Glossary

Testamentary trust

A trust written into a will that comes into existence only after death and probate, often to manage money for minor children.

Also called: will trust, trust under will

A testamentary trust is created by the terms of a will and doesn't exist until the will-maker dies and the will is admitted to probate. It's commonly used to hold an inheritance for children until they reach a stated age, with a named trustee managing and distributing the money.

Life insurance can be directed to a testamentary trust by naming "the trustee of the trust under my will" as beneficiary, if the insurer and state law allow it. Hypothetically, a parent might write a will creating a trust that pays for each child's education and distributes the balance at age 30, then name that trust as beneficiary of a $750,000 policy. Without some kind of trust or custodian, a minor beneficiary might need a court-supervised guardianship.

The drawbacks: because the trust arises only through probate, proceeds may be delayed until the will is probated and a trustee is appointed; the trust may stay under court supervision in some states; and if the will is changed or never probated, the designation can fail. Many families prefer a revocable living trust, which exists immediately. An estate attorney can explain which works better in your state. See naming a trust as your life insurance beneficiary and naming a minor child as life insurance beneficiary.

Last reviewed October 4, 2026

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Related terms

Probate The court-supervised process of validating a will, paying a deceased person's debts and distributing what's left, which life insurance usually avoids. Trustee The person or institution that holds legal title to trust assets and manages them for the beneficiaries under the trust's terms and fiduciary duties. Revocable living trust A trust you create and control during your life that can hold assets or receive life insurance, then distribute them after death without probate. Executor The person named in a will, or appointed by a court, to settle a deceased person's estate: gather assets, pay debts and taxes, and distribute what remains. Beneficiary designation The signed instruction on file with an insurer naming who receives a policy's proceeds, in what shares and in what order. Estate Everything a person owns at death, from property and accounts to some life insurance, which is settled and distributed to heirs and creditors.

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