A testamentary trust is one that is funded according to the terms of a will when a person dies. Unlike a living trust, a testamentary trust is irrevocable. Because it is not already holding assets when the testator dies, the asset must go through probate before being placed in the trust. The will may specify who will act as trustee and stipulate last wishes regarding how the trust should be administered. However, since the testator is dead, posthumous control over the trustee's actions are limited.

A testamentary trust is often used to will assets such as the proceeds from a life insurance policy to a child. The child will not have access to the funds directly until he/she reaches adulthood. This age is often set for when the child finishes college or reaches the age of 25 - whichever occurs first. Until this point, the trustee makes all decisions about how the assets will be invested and how income from the trust will be disbursed to the child. If a trustee is not designated in the will (or if the chosen trustee decides not to take on the responsibility), the probate court may appoint a trustee of its own choosing.