How does a testamentary trust differ from an inter vivos trust in funding and creation?

How does a testamentary trust differ from an inter vivos trust in funding and creation?

• A. A testamentary trust is created by a will and funded at death; an inter vivos trust is created during lifetime and funded by the settlor’s transfers.
• B. Both are created during lifetime and funded equally.
• C. A testamentary trust requires no court involvement, while inter vivos requires probate.
• D. A testamentary trust is irrevocable, while inter vivos must be revocable.

Answer: (A)

The main distinction is when and how the trust is created and funded. A testamentary trust is set up by a will and its assets are placed into the trust at the time of the decedent’s death, funded from the estate through probate proceedings. An inter vivos (living) trust is created during the settlor’s lifetime and is funded by the settlor transferring assets into the trust while alive. This difference in timing and funding is why the described statement is the best answer: it correctly contrasts creation at death with creation and funding during life. While inter vivos trusts can be revocable or irrevocable, that nuance doesn’t change the core difference in when the funding occurs.

The main distinction is when and how the trust is created and funded. A testamentary trust is set up by a will and its assets are placed into the trust at the time of the decedent’s death, funded from the estate through probate proceedings. An inter vivos (living) trust is created during the settlor’s lifetime and is funded by the settlor transferring assets into the trust while alive. This difference in timing and funding is why the described statement is the best answer: it correctly contrasts creation at death with creation and funding during life. While inter vivos trusts can be revocable or irrevocable, that nuance doesn’t change the core difference in when the funding occurs.