If you have searched for an intervivos trust or an inter vivos trust, you may be wondering what this legal term means and whether it has a place in your Texas estate plan. Despite its technical-sounding name, an inter vivos trust is simply a trust created during your lifetime. Many people know this type of trust as a living trust, but “inter vivos” is the legal term you may see in estate planning documents and discussions.
Although wills receive most of the attention, they are only one part of a comprehensive estate plan. Depending on your goals, an inter vivos trust may help you manage your assets during your lifetime, provide for your loved ones if you become incapacitated, and simplify the transfer of certain property after your death. However, it is not the right choice for everyone, nor does it replace every other estate planning document.
Understanding how an inter vivos trust works—and where it fits into a Texas estate plan—can help you decide whether it aligns with your family’s needs. The sections below explain the basics, clarify common misconceptions, and show how this type of trust works alongside other essential estate planning tools.
What Is an Inter Vivos Trust?
An inter vivos trust is a legal arrangement that is created while the person establishing the trust, known as the grantor or settlor, is still alive. The grantor transfers ownership of selected assets into the trust, and a trustee manages those assets according to the trust’s terms for the benefit of one or more beneficiaries.
Because the trust is established during the grantor’s lifetime, it is called an “inter vivos” trust, which is Latin for “between the living.” In everyday estate planning conversations, you are more likely to hear it referred to as a living trust. In Texas, these terms generally describe the same type of trust.
An inter vivos trust can be either:
- Revocable, meaning the grantor may generally amend or revoke the trust while they have the legal capacity to do so.
- Irrevocable, meaning the trust generally cannot be changed or revoked once it is created, except in limited circumstances permitted by the trust terms or Texas law.
Most individuals creating an estate plan choose a revocable living trust because it offers flexibility while allowing them to retain control over the trust assets during their lifetime.
A simple example
Imagine that Maria owns a home in Texas, maintains several investment accounts, and wants her two children to inherit her property equally. Rather than relying solely on a will, she establishes a revocable inter vivos trust and transfers ownership of her home and investment accounts into the trust.
Maria names herself as the initial trustee, so she continues managing her finances just as she did before creating the trust. She also names her daughter as the successor trustee. Years later, if Maria becomes unable to manage her affairs, her daughter can step in as trustee under the terms of the trust without asking a court to appoint a guardian for the trust assets. After Maria’s death, the successor trustee distributes the trust property according to the instructions she left in the trust agreement.
This example illustrates one of the primary reasons people choose an inter vivos trust: it provides continuity in managing assets during life and after death.
How an Inter Vivos Trust Works
Although trusts sometimes seem complicated, the basic process follows a few straightforward steps.
First, the grantor works with an estate planning attorney to prepare a written trust agreement. This document identifies the trustee, beneficiaries, successor trustee, and instructions for managing and distributing the trust property.
Next comes an essential step that many people overlook: funding the trust.
Creating the trust agreement alone does not automatically place your assets into the trust. Instead, ownership of eligible assets must be transferred to the trust. Depending on the asset, this may involve:
- Signing a new deed transferring real estate to the trust.
- Retitling bank or investment accounts.
- Assigning ownership interests in certain business entities.
- Transferring other property according to applicable legal requirements.
If property is never transferred into the trust, the trust generally cannot control or distribute that property after the grantor’s death.
The trustee’s responsibilities
The trustee manages trust assets according to the trust agreement and owes fiduciary duties to the beneficiaries. Those responsibilities often include:
- Managing trust investments prudently.
- Keeping trust property separate from personal assets.
- Maintaining appropriate records.
- Following the trust’s distribution instructions.
- Acting in the beneficiaries’ best interests.
Many people choose to serve as their own trustee while they are alive and capable of managing their finances. Doing so allows them to maintain day-to-day control over the trust assets.
A successor trustee takes over only if the original trustee dies, resigns, becomes incapacitated, or otherwise can no longer serve.
Revocable vs. irrevocable inter vivos trusts
One of the first decisions when creating an inter vivos trust is whether it should be revocable or irrevocable.
For most Texas families, a revocable trust provides sufficient flexibility because the grantor can generally:
- Add or remove trust property.
- Change beneficiaries.
- Modify distribution instructions.
- Revoke the trust entirely.
