Trusts are legal documents that give the document holder that allows a third party to hold assets on behalf of a beneficiary or beneficiaries.

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Revocable Trust vs. Irrevocable Trust in Estate Planning

When it comes to Estate Planning, Trusts allow you to avoid probate, minimize taxes, provide organization, maintain control, and provide for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your people what to do, and when.

While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let’s take a look at both so you’ll have the information you need:

Revocable Trusts 

Revocable trusts are also known as “living trusts” because they benefit you during your lifetime and you can alter, change, modify, or revoke them if your circumstances or goals change.

  • Able to stay in control of your revocable trust. You can transfer property into a trust and take it out, serve as the trustee, and be the beneficiary. You have full control. Most of our clients like that.
  • Can select successor trustees to manage the trust if you become incapacitated and when you die. Most of our clients like that they, not the courts, select who’s in charge when they need help.
  • Your trust assets avoid probate. This makes it difficult for creditors to access assets since they must petition a court for an order to enable the creditor to get to the assets held in the trust. Most of our clients want to protect their beneficiaries’ inheritances.

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Irrevocable Trusts 

When irrevocable trusts are used, assets are transferred out of the trustmaker’s estate into the name of the trust.  You, as the trustmaker, cannot alter, change, modify, or revoke this trust after execution. It’s irrevocable and you usually can’t be in control.

  • Irrevocable trust assets have increased asset protection and are kept out of the reach of creditors.
  • Taxes are often reduced because, in most cases, irrevocable trust assets are no longer part of your estate.
  • Trust protectors can modify your trust if your goals become frustrated.

As experienced estate planning attorneys, we can help you figure out whether a revocable or irrevocable trust is a good fit for you and your loved ones.  Call us at 1-720-660-9847 to make an appointment today!

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Should your child’s guardian and trustee be the same person?

If you have overheard any discussion about estate planning, you have likely heard the words “guardian” or “trustee” tossed around in the conversation. When it comes to estate planning, who will be ultimately in charge of your minor child is an important decision that requires consideration of many factors. Although there is no substitute for you as a parent, a guardian is essentially someone who steps in as a parent, assuming the parental role and raising the child through adulthood. A trustee, on the other hand, is in charge of managing the financial legacy that has been left behind for the minor.  As a parent, you need to consider the characteristics needed for each role.

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Who Makes a Good Guardian?

When choosing a guardian, the top factor to consider is who is the best person that will love and raise your child in a manner that you would. This would include religious beliefs, parenting style, interest in extracurricular activities, energy level, and whether or not he or she has children already. Keep in mind that a guardian will provide day-to-day love, care, and support for your child. While the guardian you choose may be great with your children, he or she may not be great with money. For this reason, it may make sense to place the financial management of your minor child’s funds in the hands of someone else.

Who Makes a Good Trustee? 

Not surprisingly, when choosing a trustee, the most important characteristic is that he or she is great with finances. Specifically, the trustee must be able to manage the funds in accordance with your intent and instructions that are left in your trust. Consider whether he or she will honor your wishes. Likewise, should you choose to grant your successor trustee discretion in making financial decisions regarding the management of funds left behind you should ensure the individual’s decisions will be aligned with your intent? In short, you want to choose a successor trustee who will act in your minor child’s best interest within the limits you have set forth in your estate plan documents. If you choose two different people for the role of guardian and trustee, make sure to consider how the two get along as they will likely have to work together throughout your minor’s childhood and possibly into adulthood.

Seek Help to Make Your Decision

While estate planning can be daunting, it does not have to be. Contact a knowledgeable estate planning attorney to help guide you through this process. We can explain your options and advise you on the best plan that will follow your wishes while at the same time meeting your family’s needs.

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The Top 2 Ways the Court Gets Involved in Your Estate

No one wants unnecessary court involvement in their life. But without careful and proactive estate planning, chances are that some aspect of your estate will end up being decided there.

Here are two of the most common ways court proceedings can make their way into the management and distribution of your assets, along with the estate planning measures you can take to avoid them.

