Home>Finance>What Is An Inter-Vivos Trust? Definition, How It Works, And Benefits

What Is An Inter-Vivos Trust? Definition, How It Works, And Benefits What Is An Inter-Vivos Trust? Definition, How It Works, And Benefits


What Is An Inter-Vivos Trust? Definition, How It Works, And Benefits

Discover the definition, workings, and benefits of an inter-vivos trust in the finance world. Gain insights into how this trust can assist you in managing your assets and planning for the future.

(Many of the links in this article redirect to a specific reviewed product. Your purchase of these products through affiliate links helps to generate commission for LiveWell, at no extra cost. Learn more)

Unlocking the Secrets Behind Inter-Vivos Trusts: A Comprehensive Guide

When it comes to organizing your finances and planning for the future, exploring different options and strategies is essential. One such strategy that often comes up in conversations about wealth management is the inter-vivos trust. In this article, we will delve into the definition, workings, and benefits of an inter-vivos trust, shedding light on this powerful tool for financial planning.

Key Takeaways:

  • An inter-vivos trust is a legal arrangement where assets are transferred to a trustee during the grantor’s lifetime.
  • The trustee holds and manages the assets on behalf of the beneficiaries, ensuring the grantor’s wishes are carried out.

So, What Exactly Is an Inter-Vivos Trust?

An inter-vivos trust, also known as a living trust or a revocable living trust, is a legal arrangement whereby assets are transferred from the grantor to a trustee during the grantor’s lifetime. This type of trust is different from a testamentary trust, which is created through a will and comes into effect upon the grantor’s death.

In an inter-vivos trust, the grantor, who is typically also the initial trustee, transfers ownership of their assets to the trust and designates beneficiaries who will eventually receive those assets. The grantor retains control over the trust and can make changes or revoke it as long as they are alive and mentally capable.

How Does an Inter-Vivos Trust Work?

Let’s take a closer look at the step-by-step process of setting up and operating an inter-vivos trust:

  1. Create the trust agreement: The grantor establishes the inter-vivos trust by creating a legal document called a trust agreement. This document outlines the terms and conditions of the trust, including the identity of the grantor, trustee, and beneficiaries, as well as the assets to be transferred.
  2. Transfer assets to the trust: The grantor transfers ownership of their assets, such as real estate, investments, or valuable possessions, to the trust. This ensures that these assets are effectively removed from the grantor’s estate.
  3. Appoint a trustee: The grantor appoints a trustee who will oversee and manage the trust. This can be an individual, a bank, or a trust company. The trustee has a fiduciary duty to act in the best interests of the beneficiaries and carry out the grantor’s wishes.
  4. Manage the trust: The trustee assumes responsibility for managing and preserving the trust’s assets. This includes investing, distributing income, making payments, and ensuring the smooth administration of the trust.
  5. Distribute assets to beneficiaries: When the grantor passes away, the trust becomes irrevocable, and the trustee proceeds to distribute the assets to the designated beneficiaries according to the terms outlined in the trust agreement.

Why Choose an Inter-Vivos Trust?

Inter-vivos trusts offer various benefits that make them an attractive option for individuals seeking financial planning and asset protection:

  • Probate avoidance: Assets held in an inter-vivos trust typically bypass the probate process, saving time, money, and potential complications for your loved ones.
  • Privacy: Unlike a will, which becomes a matter of public record, an inter-vivos trust allows for the private distribution of assets, keeping sensitive information out of the public domain.
  • Flexibility: While the grantor is alive, they can modify or revoke the trust at will, providing flexibility and control over the assets.
  • Asset protection: An inter-vivos trust can shield your assets from creditors and lawsuits, offering an additional layer of protection.
  • Incapacity planning: By appointing a successor trustee, an inter-vivos trust ensures a smooth transition in case the grantor becomes incapacitated or unable to manage the trust themselves.


An inter-vivos trust is a powerful financial planning tool that allows individuals to have more control over their assets, provide for their loved ones, and simplify the transfer of wealth. By understanding the definition, workings, and benefits of an inter-vivos trust, you can make informed decisions about whether this type of trust aligns with your financial goals and aspirations. Remember, consulting with a qualified estate planning attorney or financial advisor is crucial to ensure the trust is tailored to your specific needs and objectives.