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Have you ever heard about inter vivos trusts? Do you want your family to avoid paying probate after you pass away? Have you ever considered setting up a living trust but abandoned the idea due to high legal fees? If the answer to any of these questions is yes, you are in the right place. 
Inter vivos means “while alive.” It also means “between living persons”. An inter vivos trust is a multi-purpose trust that a person creates within his life. Inter vivos trusts are a secure asset management tool that can provide invaluable advantages. 
One key benefit of an inter vivos trust is its ability to bypass the probate process after the grantor’s death, ensuring a smoother transition of assets to the beneficiaries. 
The following is a detailed discussion on how Inter Vivos trusts are essential for better family fortune management which are created while the owner is still alive. 

How Does an Inter Vivos Trust Avoid Probate Tax?

There is no inheritance tax in Canada. Thereby, tax applies only to the assets owned by the deceased immediately before his death. In the case of inter vivos trusts, the taxpayer transfers relevant assets to the trust within his life. Thereafter he no longer owns those assets, nor so at the time “immediately before his death”, and the assets are passed on directly to the beneficiaries without probate proceedings. In this way, an inter vivos trust saves probate taxes.

Inter Vivos Trust: A Secure Tool for Family Wealth Management:

The death or incapacity of the settlor does not affect the steady income stream for the family members. Remarkably, such a trust acts as a safeguard or even a lifeline for those family members who are less fortunate, incapacitated or mentally unwell. 
The Canadian law allows a 65+ person to create an inter vivos trust, called alter ego trust, to put his wealth in and enjoy the rest of his deriving a tax-free income.
However, the regulations mandate the highest marginal tax rate on such a trust, when it undergoes deemed disposition.
Precaution:  One should not create an alter ego trust if he has a surviving common-law partner. Assets belonging to such trust will be subject to deemed disposition and cannot be passed on without probate. 
A settlor can use an inter vivos trust to combine assets lying in various places and put them under one trustee. Resultantly, his assets see administration all in one place. 
After making a will, a person submits the future of his assets to the will’s stipulations and the applicable laws. On the other hand, in an inter vivos trust, there is more room for him to decide how his trust will function and how different players will administer his assets after his death. 
The death or incapacity of the settlor, trustee, or beneficiary cannot affect the trust’s smooth functioning. Thus, an inter vivos trust is suitable for a business that will provide a continuous stream of income for the settlor and his loved ones. 
Attorneys often see claims and counterclaims for altering a will. Contenders attack wills, claiming that the testator was mentally incapacitated or insane at the time of making a will. Nonetheless, one can safely rule out such claims in the case of an inter vivos trust, for the creator of the trust walking amongst them sane and sound, thus yielding a trust a better legal standing. 
An inter vivos trust secures the assets from claims by credit agencies, entities seeking settlement of court decisions, or some ill-willed family members. Notably, it can protect those assets because the assets in a trust are neither the property of the settlor nor of the beneficiaries. Hence, the claimants cannot settle their claims against trust property. 
Once the settlor creates a trust, there is little room for the exertion of undue influence or duress on him to make a will of any family member’s unfair choice. In this way, an inter vivos trust is a concrete mechanism for more solidified process of inheritance, as compared to a will, at the writing of which, a person may be old age and prone to influences. 
When a Settler transfers their assets to an inter vivos trust for their spouse’s benefit at their death, those assets will go to the beneficiary in complete privacy, unlike probate, which is a public process. 
 Moreover, the spousal trust will receive the assets on a rollover basis, with no immediate tax consequences. The assets can thus remain tax-free in the trust for 21 years, and capital gains tax liability will arise only at the death of the beneficiary spouse.
If a person wants to give his wealth to charity while maintaining his lifestyle, his best option is an inter vivos trust. 
It allows a settlor to draw income from all his assets without tax liabilities. It is an irrevocable trust. All the assets placed in the trust will go to charity at his death.  
An inter vivos trust allows the settlor to see how the trust functions in his life and is entitled to make any necessary changes. He can also include an attribution clause in the document of trust. So, if, upon his death, his assets incur some form of an unmanageable tax, the inheritors could attribute some assets back to the settlor to offset the capital gains tax with the help of loss-making assets. 

Bottomline:

Inter vivos trusts can be an excellent vehicle for those who take estate planning seriously. Postmortem planning, too, begins within one’s life. In this regard, inter vivos trusts provide the requisite variety of options available before life and after death. They are a great tool in the hands of planners. Consider consulting a professional lawyer to ascertain the appropriateness of an inter vivo trust to your specific circumstances. 

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