An inter vivos trust is also called a living trust. These trusts are legal frameworks that manage your assets and real estate. Let’s look at exactly what an inter vivos trust is and how it can help you plan for the future.
Leaving a Legacy
If you open and fund a trust, you are called the Grantor. You name a trustee in the trust documents to administer the assets to specified beneficiaries at the time and in the manner prescribed by the trust. You can choose to act as your own trustee or have someone else act as trustee.
A trust legally owns the property and assets that you put in it. You no longer own those assets under your own name. The trust allows you to go ahead and plan for your heirs’ future before you pass away, but with more security and more options for how you will distribute those assets.
A living trust allows you to set up a legal frame that keeps track of your assets and liabilities,to ensure they pass to your heirs in the case of your death, just like a last will and testament.
You may also use a living trust to establish an inheritance for heirs. The trustee ensures that the property is handed out at the correct time and in the amounts you choose. Some kids are ready to accept a lump sum inheritance at age 20, while others will need a monthly distribution due to drug, spending, or gambling issues. With a living trust, you have ultimate control over how and when your assets pass on.
Transfer of Assets and Real Property
It’s crucial to hire an attorney to set up a trust to eliminate DIY blunders. Miswritten or clumsy statements in a trust can cause legal issues for you and your family down the road.
Your attorney may help you transfer assets into a trust in various ways. If you have a brokerage account, the brokerage firm will assist you in moving your equities into your trust holdings. To transfer real estate to your trust, you’ll need to change the title and draft a new deed to sign over to the trust. The property’s title transfers to the trust, and the trust now owns your property. The clerk of court records a new deed for the property. Working with an estate planning attorney can help you set up and fund an inter vivos trust.
Avoid Probate
After you die, any property or assets you own outside of your trust will go through probate court. Avoiding probate is a crucial reason to write a pour-over will (discussed below).
Your assets outside the trust are a matter of public record alongside your will. Anyone may make claims on your estate in probate court, including prior creditors and debt collectors.
In addition, your estate may also pay for attorneys, court fees, and any will contestation lawsuits while going through probate. Sometimes, it can take years for probate to settle and heirs to receive inheritances. Probate can also eat into the value of your estate with court fees, disputes about who will receive property or assets, attorney fees, or will contestations.
With an inter vivos or living trust, your estate bypasses probate entirely. Your trust is private and your estate does not become a public record.
Inter Vivos Trust with a Pour-Over Will
If you write a pour-over will, you are stating that your assets now will automatically go into the trust when you die. In this way, you can ensure that no assets get left out and go through probate court.
A Pour-Over Will, automatically places your assets in into the trust you’ve established when you die. Your trustee then manages the assets according to the terms of your trust.
Durable Power of Attorney
When creating a living trust it’s critical to name someone as your durable power of attorney. You may put many of your assets in the trust. Still, your durable power of attorney allows you to delegate management over your other non-trust assets to the individual you choose in case of incapacitation. In this case, you have someone who can manage your assets in an emergency.
For example, if you are in a car accident and end up in the hospital, a durable power of attorney can manage your assets while you are in a coma.
Other Benefits of an Inter Vivos Trust
There are many benefits to establishing an inter vivos or living trust. This type of trust allows you to manage your assets during your lifetime and after you die. It’s crucial to work with an estate planning attorney to ensure correctly written trust documents to avoid any legal issues down the road.
- You can use a living trust to avoid probate court
- A pour-over will ensures that no assets fall through the cracks
- Can name a durable power of attorney in case of incapacity
- Your estate is private and does not become a public record
- You can set up distribution rules for your heirs
- May help reduce estate taxes
We Can Help
At Cape Fear Law, we create estate plans, including trusts to prepare for your future. Planning now can reap the rewards for your estate later. Legal tools such as trusts help protect and shield your assets from loss. Contact us today and find out how you can start making your future plans today.