Guardianship and Conservatorship

If you experience an inability to make decisions on your own behalf, also known as legal incapacity, and you don’t have provisions for what to do in this situation clearly outlined in your estate plan, it falls upon the guardianship or conservatorship court to decide who will become responsible for handling your finances, lifestyle, and medical care. You can become legally incapacitated because of an accident, injury, or degenerative illness. In the case of guardianship and conservatorship (sometimes called “living probate”), your estate’s details, as well as discussion about your medical conditions, may be made public and be the topic of court proceedings.

How to avoid it: To make sure the government doesn’t get involved in your wealth management and health care during your lifetime, you need to determine who will be your power of attorney. You can appoint durable and medical powers of attorney for various categories of management in your life and estate. A solid long-term care plan, living will, and fully-funded revocable trust are also crucial components in avoiding living probate proceedings.

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The Probate Process

Probate is the name for the court proceeding that takes place after your death to prove that your will is valid and that its terms are carried out accurately and legally. Probate brings your financial and personal affairs out into the open via public forum, and your estate can dwindle due to legal fees incurred during this time. It can also take an excessive amount of time due to the slow nature of court proceedings, dragging out a potentially stressful episode for your family.           

How to avoid it: Having a will does not avoid probate, since all wills must go through probate to be validated. Although you’ll often hear about joint tenancy, beneficiary designations, and other probate avoidance options as alternatives to wills, only a fully funded revocable trust can consolidate the management and preservation of all types of assets. So, the best way to avoid probate is to work with your estate planning attorney to establish and fully fund a revocable living trust and name your beneficiaries and trustees ahead of time.

We’re here to help

Estate planning can be a daunting thing to consider when you’re busy. And we know you are. That’s why we work diligently to present you with the best estate planning tools and strategies in a straightforward manner, letting you get back to focusing on what’s most important to you. Call us at 1-720-660-9847 today to schedule an appointment.

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Get Your Affairs in Order With Estate Planning

The idea of getting your financial and legal house in order is likely the last thing on your mind during the busy holiday season. But, getting started with estate planning is much easier than you think. In fact, the end of the year is a good time to reflect upon the year that has passed and focus on your aspirations for the future. Don’t hold this task off for later. Some careful thought and a little bit of work now can go a long way to help you feel 100% confident about moving forward in the new year.

In preparation for the upcoming tax season, you may have already begun gathering some paperwork, like your property tax bill, year-end mortgage statement, or final pay stubs. Although filing your income taxes is different than putting your affairs in order, you’re already in paperwork “mode”, so now is the perfect time to reassess your legal and financial situation to create a new plan or update an existing one that no longer suits your circumstances.

Basic Estate Planning

All you need to do is start with a general list of everything that you own. You don’t have to complete a comprehensive inventory. Think instead about categories of assets, like bank accounts, life insurance, real estate, vehicles, etc.

Then, draw out your family tree and think about who you would like to receive what you’ve spent your lifetime building. If you don’t put your wishes in writing, your estate – everything you’ve worked so hard to build – may be liquidated and will be distributed according to the government’s plan, known as intestacy.

The foundation of all estate plans are wills and trusts. Which one is the best for you depends on your individual circumstances.

A will is a written legal declaration of your intentions on how you want your property disposed of upon death. This document is not legally enforceable until after your passing and, therefore, it can be changed at any time before you die or have diminished mental incapacity. A will allows you to control what happens after you are gone.

A trust is a legal arrangement where a trustee manages property for the benefit of the beneficiaries. There are many kinds of trusts, ranging from living trusts to complex dynasty trusts. Each type of trust has its own benefits and drawbacks, so talk with us about which one is the best fit for your circumstances.

Although there are many types of trusts, the one most people need is a living trust. It’s a great alternative to a will, because it can be changed during your life, can provide financial protection should you become incapacitated, and yet often is easier and less expensive for your family to handle upon your death.  Another common type of trust is a testamentary trust, which is one that is contained within the provisions of the will. Just like a will, a testamentary trust is not operative until your death, making them a little less flexible and more limited in function.

