Generally speaking, a testamentary trust is one that waits until the death of the testator to be filled with the estate. Commonly a person uses a pour-over will that designates the trust be filled with the estate at the death of the will’s maker. Testamentary trusts do not prevent the assets from entering probate.

The reason for that is the transfer occurs after the death of the testator. When a person uses a living trust, the assets are already transferred into the trust before death. Testamentary trusts are therefore subject to the same disadvantages of probate that occur when using a will.

The best use for a testamentary trust is protecting assets for minor children in the event of the parents’ death. Because minor children lack legal capacity, the court will appoint a guardian if both parents die. The guardian process can be long and expensive. The probate court will oversee the management of property, including investments, expenditures and distributions to the minor.

Another alternative is a custodial account, which can be created for the minor if that option is provided for in the will. Funds will be placed into the account, and distributed at the age of majority. The issue is whether the minor will be mature enough at the age of 18 to handle the influx of cash.

Appointing a trusted family member as trustee in the event of death ensures that either process may be avoided.