What Is an Inter-Vivos Trust?

What Is an Inter-Vivos Trust?

Let me explain what an inter-vivos trust is. It's also called a living trust, and it lets a trustee handle the trust's assets while you're still alive as the trustor who created it. Often, you name yourself as the trustee until you can't manage things anymore.

Key Takeaways

Here's what you need to know right away. An inter-vivos trust, or living trust, holds your assets as the trustor. A trustee manages them until they're distributed to the beneficiaries. One major advantage is that it helps you avoid probate, which is the court process for distributing assets after someone dies. You can even be the trustee yourself during your lifetime, or until a backup takes over.

How an Inter-Vivos Trust Works

A trust is set up to hold assets for beneficiaries, and a trustee manages them to follow the trust agreement, including distributing to the named people. As a living trust, an inter-vivos trust lets you, the trustor, use and benefit from the assets while you're alive. After you die, the trustee distributes them to the beneficiaries. You or you and your spouse can act as trustee, managing everything until you're unable, then a backup steps in.

Living trusts come in two types: revocable or irrevocable.

Revocable Trust

With a revocable trust, you can make changes or even cancel it entirely. Any income from it goes to you, the trustor. After your death, the income and assets go to the beneficiaries. These are useful because they're flexible while you're alive but still handle estate distribution.

Irrevocable Trust

An irrevocable trust doesn't allow changes or cancellation once it's set up. When you put assets in it, you give up legal ownership. The trustee manages and distributes them to beneficiaries after your death.

Benefits of an Inter-Vivos Trust

This is a key estate-planning tool because it skips probate, which can be long, expensive, and make your finances public. A well-set-up trust gets assets to the right people quickly and privately, so your family gets a smooth handover without issues.

In a revocable living trust, you control the assets as trustee, but since they're in your name, estate taxes might apply if they're over the exemption—$13.99 million for 2025. With an irrevocable one, you reduce your estate's value by giving up rights, which cuts taxes.

Important Note

Remember, a living trust usually starts as revocable and becomes irrevocable after the trustor's death.

Establishing an Inter-Vivos Trust

When you set up a trust, you name the parties: trustor(s), beneficiaries, and trustee(s). Spouses might be trustees, but name a contingent one if both die. Almost any asset can go in—real estate, investments, business interests—by re-titling them to the trust. Things like life insurance or retirement plans pass directly to beneficiaries, so skip those.

You can add instructions for the trustee on when and how to distribute or manage assets. You'll need a will to execute the trust; it makes the trust the main beneficiary and catches any assets left out. A will also handles guardianship for kids, which a trust can't.

What Does Inter-Vivos Mean?

Inter-vivos is Latin for 'while alive' or 'between the living.'

Can an Inter-Vivos Trust Be Revocable?

Yes, it can be revocable or irrevocable, but most are revocable.

What Is a Testamentary Trust?

It's the opposite of a living trust; a testamentary trust starts after the trustor's death.

What Is a Settlor?

A settlor creates the trust and usually funds it with assets. That's the same as the trustor.

The Bottom Line

An inter-vivos trust is a living trust you create and fund with your assets. You entrust them to a trustee who manages as a fiduciary until distribution to beneficiaries, which can happen during or after your lifetime.