There are various types of trusts to protect assets and offer financial
support, and each offers a unique set of limitations and benefits. One
type of trust that offers significant flexibility is the inter vivos trust or
a living trust. The inter vivos trust is developed during the settlor's
lifetime, which allows them to transfer assets to a trustee for the
advantage of the trust's beneficiaries (Van Zyl, 2019). An inter vivos
trust offers great control to the settlor over their assets, which is one
of the great benefits. Here, the settler can specify when and how to
distribute their assets. In addition, inter vivos trusts can also help to
avoid probate, which can be expensive and time-consuming as it is
already owned and established assets. Moreover, an inter vivos trust
provides great privacy, which is a great advantage. When an asset
goes through probate, the distribution and details of the assets
become part of the public record. But the details remain private with
an inter vivos trust as the trust is a private document.
An inter vivos trust has some disadvantages that include being more
complex to maintain and set up compared to another type of trust. It
involves additional administrative and legal costs to transfer assets
(Van Zyl, 2019). In addition, it also ensures it remains effective and
valid. Moreover, an inter vivos may not provide more asset protection
like another type of trust, as the settlor has control over the assets.
An inter vivos trust is governed by state trust laws in terms of
statutory authority that can differ by state. Moreover, the validity of
inter vivos trusts is upheld by the court in terms of case law, where
the settlers have the right to control the trust. However, the court has
also recognised the controlling limitations of the settlor when it
comes to the interests of the beneficiaries and the trustee's fiduciary
duties. Further, the American College of Trust and Estate Counsel
(ACTEC) gives guidance for different professions, including
counsellors and attorneys who advise clients on trust (American Bar,
2023). These codes focus on the significance of acting in the best
client's interests and maintaining the confidentiality of the client's
information. Overall, inter vivos trusts provide control over assets
and significant flexibility, but they also need careful management and
planning to be effective. If a settler is considering an inter vivos trust,
then they must weigh the drawbacks and benefits carefully and get
advice from a professional attorney.
References
Van Zyl, R. (2019). The question of rights, acceptance and
amendments of inter vivos trusts in terms of the stipulation alteri.
South African Law Journal, 136(4), 717-748.
