Who may create a lifetime trust?

• A. Only individuals
• B. Only corporations
• C. Any person or entity
• D. Only heirs of the grantor

Answer: (C)

A lifetime trust is created by a settlor who has the legal capacity to create a trust and who transfers property to a trustee for the benefit of beneficiaries. That capacity isn’t limited to a single type of person or entity—any person or entity that can own and convey property can be the settlor. So both individuals and legal entities (like corporations, banks, nonprofit organizations, partnerships, or even another trust) may create a lifetime trust. The other options erroneously restrict who can create a trust. Also, remember lifetime (inter vivos) trusts are created during the grantor’s life, unlike testamentary trusts that arise from a will after death.