December 6, 2015
I get this question pretty frequently. The terms above refer to two very general categories of trusts.
An inter vivos trust is a trust that was created during the lifetime of its creator (the Grantor or Trustor).
A testamentary trust is set up upon the death of its creator, usually in the creator’s Last Will and Testament.
Some distinctions are that an inter vivos trust may be freely revocable and modifiable by its creator during his/her lifetime, whereas the testamentary trust is typically irrevocable, except under certain circumstances. The inter vivos trust may be set up to accomplish asset management, incapacity planning, or Medicaid planning for its creator. A testamentary trust is useful to protect the creator’s eventual beneficiaries from dissipating their inheritance through immaturity, creditors’ claims, divorce, and the like.
These two trust types probably represent the most general distinction that can be made among trusts. Make no mistake though, there are a lot of different types of trusts that can be created. In future posts, I will write more about these different types of trusts.