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Benefits of Estate Planning

Estate planning can help provide financial stability for loved ones, designate a guardian for minor children or disabled family members, distribute property to chosen charitable organizations, reduce tax liabilities, and achieve other personal and family goals. Organizing your financial and legal affairs is your opportunity to make impactful decisions on your assets, money, and healthcare and leave a legacy after you are gone.

Planning your estate may feel like a daunting task. We’re here to help. You don’t have to do this alone. Call us at 1-720-660-9847 to discuss your options and organize your future.

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4 Tips for Avoiding a Will or Trust Contest

A will or trust contest can derail your final wishes, rapidly deplete your estate, and tear your loved ones apart. But with proper planning, you can help your family avoid a potentially disastrous will or trust contest.

If you are concerned about challenges to your estate plan, consider the following:

1. Do Not Attempt “Do It Yourself” Solutions

If you are concerned about an heir contesting your estate plan, the last thing you want to do is attempt to write or update your will or trust on your own. Only an experienced estate planning attorney can help you put together and maintain an estate plan that will discourage lawsuits.

2. Let Family Members Know About Your Estate Plan

When it comes to estate planning, secrecy breeds contempt. While it is not necessary to let your family members know all of the intimate details of your estate plan, you should let them know that you have taken the time to create a plan that spells out your final wishes and who they should contact if you become incapacitated or die.

3. Use Discretionary Trusts for Problem Beneficiaries

You may feel that you have to completely disinherit a beneficiary because of concerns that a potential beneficiary will squander their inheritance or use it in a manner that is against your beliefs. However, there are other options than completely disinheriting someone. For example, you can require that the problem beneficiary’s share be held in a lifetime discretionary trust and name a third party, such as a bank or trust company, as trustee.

This will ensure that the beneficiary will only be entitled to receive trust distributions under the terms and conditions you have dictated. You will also be able to control who will inherit the balance of the trust if the beneficiary dies before the funds are completely distributed.

4. Keep Your Estate Plan Up to Date

Estate planning is not a one-time transaction – it is an ongoing process. Therefore, as your circumstances change, you should update your estate plan. An up-to-date estate plan shows that you have taken the time to review and revise your plan as your family and financial situations change. This, in turn, will discourage challenges since your plan will encompass your current estate planning goals.

Seek Will or Trust Contest Help

By following these four tips, your heirs will be less likely to challenge your estate planning decisions and will be more inclined to fulfill your final wishes. If you are concerned about heirs contesting your will or trust, you should seek professional advice now. Call us at 1-720-660-9847 today to schedule a free consultation and learn more about how we can help.

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What to Ask A Potential Will and Trust Attorney

It goes without saying that estate planning is incredibly important and is more than just having a will or a trust. Estate planning offers a sense of security for you and your loved ones that your wishes will be carried out. With such an important and personal endeavor, selecting the right Wills and Trusts Attorney is crucial.

Doing your homework, familiarizing yourself with the options, and asking questions will be critical to getting someone who’s actively looking out for your interests.

There are several key factors you should consider when interviewing potential attorneys and ultimately deciding which one to hire.  

Funding a Trust

Will your estate planner help with funding your trust (or otherwise aligning asset ownership with your plan)? How much of the funding process with they do for you?

For some clients, this can be a critical service due to the complexity of assets he or they may own that need to be accounted for. Having someone thorough and reliable in this part of the process will make it easier to ensure the estate planning is completed properly.

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Organization and Payment

What does your estate planning process look like? How long will it take until the entire process is complete? When is payment due and how do I pay?

These questions may seem simple, but, not unlike when you pay for home repairs, it’s important to have an idea of the end date of the process. It is also important to know when you are expected to provide information and payment so that you are not the cause of any delays. Additionally, you never want surprises when it comes to payment amounts or dates. It is common to put down a retainer or deposit with a wills and trusts attorney, but it’s always important to know ahead of time.

Long-term Access

What long-term plans do you have for your firm? Will you or another attorney in your firm be around to help me in the future?

Creating a will or trust isn’t a one-and-done process. Wills and trusts are frequently revisited over the years because of changes in your circumstances and in the law. If at all possible, it’s best to have the same attorneys working with you. Although you can switch attorneys or firms each time you need an update, attorneys with plans to continue to offer services into the future can be a safer bet for ensuring continuity in your estate planning.

