A living trust (or inter vivos trust) is a type of trust created for the purpose of holding ownership to an individual's assets during the person's lifetime, and for distributing those assets after death. In common law legal systems, a trust is a relationship in which a person or entity (the trustee) has legal control over certain property (the trust property or trust corpus), but is bound by fiduciary duty to exercise that legal control for the benefit of someone else (the beneficiary), according... In business and accounting an asset is anything owned, whether in possession or by right to take possession, by a person or a group acting together, e. ...
In the United States it is often used because it can allow assets to be passed to heirs without going through probate. Avoiding probate may save some costs, time, and maintain privacy (the probate process is public). Probate is the legal process of settling a dead persons estate: specifically, distributing his property. ...
General information from the Office of New York State Attorney General (http://www.oag.state.ny.us/seniors/living_trust.html)
Further, the 21-year deemed disposition rule is suspended until the date of death of the settlor (in the case of an alter ego trust) and the date of death of the survivor of the settlor and his or her spouse (in the case of a joint partner trust).
If the 21st deemed disposition anniversary of an intervivostrust, under which the individual and his or her children are beneficiaries, is "up-coming", the trust could transfer its assets to the individual (having attained the age of 65) who would then transfer the assets to an alter ego trust or joint partner trust.
By contrast, an "intervivostrust", also known as a "living trust", is one that is created by an individual during his or her lifetime.
An intervivostrust is subject to a flat rate of federal tax on its amount taxable for the year equivalent to the highest rate for individuals, except where all of the conditions set out in subsection 122(2) are met by the trust (see 2 below).
Where an intervivostrust (other than a mutual fund trust) meets all of the conditions set out in subsection 122(2), it is taxed at the graduated federal tax rates for individuals which are set out in section 117.
Conversely, under the provisions of subsection 149(5), an intervivostrust that is deemed to have been created in respect of a club, society or association cannot have come into existence prior to the end of 1971 even though the club, society or association was in existence prior to June 18, 1971.
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