What Is a Revocable Trust?
You may be worried about protecting the assets you have spent a whole lifetime building for the future generations of your family. Estate planning, especially through the creation of trusts, is a wonderful way of ensuring that the assets you worked so hard to build remain in the family for a long time.
Trusts may be revocable or irrevocable. Revocable living trusts in Colorado are written documents that specify the management, distribution, and ownership of personal assets. In the event that the person creating the trust (called the grantor) dies or becomes incapacitated, the chosen successor trustee will handle the trust administration.
The living trust is called revocable because the grantor retains control of the trust document over his lifetime. As such, the grantor can change the terms of the trust as he wishes. On the other hand, you cannot withdraw or alter an irrevocable living trust after it has been signed except in extremely rare and limited circumstances.
Do You Need a Living Trust in Colorado?
Trusts are one of the most effective ways to protect assets, avoid probate, and fulfill many other estate planning goals in Colorado.
Having a living trust as part of your Colorado estate planning strategy is optional. However, many individuals prefer to use a living trust document because it permits total control over assets
You may need the services of a knowledgeable attorney experienced in trusts and estate planning laws to help you determine which kind of trust would suit your family’s needs. Consider hiring the services of Duncan Legal, PC, to help you kickstart your journey toward financial security today!
Advantages of a Living Trust
The following are some reasons why you may consider establishing a living trust as part of your estate plan:
- Makes Things Easier for Your Family
The main reason why people establish living trusts in Colorado is to make things easier for their relatives after their demise. Living trusts help you transfer your property to your heirs after death without wasting time, effort, and money on the court-administered probate process.
Property left through a will (as opposed to a living trust) could be held up in probate court for months or even years, incurring hefty court costs and attorney fees. In contrast, property left through a trust can be dispersed to your beneficiaries much faster and sometimes without the assistance of an attorney.
Colorado is, however, one of the states that have embraced the Uniform Probate Code (UBC), a model statute that streamlines the probate process. In other words, probate in Colorado may have a more simplified probate process than in states that have not prescribed to the UBC.
If you leave your possessions via a will, it must go through a probate court proceeding. Wills that are probated typically go into the public domain along with other details, including the value of your assets and an inventory listing the items you left behind.
However, living trusts afford you privacy by avoiding probate court. The terms of the trust are confidential, granting you a layer of asset protection and safeguarding the details of the property you leave behind.
Transfer of Trust Property to Minor Children
A further advantage of living trusts is that regulating property transfer to minors is easier. A living trust allows you to leave the property in the trust until the child reaches a particular age under the trustee’s supervision.
Planning for Incapacitation
Another advantage of living trusts? If, due to age or any other reason, you become unable to care for yourself, you can avoid conservatorship. You already have a trustee managing the trust’s property and will not need to go through the conservatorship process.
How Do I Set Up a Revocable Living Trust in Colorado?
- Type of trust: The first step in creating a revocable living trust in Colorado is to decide what type you need. Your Colorado living trust can be individual or joint (for married couples).
- Choose trust property, trustees, and beneficiaries: The next step is to choose the trust property and the assets you wish to include in the living trust. You will also have to pick the trustee and beneficiaries for your living trust. The trust beneficiaries are individuals who will receive the trust property.
- Draft and sign trust agreement: A lawyer will usually draw up your revocable living trust agreement with all your chosen specifics and limitations. The agreement has to be then signed before a notary (public), at which point it takes effect.
- Transfer ownership of property: The trust is funded by transferring ownership of your selected assets to the trust. The trust will become functioning after this is finished.
Who Can Be a Trustee of a Revocable Living Trust in Colorado?
The trustee is the person or institution that administers the trust. They are responsible for ensuring that the assets you have set aside are managed according to your wishes.
You may choose yourself, someone you know and trust (such as family members or friends), or an experienced professional such as a bank trust department, accountant, lawyer, or estate planner. Whoever you choose as a trustee should have basic knowledge about managing assets and investments.
How Much Does It Cost to Create a Living Trust in Colorado?
It’s hard to say how much money you will need to create a Colorado revocable living trust. In most cases, the cost will depend on the complexity of your case and the method you use to create the living trust.
Using an online tool will likely be less expensive than hiring an attorney to create your living trust. However, this method may cause problems as living trusts require extensive research, attention to detail, and knowledge of the law.
The other method will be to hire an attorney. Although this method may be more expensive, it gives you peace of mind knowing professionals are handling your case. Select a lawyer experienced in trusts and estate planning laws. Please ensure you are aware of the costs and clearly understand them to avoid miscommunication.
It’s important to note that estate planning is ongoing, and you may need to update your trust periodically. When this happens, you will need a lawyer or financial advisor to help review the document and make any necessary modifications. So, factor in additional costs for legal fees when creating a living trust in Colorado.
What Happens to My Property if I Don’t Establish a Revocable Living Trust?
If you hold any assets at the time of your death that aren’t covered by your trust, probate would probably be necessary to transfer those assets to the name of a living beneficiary.
Funding your revocable living trust is even more crucial than setting up your trust in the first place.
If you don’t fund your living trust or accumulate new assets over time that you fail to transfer into the trust’s name, the trust is meaningless and can result in several issues.
Revocable Trusts and Estate Taxes
Colorado has no estate tax, although, under federal law, estates worth more than $12.92 million are subject to tax.
Even for estates exceeding the $12.92 million threshold, an AB trust can transfer assets from one spouse to the remaining spouse to reduce or avoid tax liability.
With the help of an experienced estate planner, you can rest assured that your family’s future will be secure. Duncan Legal, PC, is available to help you navigate this process and create a plan for providing for your loved ones after your passing.
Get Professional Help with Your Colorado Revocable Trust
Establishing a living trust in Colorado requires research, knowledge of the law, and proper execution. For this reason, it is highly advisable to seek the help of an experienced estate planner. An attorney specializing in trusts and estates can guide you through the process and ensure your trust meets all legal requirements.
At Duncan Legal, PC, we are passionate about helping our clients ensure their assets and wishes are honored. Our experienced attorneys can help you create a living trust that adequately protects your interests and plans for the future. We believe in protecting your rights and advocating for your best interests. Contact us today to learn more about our services.