Definition - What does Inter Vivos mean?
Inter vivos is a transfer of a possession while a person is alive in the form of a conveyance to another person. (To avoid inheritance tax, many people choose to transfer assets while they are alive instead of waiting to allow a relative to inherit it when they die.)
An example would be a gift of property that is given during a person's life instead of when they die. It is differentiated from a normal conveyance, which is between parties that exchange funds for the property.
There are many such transfers in conveyancing of large assets, usually property, for the purpose of either reducing the beneficial owner’s or inheritor's tax payment against the asset or when the inheritor needs full title over a property in order to avail of the immediate benefit, such as when they wish to use the property as collateral.
Sometimes, inter vivos transfers of property hold special clauses that allow the property owner to avail of the property over the course of their life even though they are handing the title in full over to another person. Such a situation is termed “a right to remain.”
Significant savings can happen through the availing of such transfers, as well as potential bankruptcy liquidation avoidance. There are times when a court will deem the transfer illegal, such as where it can be seen to be done to avoid repayment of debt through liquidation.
Justipedia explains Inter Vivos
Sometimes, the property is put in a trust in the other person's name, rather than giving it to them in full. This is called an inter vivos trust.
An inter vivos trust is a trust fund that is established during the course of a person's lifetime for the sole purpose of gifting something to another person while the giver is still alive. Inter vivos trusts have no attachments to wills. This is an important aspect that qualifies a trust as inter vivos. Other crucial requirements for an inter vivos trust are the responses; three actionable responses must happen in order for an inter vivos trust to be valid:
- First, the person giving the asset needs to volunteer the asset to the receiver.
- The act of offering it to the receiver qualifies as the second step.
- The third step is the receiver agreeing to take it.
As long as the above three conditions are met, it is completely lawful for a giver to give assets, including cash or property, to another person while still alive and not attached to any other precondition.
Inter vivos trusts are commonly found within civil and family law. The term can be used to describe assets that are retained separately by spouses and can be disbursed of unilaterally. When the process of a divorce happens concurrently or within a few years of gifting through inter vivos trust rules, the term appears in order to clarify what happened to the property or asset, and through what means it was initially derived.