What Is an Inter-Vivos Trust?

An inter-vivos trust, or a living trust, enables a trustee to manage the trust's assets while the person who created the trust (the trustor) is still alive. Often, the trustor names themself the trustee until they can no longer manage their own affairs.

How an Inter-Vivos Trust Works

A trust is typically established to hold assets for the 澳洲幸运5官方开奖结果体彩网:trust's beneficiary or benef🐻iciaries. A trustee is typically assigned to m🐟anage those assets and to ensure that t𝓰he trust agreement is followed, which would include making sure the assets are distributed to the named beneficiaries.

As a living trust, an inter-vivos trust allows the trustor to use the assets and benefit from the🌌 trust during the trustor's lifetime. Once the trustor dies, the assets would be distributed by the trustee to the beneficiaries. While living, the trustor, or trustors in the case of a married couple, can be the trustee, managing t✱he assets until they are no longer able, at which time a named backup trustee assumes the duties.

There are two cat🔜egories of trusts that a living trust can fall under: revocable or irrevocable.

Revocable Trust

A 澳洲幸运5官方开奖结果体彩网:revocable trust is a trust that allows changes to be made to the trust by the trustor. The trust can also be canceled by the trustor. Any income earned in a revocable trust is paid to the trustor. 澳洲幸运5官方开奖结果体彩网:Following the death of the trustor, the income and assets are transferred to the beneficiaries of the trust. Revocable trus🦋ts are helpful since they’re flexible during the lifetime of the trustor but also allow the distribution of the assets from the trustor’s estate.

Irrevocable Trust

An 澳洲幸运5官方开奖结果体彩网:irrevocable trust is a trust that does not allow changes to be made to the trust. The trust cannot be canceled or altere🌄d once established as an irrevocable trust. Once assets are placed in an irrevocable trust, the trustor has essentially given up legal ownership of those assets. The trustee would manage the assets and distribute them to the beneficiaries upon the death of the trustor. 

Benefits of an Inter-Vivos Trust

An inter-vivos trust is an important 澳洲幸运5官方开奖结果体彩网:estate-planning tool because it helps avoid probate, which is the process of distributing a deceased person's assets in court. The probate process can be lengthy, costly, and expose a family's private financial matters by making them a matter of p🃏ublic record. A properly established tr♛ust helps to ensure that the assets get distributed to their intended recipients in a timely and private manner. As a result, the surviving family members receive the assets in a smooth transition without any disruption.

With a living (inter-vivos) revocable trust, the trustor can also be the trustee, which means that the assets are controlled by the owner. However, since the assets are in the trustor’s name, estate taxes might apply if the value of the assets exceeds the estate-tax exemption at the time of the trustor's death. (For 2025, that exemption amount is $13.99 million.)

If the trustor creates a living irrevocable trust, the trustor essentially reduces the value of the estate (since al𝔉l rights to the assets have been relinquished). This would thus reduceꩵ the taxes on the estate.

Establishing an Inter-Vivos Trust

In establishing a trust, the trustor names the trust parties, which i✱nclude the trustor(s), the beneficiary or beneficiaries, and the trustee(s). Sometimes, spouses are named as trustees. However, a contingent trustee should be named in the event that both spouses die.

Just about any asset can be owned by a trust. Assets such as real estate, investments, and business interests 𝄹can be re-titled in the name of the trust. Some assets, such as life insurance and retirement plans, pass to a designated beneficiary directly so the𒁏y need not be included.

In addition to assigning assets to specific beneficiaries, a trust can include instructions for the trustee 🍎to guide the timing of distribution and management of the assets while they are still held by the trust.

A will is needed to execute the trust. Essentially, the trust൩ becomes the primary beneficiary of a will. In addition, a will acts as a catch-all mechanism that determines the disposition of assets that might have been excluded from the trust. (A will also establishes guardianship for minor children, which a trust can't do.)

The Bottom Line

An inter-vivos trust is a living trust. It's created by a trustor who funds the trust with their assets. The trustor entrusts their assets to the trustee, who acts as a 澳洲幸运5官方开奖结果体彩网:fiduciary and manages the assets until they are distributed to the beneficiary. The beneficiary can receive the assets during or after the trustor's lifetime.