Inter vivos is a Latin phrase meaning “between the living,” and in estate planning it describes any transfer of property or legal arrangement that takes effect during your lifetime rather than after you die. The distinction drives real consequences. Lifetime transfers and death-time transfers follow different tax rules, offer different protection from creditors, and move through different legal processes. Knowing which category a transfer falls into tells you what paperwork you owe, what tax the recipient will face, and whether a court will have to get involved.
What Makes a Gift Inter Vivos
An inter vivos gift is property transferred voluntarily, without payment, that takes effect right now. Once it is complete, it is permanent. The donor gives up ownership and cannot pull the property back.
Three elements have to line up for the gift to be legally valid. The donor must intend to transfer ownership immediately, not someday. A promise to hand over a car next year is not a completed gift. The donor must deliver the property, either by physically handing it over or, when the item is too large to move, by doing something that clearly transfers control, like signing over a title or passing the keys. And the recipient must accept, which courts generally presume unless the person refuses outright.
There is one close cousin worth flagging so you don’t confuse the two. A gift causa mortis is made when the donor believes death is imminent. The same three elements apply, but a causa mortis gift is automatically revoked if the donor survives, and the donor can take it back any time before death. A standard inter vivos gift becomes irrevocable the moment the three elements are met.
How Lifetime Gifts Are Taxed
The IRS treats inter vivos gifts differently from inherited property, and the differences catch people off guard.
You can give up to $19,000 per recipient in 2026 without any gift tax and without any filing requirement.1Internal Revenue Service. What’s New — Estate and Gift Tax A married couple can combine their exclusions and give $38,000 per recipient. Gifts at or below that annual exclusion require no paperwork.
Give more than $19,000 to any one person in a year and you have to file IRS Form 709. Filing does not necessarily mean owing tax. The amount above the annual exclusion counts against your lifetime gift and estate tax exemption, which sits at $15,000,000 for 2026.1Internal Revenue Service. What’s New — Estate and Gift Tax Most people never reach the lifetime cap, but skipping Form 709 when it is required is still a compliance problem.2Internal Revenue Service. Instructions for Form 709
The bigger surprise is basis. When you give someone appreciated property during your lifetime, the recipient inherits your original cost basis. Stock you bought for $10,000 that is now worth $100,000 passes with a $10,000 basis, and when the recipient sells, they owe capital gains tax on $90,000 of appreciation.3Office of the Law Revision Counsel. 26 U.S. Code 1015 – Basis of Property Acquired by Gifts and Transfers in Trust The same asset passing at death gets a stepped-up basis equal to its fair market value on the date of death.4Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent The heir who inherits that $100,000 stock gets a $100,000 basis and owes nothing on the appreciation if they sell right away. For highly appreciated assets, that gap often makes a lifetime gift the wrong financial move even when it feels simpler.
Inter Vivos Trusts
An inter vivos trust, usually called a living trust, is a legal arrangement you create and fund while you are alive. You transfer assets into the trust, name a trustee to manage them, and spell out how everything is handled during your life and after your death. The trust is operational the moment it is created and funded.5Legal Information Institute. Inter Vivos Trust
Most people serve as their own initial trustee, so daily life does not change much. You still write checks, sell your house, and manage your investments. But the assets legally belong to the trust, not to you personally, so they follow the trust’s instructions when you die or become incapacitated, without going through probate.
Revocable Trusts
A revocable inter vivos trust can be changed, amended, or dissolved by you at any point during your life. That flexibility is the main reason revocable trusts dominate estate planning. The tradeoff is that because you keep control, the IRS still treats the assets as yours. They are included in your taxable estate at death and remain reachable by your creditors while you are alive.6Office of the Law Revision Counsel. 26 USC 2038 – Revocable Transfers
The main benefit is probate avoidance. Assets properly titled in the trust pass directly to your beneficiaries under its terms, skipping court entirely. Probate takes months, generates attorney and court fees, and puts the distribution on the public record. A funded revocable trust avoids all of that. It also handles incapacity: a successor trustee you have already named steps in if you can no longer manage your affairs, without any court proceeding. A will does nothing for you while you are alive.
Irrevocable Trusts
An irrevocable inter vivos trust is a different tool altogether. Once you fund it, you cannot take the assets back, change the terms, or dissolve it.5Legal Information Institute. Inter Vivos Trust Losing control is the point. Because you no longer own the assets, they are generally excluded from your taxable estate and are typically out of reach of your creditors.
The estate tax exclusion has limits. If you keep the right to income from the trust, the right to use the property, or the power to decide who benefits, the IRS pulls the assets back into your gross estate as though you never transferred them.7Office of the Law Revision Counsel. 26 USC 2036 – Transfers With Retained Life Estate The transfer has to genuinely give up your control for the tax treatment to hold.
Why Funding the Trust Matters
Signing a trust document accomplishes nothing on its own. A trust only controls the assets that have actually been retitled into it. Anything still in your personal name at death passes under your will and goes through probate, no matter what the trust document says. This is the most common estate planning failure and the easiest one to prevent. Each account, deed, and asset you intend the trust to govern has to be formally transferred into the trust’s name.
Inter Vivos vs. Testamentary Arrangements
The core distinction is timing. Inter vivos arrangements take effect while you are living. Testamentary arrangements, like a will, take effect only after you die. A will sits dormant during your lifetime, does nothing if you are incapacitated, and has to be validated through probate before your executor can distribute anything.
An inter vivos trust is already running. Assets are titled in it, a successor trustee is already named, and the instructions for both incapacity and death are already written. When something happens, the trust continues under new management without court involvement.
Most estate plans use both. A will catches assets that were never transferred into the trust and handles matters a trust cannot, like naming guardians for minor children. Relying on only one leaves gaps.
The Medicaid Look-Back
One other consequence of lifetime transfers often blindsides people. Medicaid, which covers long-term nursing home care for people who meet income and asset limits, penalizes applicants who gave away assets for less than fair market value before applying. The federal look-back period is 60 months, so Medicaid reviews every transfer you made in the five years before your application.8Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
If transfers show up inside that window, Medicaid imposes a penalty period of ineligibility whose length depends on the value transferred. Moving your home into an irrevocable trust six years before you need care may hold up. Doing it three years out will likely trigger a penalty when you need coverage most. Revocable trusts do nothing here because you still control the assets, so Medicaid counts them as yours. Only an irrevocable transfer that falls outside the look-back can potentially keep assets out of the calculation.