Planning for the Future

Can you help my family members if I become sick or when I die? Just because an attorney prepares estate planning documents, does not mean that they will help with estate or trust administration. Having the attorney who prepared your estate planning documents to assist your family during times of incapacity or at your death can be extremely helpful. Since he or she is already aware of your wishes and will have a copy of your documents, addressing these difficult situations can be quicker and involve less hassle.

Have Questions? Let Us Answer Them

There’s no reason to get overwhelmed by the choice of a wills and trusts attorney. Asking just a few simple, but critical, questions can help you find someone who’s on the same page. Contact us or give us a call today to schedule an appointment.  We would be happy to answer these questions and any others you may have.

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Do You Really Need A Trust?

Although many people equate “estate planning” with having a will, there are many advantages to having a Trust rather than a will as the centerpiece of your estate plan. While there are other estate planning tools (such as joint tenancy, transfer on death, beneficiary designations, to name a few), only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death.

What Are The Benefits Of Having A Trust

One of the primary advantages of having a trust is that it provides the ability to bypass the publicity, time, and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily cost thousands of dollars and take several months to more than a year to resolve. Or course, not all assets are subject to probate. Some exemptions include jointly owned assets with rights of survivorship as well as assets with designated beneficiaries (such as life insurance, annuities, and retirement accounts) and payable upon death or transfer on death accounts. But joint tenancy and designating beneficiaries don’t provide the ability for someone you trust to manage your property if you’re unable to do so, so they are an incomplete solution. And having a will does not avoid probate.

Of note, if your probate estate is small enough – or it is going to a surviving spouse or domestic partner – you may qualify for a simplified probate process in your state, although this is highly dependent on the state where you live and own property. In general, if your assets are worth $100,000 or more, you will likely not qualify for simplified probate and should strongly consider creating a trust. Considering the cost of probate should also be a factor in your estate planning as creating a trust can save you both time and money in the long run. Moreover, if you own property in another state or country, the probate process will be even more complicated because your family may face multiple probate cases after your death, one in each state where you owned property – even if you have a will. Beyond the cost and time of probate, this court proceeding that includes your financial life and last wishes is public record. A trust, on the other hand, creates privacy for your personal matters as your heirs would not be made aware of the distribution of your assets knowledge of which may cause conflicts or even legal challenges.

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Why Should I Create a Trust

A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not ever be able to manage these assets on their own. Through a Trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met for the person to receive the benefit of the gift. Furthermore, if you ever become incapacitated your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid a Guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.

Trusts are not simply just about avoiding probate. Creating a Trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you are unable to manage your own assets. Simply put, the creation of a Trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving this critical life decision to others, like a judge. To learn more about trusts – and estate planning in general, including which type of plan best fits your needs – contact us today.

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Designating Beneficiaries in Blended Families

Whether you are in your first marriage or have remarried after a divorce, blended families are a common part of modern society. That being said, it is important to understand that blended families and subsequent marriages create important and unique issues when it comes to estate planning. This comes into play mostly with blended family beneficiary designations.

You may need to account for a prior spouse who is still caring for minor or disabled children, and also possibly make sure your current spouse and any children you had together – and any stepchildren – are also taken care of after you pass away. The good news is that estate planning can take all of these factors into account. This is true whether you are putting together your estate plan for the very first time or if you need to update your current estate plan due to a change in your circumstances.

Setting Up a Trust For A Blended Family

It is common for married couples to leave everything to one another in their wills, or list their spouse as the sole beneficiary of any assets that allow for this designation. The result is that if one spouse passes away before the other, the surviving spouse will own all of the assets left behind outright. While this may work for some families, when it comes to blended families this strategy may inadvertently disinherit children or spouses from a prior marriage.

One way to provide for a current spouse without leaving out children from a prior marriage is to place some or all of your assets in a trust that the spouse can use during his or her lifetime. Once the spouse dies, all of the property in the trust can go to the children from your current and prior marriage, or to other intended beneficiaries.

