Inter vivos (Latin, between the living) is a legal term referring to a transfer or gift made during one's lifetime, as opposed to a testamentary transfer (a gift that takes effect on death) under the subject of trust. The term is often used to describe a trust established during one's lifetime, i.e., an Inter vivos trust as opposed to a Testamentary trust which is established on one's death, usually as part of a will. An Inter vivos trust is often used synonymously with the more common term Living trust, but an Inter vivos trust, by definition, includes both revocable and irrevocable trusts.
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Due to the potential problems, lawyers often advise that a revocable living trust or inter vivos trust be created instead of a testamentary trust. However, a testamentary trust may be a better solution if the expected estate is small compared to potential life-insurance settlement amounts.
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A trust instrument (also sometimes called a deed of trust, where executed by way of deed) is an instrument in writing executed by a settlor used to constitute a trust. Trust instruments are generally only used in relation to an inter vivos trust; testamentary trusts are usually created under a will.Although not always. It is possible for the deceased to convey property to trustees upon death which perfects a trust.
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While the use of Land Trusts by real estate investors does make it more difficult for a lender to discover a transfer has occurred, the loan can still be accelerated if it is discovered since a transfer has occurred. By federal law a transfer to a trustee in an inter vivos trust (to which classification a residential property land trust belongs) cannot be considered a due-on-sale (due-on-transfer) violation unless all of one's beneficiary interest would have been transferred to another. Title 12 of the US Code Para. 1701-j-3 - i.e.
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In so much as the land trust is beneficiary-directed rather than being directed and managed by its trustee, a remainder agent (i.e., a party appointed to assume responsibility for the trust and its corpus in the event of the death or incapacity of the original director-manager beneficiary) can be a remainder beneficiary (co-beneficiary), rather than needing to be remainder trustee, as would be the case with the standard, and far more common, trustee-directed inter vivos trust (i.e., the fully funded inter vivos family trust).
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A letter of wishes is a non-binding indication by the settlor of the manner in which he wishes the trustees to exercise their discretion in relation to a discretionary trust. Letters of wishes are normally used in testamentary trusts, although theoretically there is no reason why they should not be used in an inter vivos trust. Letters of wishes are useful where a trust instrument gives the trustees very wide powers and discretions. The letter of wishes principally sets out the manner in which the settlor wishes the trustees to exercise their powers and discretions, but is not binding on the trustees.
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For example, borrowers may place their homes in their own trust without triggering the due-on-sale clause. "A lender may not exercise its option pursuant to a due-on-sale clause upon a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property." (12 U.S.C. 1701j-3(d)(8)..[5].) Note that a beneficiary means possibly among multiple beneficiaries. Similarly, transfer of the borrower's home to a spouse as part of a divorce or dissolution of marriage generally does not trigger a due-on-sale clause.
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This long form of wording may be especially appropriate in those jurisdictions which use the phrase "joint tenancy" as synonymous with a tenancy in common. Shorter forms such as "to AB and CD as joint tenants" or "to AB and CD jointly" can be used in most jurisdictions. Words to that effect may be used by the parties in the deed of conveyance or other instrument of transfer of title, or by a testator in a will, or in an inter vivos trust deed. If a testator leaves property in a will to several beneficiaries "jointly" and one or more of those named beneficiaries dies before the will takes effect, then the survivors of those named beneficiaries will inherit the whole property on a joint tenancy basis.
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634 The response has been to view the secret trust as a disposition inter vivos ("between the living") rather than testamentary under exception. Although the testator is unlikely to consider the trust having come into existence at the time of the will upon his death, whether a disposition is arguably though less convincingly regarded as an inter vivos is a question for the courts as well as parliament. However, other types of inter vivos trust are incapable of binding after-acquired property or operating so as to, whether automatically, semi-automatically or no automatism at all, bind such property as and when it is received. No separate declaration of trust is required in the case of property acquired after the execution of a will for it to form part of a secret trust.
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In most countries no formalities are required to create an inter vivos trust over personal property, but there are often formalities associated with trusts over real property, or testamentary trusts. The words or acts of the settlor must be sufficient to establish an intention that either another person or the settlor himself shall be trustee of the property on behalf of the beneficiary; a general intention to benefit another person on its own is sufficient. These formalities apply to express trusts only, and not to resulting, implied or constructive trusts. For a settlor to validly create a trust, in most common law legal systems they must satisfy the three certainties, established in Knight v Knight: #certainty of intention – whether the settlor (or testator) has manifested an intention to create a trust.
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A trust is a three-party fiduciary relationship in which the first party, the trustor or settlor, transfers ("settles") a property (often but not necessarily a sum of money) upon the second party (the trustee) for the benefit of the third party, the beneficiary. A testamentary trust is created by a will and arises after the death of the settlor. An inter vivos trust is created during the settlor's lifetime by a trust instrument. A trust may be revocable or irrevocable; in the United States, a trust is presumed to be irrevocable unless the instrument or will creating it states it is revocable, except in California, Oklahoma and Texas, in which trusts are presumed to be revocable until the instrument or will creating them states they are irrevocable.
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A pour-over clause in a will gives probate property to a trustee of the testator's separate trust and must be validated either under incorporation by reference by identifying the previously existing trust which the property will be poured into, or under the doctrine of acts of independent significance by referring to some act that has significance apart from disposing of probate assets, namely, the revocable living trust (inter vivos trust). The testator's property is subject to probate until such time as the pour-over clause is applied, and the estate assets "pour" into the trust. The trust instrument must be either in existence at the time when the will with the pour-over clause is executed, or executed concurrently with the will to be a valid pour-over gift. However, the trust need not be funded inter vivos.
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