When creating a trust, you will come across a variety of unusual terms, such as revocable, irrevocable, testamentary and inter vivos. But, what do these terms mean regarding trusts? Here, estate planning attorney, Douglas Lauenstein, explains these important trust-related terms.
Term One: “Revocable”
The term revocable refers to a type of trust. A revocable trust is one where you retain ownership and control of the property in the trust. A revocable trust also allows you to change the terms of the trust after it has been established—this is especially beneficial for those with blended families, or those who experience a sudden life change. Another benefit of a revocable trust is that the property held within it will avoid probate.
Term Two: “Irrevocable”
As with revocable, the term irrevocable refers to a type of trust. An irrevocable trust is the opposite of a revocable trust: it cannot be altered once enacted, and you give ownership and control of the property held in the trust to another individual, known as the trustee. With an irrevocable trust, the property within the trust must be re-titled in the trustee’s name. As this trust cannot be altered, it is important to consult an experienced estate planning attorney when establishing the terms, and determining what property is suitable for the goals of the trust.
Term Three: “Testamentary”
The term testamentary refers to a type of trust contained in a last will and testament. It may specify how all or only part of an estate is to be distributed, and often is tied to a life insurance policy you hold. There may be more than one testamentary trust per will, depending on what part of an estate each covers. This type of trust becomes active upon your passing, after the probate process has ended on your estate.
Term Four: “Inter Vivos”
The final term, inter vivos, refers to a type of trust that works opposite to a testamentary trust. From the Latin for “between the living,” an inter vivos trust is also known as a living trust. It allows for the distribution of assets during or after your lifetime—so there is no need for the beneficiary to wait until probate of your estate has ended. This allows for assets to be distributed in an efficient and timely manner.
The Final Term You Should Know? “Lauenstein Law Firm.”
Creating a trust can be a useful estate planning tool, allowing you to ensure a secure future for loved ones upon your passing. However, it is important to choose the correct trust for your needs, whether it is a revocable, irrevocable, testamentary, inter vivos or any other kind of trust. It is also vital to carefully consider the assets you wish to place in a trust. At Lauenstein Law Firm, we are available to help you with your estate planning needs, including establishing and enacting a trust—contact us today for more information.