======Inter Vivos Trust======
An Inter Vivos Trust (also known as a 'Living Trust') is a legal arrangement you create during your lifetime—//inter vivos// is Latin for "between the living." Think of it as a special container you create to hold your valuable possessions. You, the creator (the ‘[[grantor]]’), transfer ownership of your [[asset]]s—like your stock portfolio, real estate, or bank accounts—into this container. You then appoint a manager (the ‘[[trustee]]’), who has a [[fiduciary]] duty to look after the assets for the benefit of the people you choose (the ‘[[beneficiary]]’ or beneficiaries). The magic of a living trust is that it operates while you're alive and continues seamlessly after you pass away. This is in sharp contrast to a ‘[[testamentary trust]]’, which is created through a will and only springs into existence after your death, meaning it must first go through the court system.
===== How It Works: The Three Key Roles =====
Setting up a living trust involves a few key players and simple steps. It's less about complex finance and more about smart organization.
  * **The Grantor (or Settlor):** This is you, the architect of the trust. You decide the rules, what goes in, and who benefits.
  * **The Trustee:** This is the manager. While you are alive and well, you will almost certainly be your own trustee, maintaining full control over your assets. You'll also name a "successor trustee" to take over management if you become incapacitated or pass away.
  * **The Beneficiary:** This is the person or people who get to enjoy the assets. Again, while you're alive, you are typically the primary beneficiary. After your death, your chosen heirs (e.g., your children or a charity) become the beneficiaries.
The process is straightforward: you work with an attorney to draft the trust document outlining your wishes. Then, you "fund the trust" by retitling your assets in the trust's name (e.g., changing the owner of your brokerage account from "Jane Doe" to "The Jane Doe Revocable Trust").
===== Why Should an Investor Care? =====
For a savvy investor, a living trust isn't just an estate planning tool; it's a critical component of a long-term wealth management strategy.
  * **Dodge the Probate Pile-Up:** [[Probate]] is the court-supervised process of settling a deceased person's [[estate]]. It can be notoriously slow, expensive, and, worst of all, public. Assets held in a living trust bypass probate entirely, allowing for a swift, private, and cost-effective transfer to your heirs.
  * **Guard Your Privacy:** A will is a public document. Anyone can go to the courthouse and see who you left your money to and how much. A trust, on the other hand, is a private contract. The details of your wealth and your beneficiaries remain confidential—a huge advantage for anyone who values their privacy.
  * **Plan for Incapacity:** What happens to your investment portfolio if an accident or illness leaves you unable to manage it? Without a trust, your family may face a costly and stressful court process to have a guardian appointed. With a trust, your chosen successor trustee can step in immediately and manage your affairs seamlessly, ensuring your investment strategy continues uninterrupted.
===== The Two Flavors of Living Trusts =====
Living trusts generally come in two main varieties, each with a different purpose.
==== The Revocable Trust: Flexibility First ====
This is the go-to option for most people. A [[revocable trust]] is exactly what it sounds like: you can change it, amend it, or cancel it entirely at any time. You can pull assets out or put new ones in whenever you wish. It offers maximum control and is primarily designed for probate avoidance and incapacity planning. However, because you retain so much control, the assets are still considered yours for tax purposes and are not protected from creditors.
==== The Irrevocable Trust: The Fortress ====
An [[irrevocable trust]] is a much more rigid structure. Once you place assets inside and the terms are set, you generally cannot change them or take the assets back. Why would anyone do this? In exchange for giving up control, you gain powerful benefits. Assets in an irrevocable trust are typically protected from your future creditors and, crucially, are removed from your estate, which can significantly reduce or eliminate [[estate tax]] for very wealthy individuals. This is an advanced strategy for high-net-worth investors focused on asset protection and tax minimization.
===== A Value Investor's Perspective =====
Value investing is a discipline built on long-term thinking, patience, and the preservation of capital. A living trust is the legal embodiment of this philosophy. It’s a tool for stewardship. Creating a trust isn't about chasing a fleeting market trend; it's about building a durable structure to protect the wealth you’ve carefully accumulated over a lifetime.
By placing your well-researched portfolio into a trust, you ensure that your assets are managed according to your long-term vision, both during your life and long after. It prevents your hard-won capital from being eroded by legal fees or exposed in public court records. In essence, a trust allows a value investor to apply their principles of prudence and foresight not just to //what// they own, but to //how// they own it, securing their financial legacy for generations to come.