Wills Bar Exam 2025 – 400 Free Practice Questions to Pass the Exam

The main distinction between a testamentary trust and an inter vivos trust lies in the timing of their creation. A testamentary trust is established in a will and comes into effect only after the grantor's death; it governs the distribution of assets according to the terms set out in the will. This type of trust is not operational until the grantor has passed away, and it is funded by the assets of the deceased according to the provisions laid out in the will.

On the other hand, an inter vivos trust, also known as a living trust, is created and becomes effective during the grantor's lifetime. This type of trust allows the grantor to transfer assets into the trust while they are still alive, providing a mechanism for managing those assets and facilitating distribution either during the grantor's life or after death, without the need for probate.

The other answer choices do not accurately capture the distinction between these two types of trusts. For instance, inter vivos trusts can hold a variety of assets, not just cash, which undermines the assertion that they can only hold cash assets. Additionally, while testamentary trusts do require court involvement through the probate process, this is not the defining characteristic distinguishing them from inter vivos trusts. Lastly, both testamentary and