Inter Vivos Trust (living trust) v. a Testamentary Trust
This article is intended to briefly introduce you to the difference between an inter vivos trust and a testamentary trust. There are many different types of trusts and reasons for creating a trust. If you have further questions, please do not hesitate to contact our office to discuss your estate.
Inter Vivos Trusts (living trust) in Virginia
An inter vivos trust, sometimes called a “living trust,” is a trust created during the lifetime of the settlor (person creating the trust). These trusts can either be revocable or irrevocable. In Virginia, inter vivos trusts created on or after July 1, 2006, are revocable and can be revoked or modified by the settlor unless expressly made irrevocable and nonmodifiable by the settlor.
One of the main motivations for creating an inter vivos trust is that the estate may avoid probate, which can prove to be costly and time-consuming. Of course, there is more upfront cost associated with creating an inter vivos trust as opposed to a will.
Many times, these trusts are created as “self-declaration trusts,” whereby the settlor names himself as trustee but remains the beneficiary. Generally, there are little restrictions on property or assets held in this type of trust.
Testamentary Trust (will trust) in Virginia
A testamentary trust, sometimes called a “will trust,” specifically arises on the death of the testator (person leaving behind a last will and testament). The testamentary trust may have similar terms to an inter vivos trust. Many times, my clients who desire a will, are concerned about what may would happen if a minor received a lump sum payment of inheritance. In these instances, I often suggest that a testamentary trust be created and that the minor’s inheritance be kept in the trust until an age the testator feels comfortable. Just like inter vivos trusts, the terms of a testamentary trust vary widely depending on the concerns of the testator.
The terms of the trust you create will depend largely on the composition of your family and the size of your estate. Before you consult with an attorney about your estate, write down any questions that you may have. In particular, do not be afraid to tell the attorney about concerns you may have regarding your estate or particular beneficiaries. Beneficiaries may have to be treated differently and their needs should be considered as well.
No two estates are the same and every person has unique concerns regarding what will become of their estate after they pass away. My goal is to learn what your fears are regarding your estate and to succinctly address each concern through a carefully tailored estate plan.
