What is an inter vivos trust?

An inter vivos trust is defined as a trust that is created and becomes effective during the lifetime of the grantor. This type of trust allows the grantor to manage their assets while they are alive and can be modified or revoked if it is a revocable inter vivos trust. The primary benefit of an inter vivos trust is that it can help in the management and distribution of the grantor's assets without going through the probate process upon their death.

In contrast, a trust that only becomes effective after the grantor's death would be classified as a testamentary trust, which does not take effect until the grantor passes away. A trust established by a court does not fall under the category of inter vivos trusts, as it is not created by the grantor but rather ordered by the court typically in cases concerning estate management or after someone has passed away. Lastly, a mandatory trust created by law is a construct that serves specific legal requirements, which is different from an inter vivos trust that an individual creates intentionally during their lifetime. Thus, the definition fits the concept of an inter vivos trust perfectly, making it the correct answer.