Inter vivos trusts are typically established by carefully-drafted documents which set out the terms and conditions necessary for directing how the trust will operate, what property will be held in the trust, who will hold the property and act as trustee, how long will the property be held, and who will be the beneficiary (or beneficiaries) of the trust.

When property is transferred to a trust it is generally deemed, for tax purposes, to have been disposed of at fair market value. Capital gains taxes may therefore be levied against any increase in the property’s value when the property is transferred to the trust.

Inter vivos trusts are flexible in how they can be used to address different issues. Before establishing an inter vivos trust, you should carefully consider your goal or goals. Because the creation, management, and administration of trusts can be complex, we recommended that anyone who is interested in using an inter vivos trust consult a lawyer.