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Inter Vivos Trusts

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What Is an Inter Vivos Trust?

An inter vivos trust is a type of trust that is often used in estate planning and management. Inter vivos trusts involve property that is distributed to a beneficiary while the estate holder is still alive. This is in contrast to other types of estate planning tools that are enforceable only on the estate holder’s death (like a will document).

The way that an inter vivos trust works is that the property holder will assign choose a trustee. A trustee is the person who is entrusted with the task of holding the property. The property will then be distributed to the recipient, also called the beneficiary. Inter vivos trusts are sometimes called “living trusts”, as they are made while the property owner is still alive.

Thus, the property doesn’t pass directly from the owner to the beneficiary, but instead is managed for some time by the trustee. There may be different reasons for choosing this type of setup. For example, the beneficiary may be too young to be responsible for the property, or there may be conditions attached to the release of the property or funds to the beneficiary.

What Are Some Features and Limitations of Inter Vivos Trusts?

Inter vivos trusts are subject to the basic legal rules and requirements for creating a trust. For example, the must be a trust property (the “res”), a trustee, and a beneficiary. Some positive features of inter vivos trusts are:

  • They are somewhat easy to create
  • The beneficiary might be able to use the property sooner than with a will
  • The estate holder can often reduce estate taxes, as the property will no longer be counted in their estate

Some limitations associated with inter vivos trusts include:

  • Distributions of property usually can’t be changed- it may not be advisable to try to reclaim the property after it has already been distributed
  • Changes may occur later on in between the time of the trust creation and the testator’s passing
  • Inter vivos trust laws may be very different according to the jurisdiction that the transaction occurs in

Thus, a person should weigh the pros and cons of inter vivos trusts very carefully before they decide to create one. This may require the advice of a lawyer in order to determine whether an inter vivos trust is the best option.

What If There Is a Dispute over an Inter Vivos Trust?

Disputes over an inter vivos trust can happen for a number of reasons. A common trust dispute is where the beneficiary contests the terms of the trust. Another dispute is where the property owner did not clearly describe the property in question, which can lead to confusion during the process. Or, the trustee might have violated their responsibilities and duties as a trustee.

Thus, any of the parties involved in an inter vivos trust will have legal obligations that they need to fulfill.  A dispute over the trust terms can lead to a civil lawsuit, and may result in a damages award to the non-violating party. Disputes over an inter vivos trust are generally resolved in a civil court of law. They are handled much like contract disputes, and can often involve other areas of law such as wills or estates.

Do I Need a Lawyer for Help with Inter Vivos Trusts?

Inter vivos trusts can be a very useful estate planning instrument, depending on the needs of the various parties involved. You may wish to contact an estate planning lawyer in your area if you’re considering setting up an inter vivos trust. Your attorney can help you draft and review the legal documents that are needed to form a valid trust. In addition, you may wish to hire an attorney if you are in any way involved in a trust dispute or lawsuit. 

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 04-23-2015 09:38 AM PDT

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