Everything You Need To Know About a Colorado Asset Protection Trust
Discover the benefits of the Colorado asset protection trust with Duncan Legal, PC. Safeguard your assets and secure your future. Contact us today for guidance.
Benefits of Asset Protection Trusts
In addition to protecting your assets from your future creditors, asset protection trusts offer several advantages, including the following:
Trusts generally offer high levels of privacy since they are not public documents. As such, the details of an APT are confidential and are an appropriate tool if you prefer to keep your financial affairs private.
Probate is a lengthy and costly legal process that a deceased person’s estate must pass through (in most cases) before it is distributed to their family members or beneficiaries.
With a properly structured APT, you can help your beneficiaries avoid probate in Colorado. That way, they can enjoy the assets you leave without stress when you’re no longer around.
An asset protection trust may offer shelter from estate and gift taxes when the trust assets pass to your beneficiaries after your death, depending on the trust terms.
If this is one of your goals, you can consult an estate planning attorney to help you understand what you must do to get this benefit.
Asset Protection Trusts in Colorado
Colorado law does not specifically provide for domestic asset protection trusts. Nevertheless, the state’s trust laws allow for the creation of trusts with some of the features mentioned in the previous section.
For instance, you can create an irrevocable trust with a spendthrift provision that prevents the voluntary or involuntary transfer of the trust assets to anyone other than the beneficiary.
However, some provisions in the Colorado Revised Statutes limit the scope of asset protection you can get under such trusts. Some of these statutory limitations are explained below.
Limitations of Asset Protection Trusts Under Colorado Law
Even though Colorado law allows settlors to create trusts with spendthrift provisions that prevent a creditor from accessing the trust assets, the law reduces the impact of such provisions by allowing some third parties to assess the trust property in several circumstances.
Under the law, spendthrift trust provisions cannot be used against the following third parties:
A child who is the beneficiary of a child support order against the trust beneficiary
A judgment creditor who secured a judgment against the beneficiary for payment for the provision of essential services
A creditor who does not fall within the above categories may access distributions from the trust assets to the beneficiary by obtaining a court order.
The law also allows creditors to assess distributions from the assets in an irrevocable trust made by a settlor if the distributions are for the settlor’s benefit.
These exceptions substantially reduce the scope of asset protection that can be achieved with an asset protection trust in Colorado.
Secure Your Assets With Help From Trusted Estate Planning Attorneys at Duncan Legal, PC
Asset protection trusts in Colorado offer low levels of protection and may be inadequate to secure your assets against dissipation or loss due to third-party and creditor claims.
There are alternatives you can try from the several available asset protection strategies. But you need to pick the option that suits your circumstances and offers you the highest possible protection.
Our skilled attorneys at Duncan Legal, PC, can assess your case and help you create a personalized asset protection strategy that meets your unique needs and offers maximum security under the law.
So, if you have questions about your asset protection options in Colorado, do not hesitate to contact us. Let us help you secure your assets for the future.
Schedule an appointment immediately to get started.