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Living or Inter Vivos Trusts |
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Learn some basic information about living or inter vivos trusts in this short article.
The living trust or inter vivos trust is the most flexible estate planning vehicle. While an in depth discussion of trusts and their uses is beyond the scope of a short article, it is worth noting that the uniquely flexible structure of the trust gives it tremendous advantages over other estate planning tools. To give you an idea of the trust's usefulness, here is a list of some of the advantages and/or planning possibilities of using an inter vivos trust in estate planning: - property can be conserved for the use of the beneficiaries and protected in cases where the personal situation of the beneficiaries may make it likely that the property would be depleted if given outright to the beneficiaries;
- relieving the family of the burden of managing the property and, similarly, retaining all benefits for the family while employing specialized talent to manage and invest the property;
- avoidance of guardianship and related probate requirements arising out of transfers to minors and other legally incapacitated persons;
- minimization or elimination of probate fees by transferring property beyond the jurisdiction of the probate process;
- assurance of privacy in the transfer of property at death; and
- heightened tax advantages, particularly if the property owner is over the age of 65 - a particular kind of trust known as an alter ego trust may be applicable in this situation.
The only real disadvantages of using an inter vivos trust are the following: - the advice of a lawyer is required to establish the trust;
- there is possible loss of control over the trust assets depending upon the objectives desired and the type of trust used (these concerns can usually be accommodated, however, with proper planning);
- the expenses and complexity of the administration of the trust (these are best left to professionals).
In addition, it is useful to list, briefly, some additional more sophisticated uses to which inter vivos trusts may be put in estate planning: - protecting the settlor (the person/property owner who creates the trust) and beneficiaries from future creditors;
- protecting the settlor and beneficiaries from challenges to the will;
- protecting the settlor and beneficiaries from future family law property claims; and
- "estate freezes" which are an organizational method of transferring property into a trust are one of the primary ways to accomplish the above objectives.
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