How is a living trust different than a testamentary trust?

Both a living trust and a testamentary trust can perform many of the same functions. The key difference between the two is the timing and mechanism of their creation. A living trust is created during the grantor’s lifetime, and can be used immediately to hold and manage assets on behalf of designated beneficiaries. A testamentary trust is created by action of a last will and testament, and only comes into existence after the death of the decedent.