What is the difference between a Living Trust and a Testamentary Trust?
A living trust is one that you create during your lifetime by making a trust agreement with a trustee and transferring assets into the trustees name. A testamentary trust, on the other hand, is one that goes into effect and is funded (i.e., assets are transferred to the trustee) following your death. Thus, a revocable living trust is one that you create and fund during your lifetime, and over which you have virtually complete control.
A testamentary trust is created in a will and comes into being upon death. A living trust is created during life. The key difference is that a testamentary trust is created in a will. Although there can be good reasons for using a testamentary trust, it does not avoid probate. A living trust, on the other hand, can help avoid probate when properly used. A living trust exists outside of your will. Assets in the trust are not subject to probate.
