An intervivos trust is an agreement where the person creating the trust (referred to variously as the grantor, settlor, or trustor) during the creator’s life appoints a trustee to receive assets for the benefit of the creator and/or one or more beneficiaries. A written agreement should be drafted by an attorney to identify the roles, duties and powers of the parties. It will be signed by both the creator and the trustee.
An intervivos trust is often created for one or more of the following purposes: (a) avoiding probate by having assets owned by the trust, not the creator, (b) providing for the post-death disposition directives in the trust rather than in a will, (c) in addition to a will, facilitating a means of limiting the impact of estate taxes for subsequent beneficiaries, or (d) holding assets for the benefit of children until they reach a specified age or until a stated triggering event occurs.
The intervivos trust may be either revocable or irrevocable, and either funded or unfunded. An intervivos trust is often referred to as a “living trust”.
The creation and administration of the intervivos trust occurs outside the general supervision of the Probate Court. However, the Court may assume limited jurisdiction over the trust for purposes of a addressing specifically identified issues relating to the trust language or the administration. This jurisdiction is invoked through the filing of a Motion to Assume Jurisdiction for a specifically described purpose that is presented to the Court by a party having an interest in the trust. The primary action then is commenced as a civil action with the filing of a Complaint with the Court. This proceeding will be governed by the Rules of Civil Procedure and at the conclusion of the litigation the Court’s involvement with the intervivos trust ends, unless jurisdiction is expressly retained.
Advantages of Using an Intervivos Living Trust
- Privacy: A trust agreement is a private document and becomes public only in limited situations where persons with standing seek interpretation, modification, reformation, supervision, or termination from the Probate Court.
- Speed of Transfer: Assets may be transferred into and out of the trust without the need for Court approval.
- Avoidance of Probate Expenses: An intervivos trust will not typically require probate court involvement; therefore, court costs and statutory fees will be avoided.
Disadvantages of Using an Intervivos Trust
- Effort to Fund Trust: An intervivos trust must be fully funded with all the settlor’s assets while the settlor is living or through other non-probate transfer mechanisms in order to fully avoid probate. Assets acquired by the settlor after the trust is established must be transferred to the trustee prior to death, or by non-probate transfer mechanisms to avoid having to probate them.
- Expense: Cost of drafting and funding a trust is generally greater than the cost of preparing a will and the cost of transferring assets to the trust is money spent prior to death, rather than post-death.
- Lack of Oversight: With privacy, generally there is no readily available forum for the trustee or the beneficiaries to obtain resolution of disputes or direction. With privacy, and without independent oversight and supervision the specter of suspicion may become burdensome for the trustee and problematic for the beneficiaries.
If there is interest in creating an intervivos trust, consultation is recommended with an attorney knowledgeable in trust drafting and administration, estate planning, taxation, and probate matters.