The first step for most people who decide that it’s time to plan for the future is to make a will. However, even a simple Google search into how to do that or what your will needs to include will lead you down a rabbit hole of estate planning terminology that ranges from slightly confusing to completely baffling.
Take one of the most important estate planning tools available – an inter vivos trust. Most people have no idea what that is, but having one could save you and your family significant time, money, and stress later on. The better you understand how it works, the more confident you’ll be in making decisions that will protect your legacy.
The word “inter vivos” is a lofty term. Let’s take a look at what it means and what you need to know about it!
What Is An Inter Vivos Trust?
“Inter vivos” is Latin, and means “between the living”. Another name for this type of trust is a living trust, because you created and used it during your lifetime.
Think of this type of legal agreeement like a metaphorical jewelry box. You own the jewelry box and can put your most valuable possessions in it. Those possessions are protected in the jewelry box for as long as you are alive. You can give someone you trust the key, and when you pass away, they can take possession of the things inside the jewelry box and make sure that other people you intended to inherit receive them.
That’s how an inter vivos trust works. You, the creator or “grantor” set up the trust and then transfer assets to it (your house, certain monies or accounts like stocks, other valuable possessions, etc.). Then you designate a trustee to manage the trust. You can pick yourself as the trustee in most cases, although you’ll need to designate a backup trustee in the event of your passing. When you die, that trustee distributes the assets inside the trust to your children and grandchildren or previously designated heirs.
Revocable Vs. Irrevocable Inter Vivos Trusts
There are two different types of inter vivos trusts – revocable and irrevocable.
Revocable means that you can make changes to the trust during your lifetime. You can add beneficiaries, and transfer assets in and out. It’s flexible and can adjust as your life changes.
Irrevocable means that once the terms of the trust have been established, they are essentially set in stone and can’t be changed or canceled except in certain circumstances.
While it seems like the obvious choice would be a revocable inter vivos trust, irrevocable inter vivos trusts offer greater protections against creditors and more tax benefits. Which type you should choose depends on your unique needs – a lawyer who is well versed in trust law can help you decide!
Benefits Of An Inter Vivos Trust
There are two primary benefits of an inter vivos trust and many secondary benefits, the primary benefits being that this estate planning tool avoids probate and conservatorship.
When you pass away, and you have an inter vivos trust in place, your assets are distributed smoothly, quickly, and privately according to the plan you set up. If you didn’t have one, probate – an expensive and time-consuming court process – would have to occur instead, and this would cause an additional legal and financial headache for your loved ones.
Likewise if you become incapacitated and have this trust in place, your backup trustee can manage your affairs; if you didn’t have one and became unable to make decisions for yourself, your family would need to go to court and obtain control of your finances (again, an unnecessary legal and financial headache).
An inter vivos trust also offers you the most control over your assets. For example, if you have an adult child who struggles with a gambling problem, you can arrange for them to receive their inheritance in small amounts over a prolonged period of time so they don’t become tempted to gamble it away; if you have a dependent with special needs, you can arrange to pay for their care ahead of time.
Who Needs An Inter Vivos Trust
It may surprise you, but we believe that everyone who has family members they care about or who owns property can benefit from having an inter vivos trust! Even people who don’t consider themselves particularly wealthy still have a legacy they want to pass on; their hard-earned savings shouldn’t be wasted on court costs, and their family should be protected from a tedious court ordeal. An inter vivos trust can make your death as easy as possible on your loved ones.
However, if you do have sizable wealth, are a business owner, have multiple investment properties, have a risky profession, or have other special circumstances, an inter vivos trust could prove to be even more valuable to you and your beneficiaries.
What To Put In An Inter Vivos Trust
You can’t put actual cash in this type of trust, and it’s not recommended to put retirement assets or normal cars in this trust, but you can put almost anything else in, including savings and checking accounts, nonretirement investment accounts like mutual funds, bonds and stocks, life insurance policies, real estate, LLCs, tangible personal property, and more!
The Best Way To Creat An Inter Vivos Trust – Call Elder Law, P.A. Today!
While hopefully this blog made understanding an inter vivos trust easier, actually making one is an incredibly complex undertaking that requires extensive legal knowledge. That’s why you should never try to DIY it – you should always work with an attorney who has experience drafting all sorts of trusts, who is up to date on your state’s specific laws, and who can personalize your trust to your unique situation and goals.
At Elder Law, P.A., we’ve been working tirelessly to ensure that our clients and their families are protected, both now and in the future. We can give you peace of mind! Call today to book a free consultation and learn more about your options.
