Testamentary trust

A testamentary trust (sometimes referred to as a will trust or trust under will) is a trust which arises upon the death of the testator, and which is specified in his or her will. A will may contain more than one testamentary trust, and may address all or any portion of the estate.
Testamentary trusts are distinguished from "inter vivos" trusts, which are created during the settlor's lifetime.
There are four parties involved in a testamentary trust:
A testamentary trust is a legal arrangement created as specified in a person's will, and is occasioned by the death of that person. It is created to address any estate accumulated during that person's lifetime or generated as a result of a postmortem lawsuit, such as a settlement in a survival claim, or the proceeds from a life insurance policy held on the settlor. A trust can be created to oversee such assets. A trustee is appointed to direct the trust until a set time when the trust expires, such as when minor beneficiaries reach a specified age or accomplish a deed such as completing a set educational goal or achieving a specified matrimonial status.
For a testamentary trust, as the settlor is deceased, he or she will generally not have any influence over the trustee's exercise of discretion, although in some jurisdictions it is common for the testator to leave a letter of wishes for the trustee. In practical terms testamentary trusts tend to be driven more by the needs of the beneficiaries (particularly infant beneficiaries) than by tax considerations, which are the usual considerations in "inter vivos" trusts.
If a testamentary trust fails, the property usually will be held on resulting trusts for the testator's residuary estate. Some famous English trust law cases were on behalf of the residuary legatees under a will seeking to have testamentary trusts declared void so as to inherit the trust property. An infamous example is "Re Diplock" [1951] Ch 253, which resulted in the suicide of one of the trustees who was personally liable to account for trust funds that had been disbursed for what he thought were perfectly valid charitable trusts.
Summary.
Due to the potential problems, lawyers often advise that a "revocable living trust" or "inter vivos trust" be created instead of a testamentary trust. However, a testamentary trust may be a better solution if the expected estate is small compared to potential life-insurance settlement amounts.