An Overview of Revocable Living Trusts in Colorado
Few people want to spend much time thinking about what will happen to their property after they die. However, without thorough and effective planning, individuals may inadvertently place undue hardships on their families and other beneficiaries.
Complicated laws, excess tax burdens, and uncertainty over which properties should pass to whom can create challenges and costs. A revocable living trust can ease these burdens and help property owners and their families focus on more important matters.
What Is a Revocable Living Trust?
A Revocable Living Trust is an estate planning solution that helps property owners transfer their property and assets at death without the need of going through a court administered process. The trust is a written document that should provide clear instructions for the management, distribution, and ownership of property. Should the trust maker, also called the grantor, become mentally incapacitated or pass away another appointed person, called a successor trustee should step in to administer the trust. It is considered “revocable” because the grantor retains the ability to amend the trust to reflect changing circumstances or decisions during his or her lifetime.
The stakeholders can include:
- Grantor / Trust Maker. The property owner who creates the trust.
- Trustee. The individual responsible for managing the trust property. Until he or she dies or becomes incapacitated, the grantor typically acts as the trustee.
- Successor Trustee. When the original trustee passes away or can no longer serve in this role, the successor steps in to manage the trust.
- Beneficiary. The trust establishes this person as the one who will receive the property after the death or incapacitation of the grantor.
What Happens to My Property If I Don’t Establish a Revocable Living Trust?
Revocable living trusts provide significant protection for individuals and their families in the case of their death or incapacitation. Under Colorado estate laws, properties typically go into probate after the deaths of their owners, potentially leading to complicated legal cases and considerable expenses for the beneficiaries.
A carefully crafted revocable living trust can help circumnavigate the probate process. Wills are subject to court involvement, and they become part of the public record; revocable living trusts, however, allow grantors to distribute their property privately.
How Do I Set Up a Revocable Living Trust in Colorado?
Setting up your own Colorado Revocable Living Trust is probably much easier than you think. Property owners generally enlist the help of an experienced and qualified estate planning attorney. A lawyer can carefully examine your circumstances and ensure that your trust is effectively written, funded, and executed. That being said here is a list of things to keep in mind when thinking about your drafting and funding your trust.
- What are your assets?
- Obtain the necessary paperwork for your assets.
- Decide who should inherit the trust property.
- Decide on a successor trustee.
- Drafting the trust documents.
- List of the trust’s beneficiaries.
Do I need a Revocable Living Trust?
As you may have heard before, in most cases, a Trust is not a something you get for yourself, rather it is something that should help make the lives of your family and other beneficiaries safer and easier. Some of the advantages of a Revocable Living Trust is a clearer, more streamlined succession plan that will not necessarily require the supervision of a probate court. Additionally, once the trust becomes irrevocable, the beneficiaries can enjoy a degree of protection as long as the assets remain in the trust and are managed by a third-party trustee.
What does a revocable living trust do for me?
A revocable living trust does two things. First, a revocable living trust allows your assets to avoid probate. Second, a revocable living trust allows you to keep your property protected from lawsuits brought against a beneficiary other than yourself. A revocable living trust does not reduce your taxes, it does not protect property from your own creditors or lawsuits, and it will not help you become eligible for government benefits. (There are other trusts available that serve these purposes, but a revocable living trust does not do any of these.)
What does it mean to fund a trust?
Funding a trust means transferring the ownership of property to the trust. In order for an asset to avoid probate, it should be transferred to your trust. For example, by signing a deed, you can transfer ownership of your real estate to your revocable living trust, keeping your real estate out of probate. A trust can also be named a beneficiary on bank accounts, retirement accounts, insurance policies, and other assets. Funding the trust is a crucial part of your estate plan since generally only the assets actually placed in trust can avoid probate and receive third party management and protection.
What does it mean to be a trustee or a beneficiary?
The trustee is the administrator of the trust but is not permitted to have beneficial use of the property unless also named as a beneficiary. Generally the person who sets up the trust wants to be the trustee for the rest of their lives. The grantor should select a successor trustee who would take over the management of the trust once the grantor becomes incapacitated or passes away.
The beneficiaries of the trust are those who benefit by receiving distributions from the trust. Generally this means the grantor’s children, grandchildren, or other family members, but can also include charitable organizations and other loved ones.
Are Revocable Living Trusts necessary?
The answer to that question will depend on a variety of factors such as your level or assets, your family situation, and your plans for the future. Only you can determine whether you need a trust or not, but with effective counsel you can get answers to all of your trust-related and other estate planning questions.
At Blake Harris Law, we take pride in helping our clients create strong trusts to set their minds at ease and facilitate transitions for their beneficiaries. Contact us today to schedule a free consultation.
