Difference Between a Family Trust and a Trust Within a Will

A Family Trust and a Will (Testamentary) Trust serve different purposes and are established at different times:

1. Family Trust (Living Trust or Inter Vivos Trust):

  • Established During Lifetime: Created while the settlor (the person who establishes the trust) is still alive.

  • Immediate Benefits: The settlor can benefit from the trust during their lifetime.

  • Flexibility: Can be used for various purposes, such as managing family assets, tax planning, and ensuring financial support for family members.

2.  Testamentary Trust

  • Established After Death: Comes into existence upon the death of the will-maker (testator), as specified in their will.

  • Posthumous Benefits: The benefits are created for the beneficiaries named in the will, and the settlor does not benefit from it during their lifetime.

  • Probate Process: It is subject to the probate process, which can sometimes be lengthy and complex.

    In summary, the primary difference lies in their timing and purpose: a family trust is set up and can be used during the person’s lifetime, while a testamentary trust is established after the person’s death and is intended to benefit the beneficiaries named in the will.

     

Disclaimer

The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting members of Carson Law, Carson IP, or their own legal counsel regarding any specific legal issues. Carson Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

References:

Mullins, S. (2024, March 11). Family Trust vs. testamentary trust: Understanding the differences. Donlan Lawyers. https://donlanlawyers.com/family-trust-vs-testamentary-trust-understanding-the-differences/

Liberty Law. (n.d.). Testamentary Trusts: How Are They Different From Discretionary Family Trusts?. Retrieved from https://libertylaw.com.au/faq-items/testamentary-trusts-different-discretionary-family-trusts/