Because the grantor maintains this level of control, assets held in a revocable trust generally remain part of the grantor’s taxable estate and typically remain reachable by the grantor’s creditors to the same extent as assets owned outright.
An irrevocable trust works differently. Once assets are transferred into the trust, the grantor generally gives up significant control over those assets. In exchange, irrevocable trusts may provide benefits in specific situations, such as certain asset protection or tax-planning strategies. However, these trusts involve more complex legal and financial considerations and are not appropriate for every estate plan.
How an Inter Vivos Trust Fits Into a Texas Estate Plan
One of the biggest misconceptions about an inter vivos trust is that creating one means you no longer need a will or other estate planning documents. In reality, a trust works best as one part of a coordinated estate plan.
Think of your estate plan like a toolbox. Each document serves a different purpose, and together they address different aspects of your life, finances, healthcare decisions, and the transfer of your property.
| Estate Planning Document | Primary Purpose | When It Helps |
|---|---|---|
| Inter Vivos Trust | Holds and manages assets during your lifetime and distributes trust assets according to your instructions after death | When you want to plan for incapacity, maintain privacy, or control how beneficiaries receive certain property |
| Will | Directs the distribution of probate assets and allows you to nominate guardians for minor children | When you have assets outside your trust or need to name a guardian for your children |
| Financial Power of Attorney | Allows someone you choose to handle financial matters on your behalf if you become unable to do so | When you need someone to manage financial matters that may not be covered by a trust |
| Medical Power of Attorney | Authorizes someone to make healthcare decisions if you cannot communicate your wishes | When illness, injury, or incapacity prevents you from making your own medical decisions |
| Advance Directive (Living Will) | States your preferences regarding certain life-sustaining medical treatments | When you want your healthcare wishes known in specific end-of-life situations |
By combining these documents, you can create a more complete estate plan that addresses both what happens to your assets and who can make important decisions if you become unable to do so.
Why many people still need a will
Even if you establish an inter vivos trust, you will likely still need a will.
One reason is practical: many people unintentionally leave some property outside the trust. Perhaps they purchase a new vehicle, open a bank account, or acquire other assets without transferring ownership to the trust.
To address this possibility, estate planning attorneys commonly prepare what is known as a pour-over will. Instead of distributing assets directly to beneficiaries, a pour-over will generally directs that qualifying probate assets be transferred into the trust after death so they can be administered according to the trust’s terms.
It is important to understand, however, that a pour-over will does not automatically eliminate probate. Assets that pass under the will may still need to go through the probate process before they can be transferred into the trust.
In addition, only a will—not a trust—can nominate a guardian for your minor children in Texas. Parents with young children should therefore view a will as an important companion document, even if they also establish an inter vivos trust.
Trusts do not replace powers of attorney
Another common misunderstanding is that having a trust eliminates the need for powers of attorney.
An inter vivos trust only governs the assets that are actually owned by the trust. Many financial matters fall outside the trust’s authority.
For example, suppose James creates a revocable inter vivos trust and transfers his home and investment accounts into it. Several years later, he becomes temporarily unable to manage his affairs after a serious accident.
The successor trustee can usually manage the trust assets according to the trust agreement. However, James may also have retirement accounts, tax matters, insurance claims, or other financial transactions that are not owned by the trust. A durable financial power of attorney can authorize a trusted individual to handle many of those matters if needed.
Similarly, healthcare decisions require separate legal authority. A medical power of attorney allows someone you choose to make healthcare decisions if you become unable to make or communicate those decisions yourself.
By combining an inter vivos trust with properly drafted powers of attorney and other estate planning documents, Texans can create a more comprehensive plan that addresses a wider range of circumstances.
Benefits of Including an Inter Vivos Trust in Your Texas Estate Plan
An inter vivos trust can offer several advantages, but the benefits depend on your goals and whether you properly fund the trust.
- It may simplify the transfer of assets after your death. Assets that are properly transferred into the trust generally do not become part of your probate estate. Instead, the successor trustee distributes those assets according to the trust agreement. However, property left outside the trust may still need to go through probate.
- It provides continuity if you become incapacitated. If you become unable to manage your finances, your successor trustee can step in and administer the trust assets according to your instructions. This can help avoid interruptions in managing trust property without court involvement for those assets.
