Inter Vivos vs. Testam𓄧entary Trusts: An Overview

In estate planning, trust documents ensure the effective transfer of assets to heirs. A trust created while an individual is still alive is an 澳洲幸运5开奖号码历史ꦇ查询:inter vivos trust (living trust), while one established upon the death of the individual is a 澳洲幸运5开奖号码历史查询:testamentary trust (will trust).

Inter Vivos Trusts

Also known as a 澳洲幸运5开奖号码历史查询:living trust, an inter vivos (sometimes written with a hyphen or as "intervivos") trust is created for the purpose of estate planning while an individual is still alive. It is drafted as either a 澳洲幸运5开奖号码历史查询:revocable or 澳洲幸运5开奖号码历史查询:irrevocable living trust and allows the individual for whom the document was established to access assets such as cash, investments, and real estate property named in the title of the trust while they are still alive. Inter vivos trusts that are revocable have more flexibility than those that are deemed irrevocable, but both types of living trusts bypass the probate process once the trust owner dies.

An inter vivos trust is effectively a legal document created while the individual for which the trust is drawn up is still living. The assets are titled in the name of the living trust by the trust owner and are used or spent down by the trust owner while they are alive. Once the trust owner passes away, the 澳洲幸运5开奖号码历史查询:designated beneficiaries of the trust are grantedꦡ access to the assets, which are then managed by a successor trustee.

Testamentary Trusts

A testamentary trust (or will trust) is created when an individual dies and the trust is detailed in their 澳洲幸运5开奖号码历史查询:last will and testament. Because the establishment of a testamentary trust does not happen until death, it is by nature irrevocable once death occurs. The testamentary trust is a provision made in the will that instructs the executor of the estate to create the trust. So even though the testator creates the will while they are alive, the trust does not come into play until after their death. After death, the will must go through probate to determine itsꩵ authenticity before the testamentary trust can be created. After the trust is created, the executor follows the directions in the will to transfer property into the testamentary trust.

A testamentary trust does not protect an individual's assets from the probate process, and as such, the distribution of cash, investments, 澳洲幸运5开奖号码历史查询:real estate, or other property ma🌸y not conform to the trust owner's specific desires. This🦩 type of trust is designed to accomplish specific planning goals such as:

• Preserving assets for children from a previous marriage
• Protecting your spouse's financial future by providing lifetime income (also referred to as a 澳洲幸运5开奖号码历史查询:qualified termin🍬able intere❀st property trust)
• Ensuring that a special needs beneficiary will be taken care of
• Preventing minors from inheriting property outright at age 18 or 21. Minors are unable to take legal title of assets or property until they reach legal age, which varies by state. Trusts are often used for the safekeeping of their assets until they can take full title.
• Skipping the surviving spouse entirely as a beneficiary
• Gifting to charities

The Bottom Line

An inter vivos trust (living trust) goes into effect during the trust creator's lifetime. A testamentary trust (will trust), in contrast, goes into effect after they have died. A living trust may be revocable or irrevocable and it avoids probate, whereas a testamentary trust is irrevocable and may not avoid probate.

Laws governing the creation, holdings, and use of trust funds to transfer wealth will vary by country. As an example, 澳洲幸运5开奖号码历史查询:Canada and the U.S. allow both testamentary and inter vivos trusts, but some countries will nꦆot꧂ recognize them.