the more common modern setup.
When should I choose Testamentary Trust over Living Trust?
Use a testamentary trust within a will for specific purposes — typically managing inheritances for minor children or beneficiaries with special needs.
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