- It offers greater privacy. Unlike probate proceedings, which generally become part of the public record, a trust agreement typically remains private. Families who value confidentiality often consider this an important benefit.
- It gives you more control over distributions. A trust allows you to decide not only who inherits your property but also when and how beneficiaries receive it. For example, you can direct that assets remain in trust until a child reaches a certain age or authorize distributions for education, healthcare, or other specific needs.
Potential Limitations of an Inter Vivos Trust
Although an inter vivos trust can be a valuable planning tool, it is not the right choice for every estate plan.
- It must be properly funded. Creating the trust is only the first step. You must transfer eligible assets into the trust for it to control those assets. An unfunded trust may provide little benefit after your death.
- It does not automatically protect assets from creditors. Assets held in a revocable inter vivos trust generally remain subject to the grantor’s creditors because the grantor retains control over the property. Asset protection may require different planning strategies, such as certain irrevocable trusts.
- It does not replace every estate planning document. Even if you have an inter vivos trust, you will likely still need a will, financial and medical powers of attorney, and other estate planning documents. Together, these documents create a more complete Texas estate plan.
Who Should Consider an Inter Vivos Trust in Texas?
An inter vivos trust is not reserved for wealthy families. Depending on your goals, it may be appropriate for individuals and families with a wide range of estates.
You may want to discuss an inter vivos trust with an estate planning attorney if you:
- Own a home or multiple pieces of real estate.
- Have young children or beneficiaries who may need long-term financial guidance.
- Want to simplify the management of assets if you become incapacitated.
- Prefer greater privacy than a traditional probate proceeding may provide.
- Own property in more than one state.
- Have a blended family and want greater control over when beneficiaries receive assets.
- Wish to create detailed instructions for managing inherited property.
On the other hand, not everyone needs a trust.
Someone with a modest estate, straightforward family circumstances, and primarily beneficiary-designated assets may find that a well-drafted will, along with powers of attorney and other essential estate planning documents, adequately meets their needs. Every estate plan should reflect the individual’s goals, family dynamics, and types of assets rather than following a one-size-fits-all approach.
Conclusion
An inter vivos trust can be a valuable addition to a Texas estate plan, but it is not a one-size-fits-all solution. Whether it makes sense for you depends on your assets, family circumstances, and long-term goals. Understanding how a trust works alongside a will, powers of attorney, healthcare directives, and beneficiary designations can help you build a more complete plan that reflects your wishes.
If you are considering an inter vivos trust, working with an experienced Texas estate planning attorney can help ensure the trust is properly drafted, funded, and coordinated with the rest of your estate planning documents. Thoughtful planning today can provide greater clarity for your loved ones and help ensure your assets are managed and distributed according to your intentions.
Build an Estate Plan That Works Together
An inter vivos trust can be an effective tool for managing assets during your lifetime, preparing for potential incapacity, and simplifying the transfer of certain property after your death. However, a trust works best when it is coordinated with the rest of your estate plan, including your will, powers of attorney, healthcare directives, and beneficiary designations.
If you are considering whether an inter vivos trust is right for your Texas estate plan, an experienced estate planning attorney at the Law Office of Bryan Fagan can help you evaluate your options and create a plan tailored to your goals. From drafting and funding your trust to ensuring your other documents work together, our team can help you take steps to protect your assets and provide clarity for your loved ones.
Frequently Asked Questions
Yes. An inter vivos trust is a trust created during a person’s lifetime and is commonly referred to as a living trust. The term “inter vivos” is the legal phrase, while “living trust” is the term most people use when discussing estate planning.
An inter vivos trust may help avoid probate for assets that are properly transferred into the trust before your death. However, assets that remain in your individual name may still require probate, which is why properly funding the trust is an important step.
Yes, in many cases. A will can address assets that were not transferred into the trust and allows you to nominate guardians for minor children. Many Texans who create an inter vivos trust also use a pour-over will as part of their estate plan.
If the trust is revocable, you can generally amend or revoke it during your lifetime as long as you have the legal capacity to do so. An irrevocable trust is much more difficult to change and may involve additional legal requirements.
Not necessarily. An inter vivos trust may be helpful for people who want greater control over asset management, privacy, or planning for incapacity, but some individuals may achieve their goals with a will and other estate planning documents alone. An attorney can help determine which approach fits your circumstances.
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