Build your estate plan online! MyAdvocate is the online solution for creating and maintaining your Will and all other legally-valid estate planning documents. Click the link below to get started! -- For prospective law firm clients who want to schedule a free 15 minute initial phone call with Paul Rabalais, go to: This post should help you understand the difference between a testamentary trust and an inter vivos trust. All trusts are either testamentary or inter vivos. Inter vivos trusts are also called "Living Trusts." The best way to describe the difference is to put them in context of a real-life situation. Let's say Jack is engaged in his estate planning. He is married to Jill and he has two children. He wants to leave his estate in a way so that Jill is taken care of, but after Jill dies, he wants his estate to go to his two children. Jack goes to an attorney and the attorney prepares a Will with Testamentary Trust. The terms of the trust are a part of Jack's last will and testament. Jack's will says that when Jack dies, Jack's estate will go to the "Jack Testamentary Trust." After Jack dies, Jill and Jack's kids assume that no probate is necessary because "Jack had a trust." However, their assumption is incorrect. There will always be a probate (or in called a "Succession") when someone leaves their assets or estate to a testamentary trust. When Jack dies with a testamentary trust, his assets that are in his name when he dies will be frozen, and the courts must oversee the management and ultimate transfer of the assets to the trust. Now, instead, let's say that, instead of Jack creating a testamentary trust, he creates the stand-alone "Jack Inter Vivos Trust" or the "Jack Living Trust," If Jack transfers his asset to the Jack Living Trust during his lifetime, no Succession or Probate will be necessary when Jack dies because the assets will already be in the trust and there will be no assets in Jack's name that would be frozen and subject to the court-supervised transfer process. This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship. Paul Rabalais Estate Planning Attorney www.RabalaisEstatePlanning.com Phone: (225) 329-2450...(read more)
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Difference Between Testamentary Trusts and Inter Vivos (Living) Trusts Trusts are legal instruments that hold and manage assets on behalf of beneficiaries. They provide individuals with the ability to control and distribute their assets in an orderly and efficient manner. Two common types of trusts are testamentary trusts and inter vivos (living) trusts. While both serve similar purposes, there are notable differences between the two. A testamentary trust is established through a person's last will and testament, and it does not take effect until the individual passes away. This means that assets are transferred to the trust upon the person's death and are managed according to the terms and conditions specified in their will. Testamentary trusts are irrevocable, as the individual cannot make changes or amendments to the trust after their passing. The named executor of the will is responsible for creating and administering the testamentary trust. On the other hand, an inter vivos or living trust is created during the lifetime of an individual. Assets are transferred into the trust while the person is alive, and they can continue to manage and control those assets as the trustee. The individual establishing the inter vivos trust has the flexibility to amend or revoke the trust at any time as long as they are mentally competent to do so. Additionally, inter vivos trusts can be revocable or irrevocable, depending on the preferences and goals of the individual. One significant difference between the two types of trusts is their timing and effect. Testamentary trusts only come into existence upon the testator's death, while inter vivos trusts are established and take effect immediately during the person's lifetime. This means that testamentary trusts cannot be utilized for estate planning during one's lifetime, while living trusts can provide benefits and asset protection during the individual's lifetime. Another significant distinction is regarding probate. Probate is the legal process by which a deceased person's debts are settled and assets are distributed according to their will. Testamentary trusts must go through the probate process, which can be time-consuming, costly, and subject to public scrutiny. In contrast, living trusts typically bypass probate entirely. Since the assets in an inter vivos trust are already held by the trust entity and controlled by the trustee, upon the individual's death, the assets can be distributed directly to beneficiaries without the need for probate. Privacy is another key difference between the two types of trusts. Testamentary trusts become part of public record during the probate process, allowing anyone to access information about assets and beneficiaries. In contrast, living trusts maintain privacy as they are created and managed outside of the probate process. Lastly, testamentary trusts may provide certain tax advantages, such as potentially reducing estate taxes. On the other hand, inter vivos trusts do not offer the same estate tax benefits but can offer other tax advantages, such as avoiding capital gains tax on appreciated assets when transferred to the trust. In conclusion, testamentary trusts and inter vivos trusts serve different purposes and have distinct characteristics. Testamentary trusts activate upon the testator's death, must go through probate, and lack the flexibility of amendment or revocation after death. Inter vivos trusts, on the other hand, are established during the individual's lifetime, can be amended or revoked, and generally offer probate avoidance, increased privacy, and potential control over assets. It is essential to consult with a legal professional to determine which type of trust aligns with your specific needs and objectives. https://inflationprotection.org/understanding-the-distinction-between-testamentary-trusts-and-inter-vivos-living-trusts/?feed_id=108137&_unique_id=648c1485eb294 #Inflation #Retirement #GoldIRA #Wealth #Investing #definitionofintervivostrust #differencebetweenlivingtrustandtestamentarytrust #differencebetweentestamentarytrustandintervivostrust #LivingTrustvstestamentarytrustLouisiana #Louisianaintervivostrust #TestamentarytrustvsIntervivostrust #whatisanintervivostrust #SpousalIRA #definitionofintervivostrust #differencebetweenlivingtrustandtestamentarytrust #differencebetweentestamentarytrustandintervivostrust #LivingTrustvstestamentarytrustLouisiana #Louisianaintervivostrust #TestamentarytrustvsIntervivostrust #whatisanintervivostrust
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