Also known as: testamentary trusts · will-created trust
Written by attorneys — see sources below.
A trust created by a will that takes effect upon the testator's death. The trust property passes from the testator to a trustee who holds legal title for the benefit of designated beneficiaries according to the terms of the will.
Thomas Tate's will creates a trust for his minor children and names a corporate trustee. After Thomas's death the probate court transfers the residuary assets to the trustee. The trustee holds legal title and distributes income and principal exactly as the will directs for the children's benefit.
Tara Tran, domiciled in State A, executes a will creating a testamentary trust of real property located in State B. After Tara's death a beneficiary challenges the trust's validity under State B law. The court applies the law of Tara's domicile at death to determine whether the testamentary trust is valid.
In 1902, John Kenneth Ross, a resident of Montreal, married in Toronto after entering into an ante-nuptial agreement with his prospective wife. The agreement provided for separate property under the law of Quebec. It required Ross to establish a trust fund of $125,000 for his wife and children, with his father guaranteeing the donation. Ross's father died in 1913, leaving an estate of about $10,000,000 to his son. In 1916 Ross decided to create a larger trust of one million dollars funded with securities held in New York. He directed his adviser to prepare instruments transferring the securities to the Equitable Trust Company in New York as trustee for the benefit of his wife for life with remainder to their children. Ross and his wife executed the trust indenture before the American Consul General in Montreal. The Equitable Trust Company then signed it. The Bank of Montreal delivered the securities to the trustee in New York. The trust operated without challenge for about ten years. In 1926 Ross faced financial difficulties from oil stock speculations and loans from Baltimore banks. He was advised that the trust was invalid under Quebec law. He obtained written consents to revoke from his wife and children. He promised the banks to bring proceedings to set aside the trust in exchange for loan extensions. Ross commenced two actions in New York to set aside the trust as void and to revoke it by consent. A petition in bankruptcy was filed against Ross. The trustee in bankruptcy was substituted as plaintiff. The actions were tried together. They resulted in a judgment for the plaintiff in the first action and for the defendants in the second action. The Appellate Division reversed the first judgment and dismissed the complaint on the merits while affirming the second judgment.
View caseA testamentary trust is created by a will and arises only after the testator's death. An inter vivos trust is created and funded during the settlor's lifetime.
Yes. Because it is created by will, the trust terms must satisfy the Wills Act formalities and appear in a written will.
No. Unless the will provides otherwise, the property becomes part of the existing trust and is administered under its governing instrument, including later amendments.
The law of the testator's domicile at death ordinarily governs, unless the testator manifested an intention that the trust be administered elsewhere.
…the life beneficiary of three quarters of his estate, for whose comfort, support and anticipated increased medical expenses the testamentary trusts were evidently created. Testimony by petitioner’s investment manager, and by the objectants’ experts, disclosed that the annual yield on Kodak stock in 1973 was approximately 1.06%, and…