What is an inter vivos trust?

An inter vivos trust is a legal arrangement that is created during the lifetime of the settlor, who is the person establishing the trust. This type of trust allows the settlor to transfer property to the trust and designate beneficiaries, ensuring that the assets can be managed and distributed according to their wishes while they are still alive. This can be beneficial for estate planning purposes, providing flexibility in asset management and potentially reducing estate taxes when the settlor passes away.

Inter vivos trusts can serve various purposes, such as providing for minors or individuals with special needs, protecting assets from creditors, or promoting charitable causes while still allowing the settlor to maintain some control over the assets. By creating this type of trust, the settlor can see the effects of the trust and make adjustments if necessary, which highlights its advantages in planning and managing one’s assets.

The other options highlight different types of trusts or processes that do not align with the definition of an inter vivos trust, which emphasizes the importance of its establishment during the settlor's lifetime.