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For many individuals, when speaking of creating a trust they are referring to a Revocable Living Trust. These type of trusts provides the best way to pass assets along to family members or other heirs. A trust is easy to establish and provides substantial flexibility to distribute your assets in accordance with your goals. The primary advantage of a living trust is that, instead of having to go to a court to get your assets transferred after you have passed away, your trustee can privately distribute your assets according to your written instructions.
Additionally, unlike a simple will, a trust allows you to determine who will get your assets and when long after you pass away. If you have heirs for whom you would like to provide, but who you are not sure could responsibly handle receiving a large amount of money, no strings attached, a trust gives you a way to provide for them according to your terms.
If you are considering establishing or updating a living trust, an experienced estate planning lawyer with the McKenzie Law Firm in Denver, Colorado will help you determine the best options.
What is a Revocable Living Trust?
Although we typically talk about a trust as though it is a thing, a trust really is a relationship. There are three people required to create a trust: a trustmaker, a trustee, and a beneficiary. The trustmaker sets up the trust and establishes the rules about who gets what, when. The trustee manages the trust assets according to the trustmaker’s instructions. The beneficiary is the person who receives assets from the trust.
Multiple people can fill each role, and you can fill all three roles while you are alive and able. You can reserve the power to modify or revoke the trust during your lifetime. Once you become disabled or pass away, a successor trustee of your choosing steps into your shoes and distributes the trust property to your beneficiaries according to the instructions you left in the trust agreement.
There a number of reasons why a revocable living trust can be a valuable part of your estate plan:
- You can easily amend the trust
- It is operative immediately while you are still living
- It is private
- You may use the trust assets as you wish
- You can transfer all kinds of property into the trust
- You may leave directions on management of the trust assets if you become incapacitated
- You can appoint a professional trustee to administer the funds for elderly or inexperienced beneficiaries
- You can choose which state’s laws control regarding taxation and trust administration
- You may provide for a special needs child without jeopardizing the child’s eligibility for certain public benefits
- You can appoint a successor trustee once you pass
- It avoids the costs and time of probate
Passing your assets to your heirs in a trust rather than outright can also provide them with asset protection benefits, and maybe some tax benefits as well.
Do You Need a Will Too?
Does having a revocable living trust obviate the need for a will? While you will likely want to put all of your major assets into your trust, there will almost certainly be assets that you keep in your individual name as well, such as your car or your checking account. Therefore, even if you have a trust, you will want to have a will in place to direct those assets outside your trust at your death into the trust. This is called a pour-over will.
Consider a Revocable Living Trust
Trusts provide a lot of power of flexibility to ensure that your assets get used for exactly the purpose that you want. It is, however, critical to ensure that your trust is set up properly because one mistake or poorly thought out provision can have significant long term consequences. Contact our firm to gain the assistance of experienced attorney Dan McKenzie and ensure that your trust benefits you and your heirs in the manner you intend, and complies with all applicable laws.