What are intervivos trusts? They may be the answer for people looking to protect their wealth.

You have accumulated substantial wealth during your lifetime. You've opened bank accounts and signed insurance policies. And finally, thinking ahead, you've drawn up a will specifying how your assets should be distributed among your loved ones upon your death.

Your last will and testament need not be a bone of contention. You can preserve your wealth for your heirs and protect it from taxation, creditors and unnecessary legal contests by opting for intervivos, or living trusts. They can also help your heirs avoid paying large sums of money in estate taxes.

Sandra Jones Anderson, a Los Angeles attorney who specializes in estate planning and probate, says intervivos trusts are control mechanisms for transferring assets, allowing you to avoid probate costs and ensure your intentions. "The controls can be imposed on the surviving spouse and children," she says. "You can designate a family partnership and have that as part of the trust."

These living trusts are also legal arrangements that transfer assets--from real estate to jewels to cash--from one person to another for the benefit of a third. "The person who opens the trust is the donor; the person on behalf of whom the trust is established is the beneficiary," says Nahum Daniels, founder of Daniels Capital Strategies in New York. Daniels says the donor or settlor should select trustees carefully. "The trustee--a bank or a friend--has the legal and moral responsibility to manage the trust assets exclusively for the beneficiary." He advises working closely with an attorney, a certified financial planner or an accountant who understands the Internal Revenue Code.

There are two types of intervivos trusts: revocable living and irrevocable. According to Anderson, a revocable living trust can save fees in the probate process. In addition, revocable living trusts offer easy distribution of assets in the case of owner disability or incompetence. If a donor suffers from, say, Alzheimer's disease and can no longer sign his or her name, the named beneficiary will receive assets automatically.

An irrevocable trust has all the features of a revocable trust and can reduce transfer taxes in large estates that are more than $1.2 million for a married couple. Daniels recommends a life insurance trust for tax planning purposes as a type of irrevocable trust. He says that if a life insurance trust is set up properly, proceeds of a taxable estate can be delivered income- and estate-tax free.

But Anderson says to beware of irrevocable trusts. "The advantage of irrevocable trusts is that creditors can't get to the money," she says. "But the disadvantage is that the terms can't be altered, and most people change their minds during their lifetime." Even revocable intervivos trusts can be a headache. Some people who set up living revocable trusts never put anything into them because transferring titles can be paper intensive and complicated.

Overall, intervivos trusts provide continuity of asset management as well as tax leverage. But the particulars differ according to each family and individual. Daniels notes, "Trusts always vary from case to case, reflecting the individual needs of the donor and beneficiary."

Anderson hastens to add that there are expenses associated with handling an intervivos trust, especially after the donor dies. "A lot of people don't realize that, she says.