Joel Schoenmeyer has a good post on testamentary trusts on his Death & Taxes blog. Many clients think of estate planning in terms of either having a trust or a will. In fact, a testamentary trust plan involves both concepts. For those individuals that are not comfortable with the revocable trust plan which involves transferring all of one's assets to their trust and the cost of setting up such a plan, a testamentary trust is an alternative which gives you control from the grave over how your assets are handled.
For example, if you have young children and you aren't interested in a revocable trust, a testamentary trust would control when and how your children would access those funds in the future if something should happen to you. Without such a testamentary trust and with just a simple will, your children would receive 100% of the assets at the "mature" age of 18. Not ideal, eh?
While you maintain control, such a plan does require your estate to go through the probate process before the assets are transferred to the trustee. In other words, you maintain control over distribution provisions, but you do lose the probate avoidance by planning with a testamentary trust. Certainly a middle ground approach for many individuals that accomplishes many goals.