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Inter Vivos Trust : What Doest It Mean?



An inter vivos trust is a fiduciary relationship created during the trustor’s lifetime for estate planning purposes.

This trust, sometimes known as a living trust, has a term that is set at the time of its creation and might include asset distributions to the beneficiary during or after the trustor’s lifetime.

A testamentary trust is the polar opposite of an inter vivos trust, as it takes effect only after the trustor has died.


What Is an Inter Vivos Trust

inter vivos trust

Points to Remember:

• An inter vivos trust is a living trust established to hold a trustor’s assets.

• An inter vivos trust has the advantage of avoiding probate, which is the legal procedure of transferring the owner’s assets after death.

•  During their lifetime or until a backup identified in the trust is authorised to take over, the trustor can also be the trustee in an inter vivos trust.


How Does Inter-Vivos Work?

Typically, a trust is established to hold assets for the benefit of the trust beneficiaries.

A trustee is usually in charge of managing those assets and ensuring that the trust agreement is implemented, which includes ensuring that the assets are paid to the stated beneficiaries.

An inter-vivos trust, on the other hand, is a living trust because it allows the owner or trustor to utilise the assets and reap the benefits of the trust during his or her lifetime.

When the trustor dies, the assets are dispersed to the beneficiaries by the trustee.


The trustor, or trustors in the case of a married couple, can serve as trustee while they are still alive, administering the assets until they are no longer able to do so, at which point a named backup trustee takes over.

A living trust might fall into one of two categories: revocable or irrevocable trusts.

A revocable trust is one in which the trustor or grantor can make modifications to the trust.

The trustor can also cancel the trust, and any income generated by the revocable trust is distributed to the trustor.


The income and assets of the trust are transferred to the beneficiaries after the trustor’s death.

Revocable trusts are advantageous because they are flexible during the trustor’s lifetime while also allowing the distribution of assets from the trustor’s estate.

Irrevocable Trust is a type of trust that cannot be revoked

An irrevocable trust is one in which the trustor or grantor cannot amend the terms of the trust.

Once established as an irrevocable trust, it cannot be changed or revoked. When assets are placed in an irrevocable trust, the trustor effectively relinquishes legal possession.


Upon the trustor’s death, the assets would be managed by the trustee, who would then distribute them to the beneficiaries.

Inter Vivos Trust Advantages

An inter-vivos trust is a useful estate-planning tool since it avoids probate, which is the court-supervised process of dispersing a deceased person’s assets.

The probate process can be time-consuming and expensive, and it exposes a family’s private financial concerns by making them public.

A properly created trust aids in the timely and secret distribution of assets to their designated recipients.


As a result, the assets are distributed to the surviving family members in a seamless manner, with no interruption in their use.

The trustor can also be the trustee in a living revocable trust, which implies the assets are under the owner’s control.

However, because the assets are in the trustor’s name, estate taxes may apply if the assets’ value exceeds the estate-tax exemption when the trustor dies.

If the trustor creates a living irrevocable trust, the value of the estate is effectively reduced (because all rights to the assets have been renounced), and so the estate’s taxes are reduced.


Setting up an Inter Vivos Trust

The grantor designates the trust parties, who comprise the grantors, who are usually husband and couple; the beneficiaries; and the trustee, when forming a trust.

The spouses are sometimes named as trustees. In the event that both spouses die, a contingent trustee should be chosen.

A trust can possess almost any type of asset. Real estate, investments, and company interests can all be re-titled into the trust’s name.

Some assets, such as life insurance and retirement plans, are not need to be listed since they pass to a designated beneficiary.


A trust might include instructions for the trustee to control the timing of distribution and management of the assets while they are still held by the trust, in addition to assigning assets to specific beneficiaries.

To carry out the trust, you’ll need a will. A trust effectively becomes the primary beneficiary of a will.

A will also serves as a “catch-all” mechanism, determining the distribution of assets that may have been left out of the trust.

It is also through the will that guardianship for minor children is established.


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