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Beyond Simple Beneficiary Designation

The plain and simple beneficiary designation on assets (like life insurance, bank and investment accounts, etc.) that allow for outright distribution to the surviving spouse can inadvertently wreak havoc on an estate plan when a blended family is involved. These complications can apply to a couple who has children from prior marriages, someone who remarries late in life, or someone on their second or third marriage and beyond.

For example, you may purchase a large life insurance policy and designate your current spouse as the sole beneficiary and pass away shortly thereafter. Since the beneficiary designation takes precedence over your estate planning documents, the proceeds of the life insurance will not be placed in that trust and will be distributed outright to your current spouse. If you had instead named the trust as beneficiary, you could have determined when and how the funds would be spent for the benefit of your heirs.

As an example, the funds could be used to provide support for your surviving spouse during his or her lifetime while also allocating a portion to help your children to pay for college, finance a down payment on a first home, and pay for a wedding, or start a business. The key is that the money can be available for your spouse, but not with unfettered control, and still available for your children.

Ensuring Your Wishes Are Followed

While you hope that a surviving spouse with honor your wishes even if they are not in writing, you may accidentally disinherit your children. Instead, a knowledgeable estate planner will use your trust as the centerpiece of your estate plan and make sure to coordinate and align the beneficiaries on your assets so that your intent will become the reality once you have passed away.

We can explain all of the options available to you and put together a plan and beneficiary designation that best suits your family’s needs. Contact us today to schedule a free consultation.

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10 Common Types of Trusts

Considering the myriad of trusts available, creating an estate plan that works can seem daunting.  However, that’s what we, as estate planning attorneys, do every day. We know the laws and will design a plan which addresses your specific situation.  

Here’s a look at the basics of ten common types of trusts to provide a general understanding. There will not be a quiz at the end. All you need to do when we meet is share your goals and insight into your family and financial situation. We will design a plan that incorporates the best documents for your situation. 

Bypass Trusts

Commonly referred to as Credit Shelter Trust, Family Trust, or B Trust. Bypass Trusts do just that: bypass the surviving spouse’s estate to take advantage of tax exclusions and provide asset protection.  

Charitable Lead Trusts

CLTs are split-interest trusts, which provide a stream of income to a charity of your choice for a period of years or a lifetime. Whatever’s left goes to you or your loved ones.

Charitable Remainder Trusts

CRTs are split-interest trusts. They provide a stream of income to you for a period of years or a lifetime and the remainder goes to the charity of your choice.  

Special Needs Trusts

SNTs allow you to benefit someone with special needs without disqualifying them for governmental benefits. Federal laws allow special needs beneficiaries to obtain benefits from a carefully crafted trust without defeating eligibility for government benefits.

Generation-Skipping Trusts

GST Trusts allow you to distribute your assets to your grandchildren, or even to later generations, without paying the generation-skipping tax.

Grantor Retained Annuity Trusts

GRATs are irrevocable trusts. They are used to make large financial gifts to family members while limiting estate and gift taxes.

Irrevocable Life Insurance Trusts

ILITs are designed to exclude life insurance proceeds from the deceased’s estate for tax purposes. However, proceeds are still available to provide liquidity to pay taxes, equalize inheritances, fund buy-sell agreements, or provide an inheritance.

Marital Trusts

Marital Trusts are designed to provide asset protection and financial benefits to a surviving spouse. Trust assets are included in his or her estate for tax purposes.

Qualified Terminable Interest Property Trusts

QTIPs initially provide income to a surviving spouse and, upon his or her death, the remaining assets are distributed to other named beneficiaries. These are commonly used in second marriage situations and to maximize estate and generation-skipping tax exemptions and tax planning flexibility.

Testamentary Trusts

Testamentary Trusts are created in a will. These trusts are created upon an individual’s death and are commonly used to provide for a beneficiary. They are commonly used when a beneficiary is too young, has medical or drug issues, or may be a spendthrift. Trusts also provide asset protection from lawsuits brought against the beneficiary.

Which is the Best Option for You?

There are many types of trusts available. We’ll help you select which trusts, if any, are a good fit for you. Contact us today to schedule an appointment.

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