Inter Vivos Trust - Calgary Trust Lawyer
Neufeld Legal P.C. can be reached by telephone at 403-400-4092 or email Chris@NeufeldLegal.com
An inter vivos trust (also known as a living trust) is a legal arrangement created and funded during the lifetime of the settlor (the person creating the trust). The term "inter vivos" comes from the Latin "between the living" and as such is distinguishable from a testamentary trust, which is established on the death of the settlor.
Prominent Characteristics of an Inter Vivos Trust:
-
Created During Your Lifetime: Unlike a testamentary trust (which is established through a will and only takes effect upon death), an inter vivos trust is active while the settlor is still alive.
-
Parties Involved in an Inter Vivos Trust:
-
Settlor (also known as the Grantor or the Trustor): The person who creates the trust and transfers assets into it.
-
Trustee: The individual or entity responsible for managing and administering the assets within the trust according to the settlor's instructions. The settlor can often be the initial trustee, maintaining control over the assets during their lifetime.
-
Beneficiaries: The individuals or entities who will benefit from the trust's assets. This can include the settlor themselves, their family members, or other chosen recipients.
-
-
Asset Transfer: Assets are formally transferred and titled in the name of the trust. This means the trust legally owns the assets, not the settlor personally.
-
Revocable vs. Irrevocable:
-
Revocable Inter Vivos Trust: This type allows the settlor to modify, amend, or even terminate the trust at any time during their lifetime. It offers flexibility but the assets within it are generally still considered part of the settlor's taxable estate.
-
Irrevocable Inter Vivos Trust: Once established, an irrevocable trust generally cannot be altered or revoked by the settlor. Assets transferred into it are typically removed from the settlor's taxable estate.
-
-
Key Benefits Arising from an Inter Vivos Trust:
-
Tax Planning: Inter vivos trust are capable of providing tax minimization and tax deferral opportunities, including income splitting (though attribution rules apply to certain transfers), multiplication of usage of lifetime capital gains exemption, and estate freezes. However, it's important to note that the tax treatment of inter vivos trusts can differ from testamentary trusts, with inter vivos trusts generally being taxed at the highest individual tax rate on retained income, subject to certain exceptions like "alter ego" and "joint partner" trusts for individuals over 65.
-
Asset Management: It provides a framework for managing assets, especially for beneficiaries who may be minors, have special needs, or are not yet ready to manage a large inheritance.
-
Incapacity Planning: An inter vivos trust can include provisions for a successor trustee to take over management of assets if the settlor becomes incapacitated, avoiding the need for a court-appointed guardianship
-
Outside of Probate: Although probate costs in Alberta are minimal, since an inter vivos trust typically bypasses the probate process upon the settlor's death, it provides a faster and more private distribution of those assets to beneficiaries.
-
Protection from Challenges: Assets held in an inter vivos trust may be less susceptible to challenges (e.g., a wills variation claims) compared to assets passed through a will.
-
Contact our law firm today to learn how our legal team can help you plan for the future or deal with the legal demands associated with the passing of a loved one. Contact our law firm at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule a confidential initial consultation.
|
Henson Trusts. A Henson Trust is a trust (most frequently forming part of a parent's or grandparent's Will) that provides the trustees with the absolute discretion to distribute income and capital from the trust to the beneficiary as they see fit. The trustees have full control as to when, if and how much income or capital is to be paid to the beneficiary. Read more. |
|
Inter Vivos Trusts. An inter vivos trust (also known as a living trust) is a legal arrangement created and funded during the lifetime of the settlor (the person creating the trust). The term "inter vivos" comes from the Latin "between the living" and as such is distinguishable from a testamentary trust, which is established on the death of the settlor. Read more. |
|
Testamentary Trusts. A testamentary trust is a trust that is created by a person's will and comes into effect only upon their death. It is an alternative to distributing all assets directly to beneficiaries. Instead, assets are transferred to the trust, which is then managed by a trustee for the benefit of the designated beneficiaries. Read more. |
|
Irrevocable Trusts. An irrevocable trust is a legal arrangement where the creator of the trust (known as the grantor or settlor) permanently transfers assets into the trust, giving up all ownership and control over those assets. Once established, an irrevocable trust generally cannot be changed, amended, or revoked without the consent of all beneficiaries, and sometimes a court order. Read more. |
|
Asset Protection Trusts. An Asset Protection Trust is a legal arrangement designed to safeguard an individual's assets from potential future claims by creditors, lawsuits, or judgments. The core principle behind an asset protection trust is to legally separate ownership of assets from the individual who created the trust, making those assets less accessible to outside parties. Read more. |
IMPORTANT NOTE: This website is designed for general informational purposes. The site is not designed to answer specific questions about your individual situation or entitlement. Do not rely upon the information provided on this website as legal advice in respect of your individual situation nor use it as substitute for individual legal advice. If you want specific legal advice, you need to engage a lawyer under established legal engagement procedures that have been specifically agreed to by that lawyer.