There are many unexpected events that occur throughout people’s lives in Colorado. People try to plan for those types of events by having various types of insurance or having savings for unforeseen financial difficulties. People should also plan for passing as well. There is no stopping time and growing older is inevitable, but people cannot predict when they may pass or when they may no longer be able to manage their own affairs.
Wills are a common way that people plan for their passing and these are an effective way of ensuring property goes to the people they want it to go to. However, people also use trusts as well which have benefits people can utilize while they are living in addition to distributing their property upon their death. There are many different trusts people can use for various purposes, but they are generally either revocable or irrevocable. Both have advantages and disadvantages and people need to choose based on the purpose of the trust.
Irrevocable Trusts
As the name suggests irrevocable trusts cannot be modified in any way. Once they are set up and funded, people cannot make changes and the property put into them cannot be taken out. Because people lose control over the assets this has its advantages. Property in an irrevocable trust avoids estate taxes, it also protects it from creditors, can be used to protect assets when people are living in nursing homes and have other uses.
Revocable Trusts
Revocable trusts on the other hand can be modified throughout people’s lives. They also retain control over their property even though it is in a trust. This allows people more flexibility and still allows people to avoid probate. They can also have other trustees named so if people become incapacitated someone is already in place to manage assets. However, because people retain control over the assets, they are subject to estate taxes and can be taken by creditors.
People in Colorado have different needs and there are different trusts for those different needs. Experienced attorneys understand the different trusts and could be a useful resources