Estate planning can be a little confusing. For instance, what is the difference between inter vivos and testamentary trusts? For Arkansas residents thinking about writing their estate plans, understanding these distinctions and how they play into planning is essential in maintaining control of the trust — even, in many respects, after death. Inter vivos trusts are created while the grantor is alive and is not necessarily governed by a will, while a testamentary trust is one whose directives are included in and are a part of the will of a decedent.
Whether a trust is created while a person is still living or after he or she has died, the rationale is usually the same — to manage their assets and to leave loved ones with as little stress as possible. When it comes to inter vivos trusts, they’re usually established by a grantor to exclude property from their estate for either probate or tax purposes, or both. When many assets are in question, which a grantor thinks may cause family bickering, he or she may wish to utilize a testamentary trust.
A testamentary trust includes all or part of a grantor’s provisions within a will, so it is often chosen over an inter vivos trust. They are funded only after the grantor dies. An inter vivos trust can be funded either when the grantor is alive or deceased. If the grantor is living, the trustee has to ensure that the trust adheres to trust rules or under defective grantor trust rules to ascertain whether or not to report the income.
There are many legalities enmeshed with different trusts. An Arkansas lawyer would be able to help a client to understand what type of trust would marry well with his or her life situation. Having legal advice and guidance may make estate planning much easier and less confusing.