What is a "testamentary trust"?

A testamentary trust is specifically designed to come into effect upon the death of the testator, meaning it is established as part of the will and only arises when the testator passes away. This type of trust allows the testator to specify how assets are to be managed and distributed to beneficiaries after their death. It can be beneficial for various purposes, such as providing for minor children, managing distributions over time, or controlling when and how beneficiaries receive their inheritance.

In contrast, other types of trusts, such as living trusts, are created and take effect during the grantor's lifetime. A testamentary trust does not require periodic reviews and adjustments in the same sense as some other trusts; it is governed by the terms set forth in the will and the specifics of the testamentary intent. Additionally, while there are trusts established for minors, the defining characteristic of a testamentary trust is that it is contingent on the testator's death rather than the lifespan of the beneficiaries. Thus, B correctly identifies and defines a testamentary trust within the context of estate planning.