Estate PlanninG

Inter vivos trust vs. Testamentary trust

We often hear the terms “inter vivos trust” and “testamentary trust”. What exactly do these terms mean?

The inter vivos trust is established and made effective during a grantor’s lifetime. The inter vivos trust can be either a revocable or irrevocable trust. When reference is made to a “Living Trust” it is an inter vivos trust that is revocable.

The testamentary trust is effective upon a person’s passing and created in the deceased’s Last Will & Testament. The testamentary trust is always irrevocable.

An irrevocable trust is a trust that cannot be changed, revoked or amended once the grantor has signed it. By putting assets into an irrevocable trust, the grantor no longer owns the asset and therefore is not exposed to estate taxes which this year have a 40% tax rate!

A revocable trust allows the grantor to make changes to the trust or to revoke it anytime he wishes. The grantor still has access to the assets in the trust during his lifetime. Upon his passing the trust assets are distributed to the grantor’s heirs and remainder beneficiaries. By maintaining control over these assets during his lifetime, the grantor is exposed to estate taxes, but not to probate.

When you are ready to prepare your estate plan, the attorneys at Santaella Legal Group, APC are ready to assist you. Not only do we assist you with establishing your plan, but maintain a long term relationship with you and keep you informed of changes in the law that may affect your estate plan.

BSantaella Legal Group, APC specializes in estate planning, Medi Cal planning, business, real property, litigation, and bankruptcy law. We are located in San Ramon. We are open from 8:30 a.m. to 5 p.m., Monday to Friday. To make an appointment please call 925-359-3233.