What Is a Testamentary Trust and When Does It Start in British Columbia?

This answer covers the law of British Columbia.

A testamentary trust is a trust that is generally created on and as a result of a person's death. Most often it is set up by the terms of a will, so it does not exist while the person is alive and only begins at death. An inter vivos trust, sometimes called a living trust, is any trust that is not testamentary, and that includes alter ego and joint spousal or common-law partner trusts.

The person who runs it is the trustee, who must use the care, skill, diligence and judgment of a prudent investor when investing trust property. Executors, administrators and testamentary trustees must generally obtain a court order passing their first accounts within 2 years of the grant or appointment. That does not apply if all beneficiaries approve the accounts in writing, or if the court directs otherwise.

Tax treatment also differs. An estate qualifies as a graduated rate estate for only up to 36 months after death. Every trust is generally deemed to dispose of most capital property 21 years after it starts, but alter ego and joint partner trusts instead defer that to a death. How this applies depends on the will, so confirm with a lawyer or accountant.