How can I tell between a testamentary and inter vivos trust?

Given that there are a large number of estate planning services to choose from, it is important that you have a clear understanding of the different processes that are available and how they function. For instance, you may be considering establishing a trust fund of some sort, but may be confused about the two types that are offered. Provided below is a brief introduction to testamentary and inter vivos trusts, as well as an explanation of their similarities and differences.

According to About Money, an inter vivos trust is the same thing as a living trust. A living trust can be established during your life, and gives you the opportunity to serve as both the trustee and beneficiary in many cases. Having the option of serving in both capacities is especially relevant in cases involving elderly adults who do not wish to have their trust managed by another party. Instead of identifying yourself as the trustee of your living trust, you could also name a professional advisor or institution.

A couple other key points about living trusts are that they can either be revocable or irrevocable. Establishing a revocable living trust can give you the option of changing and/or terminating the terms of the trust along the way. With an irrevocable living trust, however, the assets identified in the trust become the property of the beneficiary from the moment it is established. As a result, you do not have the option of making any changes down the line. Living trusts are also generally not subject to probate.

Unlike an inter vivos trust, a testamentary trust is established after your passing. While you can make arrangements for the creation of a testamentary trust early on, you cannot serve as the trustee and must identify another party as the trust beneficiary. It’s also worth noting that testamentary trusts are typically subject to probate proceedings.

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