If you were reading the blog a couple of weeks ago, you’ll remember we covered Inter Vivos Trusts. The phrase “Inter Vivos” is Latin; it means “Between the living.” In the estate-planning world, Inter Vivos is assigned to gifts that are given during the lifetime of the person giving the gift.
Here in America, we typically refer to an Inter Vivos Trust by its English name: a Living Trust.
What’s the difference between a Living Trust vs. Testamentary Trust? Living Trusts are set up during lifetime, vs. Testamentary Trusts, which are set up upon death, generally via a Will.
Given creating a Trust is a legal process, there are clearly stated legal guidelines to follow. In order for a Living Trust gift to be complete, there must the gift-giver’s intent to gift a specific gift must be documented, and the delivery and acceptance of the gift must be documented as well.
A Living Trust has a term duration that is predetermined when the Trust is originally executed. In addition to the term, the Trust’s execution will also detail the intended distribution of assets to the beneficiary during or after the grantor’s lifetime.
Again, the gifts—or assets—housed in the Trust are distributed during the lifetime of the grantor, as opposed to a Testamentary Trust, which distributes gifts/assets upon the death of the grantor.
If you’ve read my blog for any amount of time you’ve likely read me warn that you must strive to avoid probate at all costs, and the best reason to execute a Trust is to avoid the agonizing, expensive, humiliating public process of probate. A Living Trust is no exception to that rule.
As opposed to an Irrevocable Trust, a Living Trust can be executed as a Revocable Trust which allows the grantor to remove assets from the Trust should the grantor ever deem that necessary.
The LIving Trust is created like most others; the grantor first funds the Trust by transferring the title of all assets into the Trust, then, once the Trust is established and funded, the grantor will serve as trustee during their lifetime.
Like all Trusts, a Living Trust is a complicated legal document that is not designed to created alone. Please seek the assistance of a qualified estate-planning lawyer to help you determine if creating a Living Trust is in your best interest and in the best interest of your family and heirs.
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