Which term describes a trust created during the client's lifetime?

Which term describes a trust created during the client's lifetime?

• A. Fiduciary duty
• B. Corpus or principal
• C. Income
• D. Inter vivos or living trust

Answer: (D)

The idea being tested is when a trust is created relative to the grantor’s life. A trust created during the client’s lifetime is called an inter vivos or living trust. Inter vivos means “between the living,” emphasizing creation while the grantor is alive, as opposed to a trust formed by a will after death (testamentary trust). Living trusts are often funded during life and can be revocable, letting the grantor modify or revoke them, and they’re commonly used to manage assets during life and, potentially, to avoid probate after death. The other terms describe different aspects of a trust—fiduciary duty is the trustee’s legal obligation, corpus or principal is the assets placed into the trust, and income is the earnings generated from those assets—none of which specify when the trust is created.

The idea being tested is when a trust is created relative to the grantor’s life. A trust created during the client’s lifetime is called an inter vivos or living trust. Inter vivos means “between the living,” emphasizing creation while the grantor is alive, as opposed to a trust formed by a will after death (testamentary trust). Living trusts are often funded during life and can be revocable, letting the grantor modify or revoke them, and they’re commonly used to manage assets during life and, potentially, to avoid probate after death. The other terms describe different aspects of a trust—fiduciary duty is the trustee’s legal obligation, corpus or principal is the assets placed into the trust, and income is the earnings generated from those assets—none of which specify when the trust is created.