What Is a Testamentary Trust in Real Estate?

A testamentary trust is a trust created through a will that becomes effective only after death. Unlike a living trust, it must go through probate before real estate can be transferred into the trust and managed for beneficiaries.

Testamentary Trust: Simple Definition

A testamentary trust is a trust established by instructions in a will. It does not exist during the property owner’s lifetime. After the will is validated through probate, the trust is created and the designated trustee receives authority to manage real estate and distribute it according to the will's terms.

Why Property Owners Use Testamentary Trusts

Testamentary trusts are commonly used when someone wants to:

  • Control how real estate is inherited after death
  • Provide long-term management for minors or dependents
  • Delay distribution until beneficiaries reach adulthood
  • Protect property from mismanagement by inexperienced heirs
  • Specify income, sale, or occupancy rules for real estate

Because a testamentary trust is tied to a will, the property must first pass through probate court before the trust becomes active.

How a Testamentary Trust Works with Real Estate

When someone dies, their will outlines the trust's terms. After the court validates the will, real estate can be transferred into the testamentary trust. The trustee then manages the property on behalf of the beneficiaries. Common responsibilities include:

  • Maintaining or renting the property
  • Paying taxes, insurance, and expenses
  • Determining when to sell the property
  • Managing income generated by the property
  • Distributing proceeds according to the will

This process contrasts with a living trust, where real estate is transferred into the trust during life and avoids probate entirely.

Do Testamentary Trusts Avoid Probate?

No — a testamentary trust cannot avoid probate.

Because the trust is created by the will, the will must go through probate court first. Only after probate is complete can real estate be transferred into the trust.

This differs significantly from intestate succession (dying without a will) and from living trusts, which bypass probate entirely.

Testamentary Trust vs. Other Types of Trusts

  • Testamentary Trust: Created by a will; starts after death; must go through probate.
  • Living Trust: Created while alive; avoids probate; provides lifetime control.
  • Real Estate Trust: Broad category including living, land, and irrevocable trusts.
  • Pour-Over Will: Transfers remaining assets into a living trust after death.

A testamentary trust is best for people who want structured, long-term control over how real estate is handled after death but do not transfer property into a living trust.

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