Inter-vivos Gifts
What Is an Inter Vivos Trust?
An Inter Vivos Trust is a living trust created during your lifetime, allowing you to transfer assets to a trustee to manage on behalf of your chosen beneficiaries. You can define specific instructions or conditions for how and when these assets should be distributed, making it a valuable tool for maintaining control and protecting your intentions.
For example, you might use an Inter Vivos Trust to provide for your parents’ medical expenses, fund your children’s education, or hold assets for minor children under 21 to receive in the future.Advantages and Disadvantages of Inter-vivos Trust
Advantages
– Simple and cost-free to implement
– Immediate transfer of ownership
– Immediate transfer of ownership
Important Considerations
– Clawback Risks: Assets gifted may be subject to reversal under certain laws (e.g. bankruptcy, insolvency)
- Forced Heirship: Local inheritance laws may override your intentions
- Reservation of benefit: Retaining use or control may jeopardize the validity of the gift
- Family law exposure: Assets may be at risk in divorce or matrimonial proceedings
- Forced Heirship: Local inheritance laws may override your intentions
- Reservation of benefit: Retaining use or control may jeopardize the validity of the gift
- Family law exposure: Assets may be at risk in divorce or matrimonial proceedings
Disadvantages
– Loss of control over how to asset is used.
- Depends on the beneficiary's ability to manage the asset responsibly.
- If held in the beneficiary's personal name, the asset may still be subjected to probate upon their death
- Gift or transfer taxes may apply depending on jurisdiction
- Depends on the beneficiary's ability to manage the asset responsibly.
- If held in the beneficiary's personal name, the asset may still be subjected to probate upon their death
- Gift or transfer taxes may apply depending on jurisdiction
4. Unity of Time
– Ownership must begin at the same moment for all co-owners.