Denver families are becoming increasingly interested in how trusts provide current and end-of-life solutions. Our Denver trust attorneys can review your financial situation to determine whether a trust complements your estate plan. We start by reviewing your finances and concerns. Then, we provide you with all the information you need to make an informed decision.
3 MAIN TYPES OF TRUSTS
When researching trusts, you may come across 20 or more different types, such as credit shelter trusts, special needs trusts and spendthrift trusts. These classifications more accurately describe the reasons people put them in place, as opposed to what type of trust they are. At Johnson Law Group, we rely on these main classifications:
1. Irrevocable Living Trusts
Families in Denver often consider this the riskiest type of trust. The belief stems from the fact that, even if you change your mind afterward, you cannot transfer the assets back to yourself. It completely severs ownership. Clients tend to choose this type of trust when they need to shield assets from lawsuits, creditors and taxes.
2. Revocable Living Trusts
Our clients often prefer this trust, because they create it during their lifetimes and have control over it. You generally get to serve as trustee of the trust and can control the assets that move in and out of its ownership. You may also terminate the trust if you later decide it does not serve your needs.
3. Testamentary Trusts
Some people prefer not to create the trust before death. This allows them to retain full control over their own assets with no complications. To get around this, they create a solid will that converts personal assets into trust assets after they pass away.
FEASABILITY OF TRUSTS FOR YOUR FINANCES
In the past, only the wealthy relied on trusts. They provided a useful vehicle to fund college expenses and protect inheritances from taxes. Over the past few years, middle-class Americans have also begun to put trusts to use. In fact, CNN asserts that the days of needing to be a millionaire to create a trust are behind us.
Financial experts recommend anyone with at least $100,000
in net worth to consider trusts. Assets, in this case, do not only refer to cash but include all forms, such as stock, real estate property, retirement accounts or boats.
TOP BENEFITS OF TRUSTS
Feasibility is only one aspect of knowing whether a trust complements your estate plan. The next step is figuring out what the benefits are and which ones you need. Note that the benefits may differ based on the specific type of trust you choose:
• Distributes assets to beneficiaries without paying for the cost of probate
• Distributes assets in a more timely manner compared to probate proceedings
• Allows beneficiaries and heirs to maintain privacy
• Reduces taxes on large inheritances that may otherwise become subject to estate taxes
• Protects assets left for dependents, such as elderly parents, minors, special needs people and even pets
• Protects income-related eligibility for disabled and elderly family members
EFFECT ON THE WILL
When creating an estate plan, many people wonder whether a will or trust creates better protections. In some cases, an individual may only decide to use one or the other. However, trusts do not necessarily invalidate the need for a will. For instance, if the individual chooses to create a testamentary trust, then a will becomes necessary.
In addition to this, people who create trusts may rely on wills to distribute items that may only hold sentimental value. Wills also help account for any property that did not make it into the trust before the individual passes away.
PROCESS FOR CREATING A TRUST
The specific steps for creating a trust depend on the specifics of your situation and the type of trust you choose. These are some general steps your lawyer may take to complete the process.
1. Gather Documents
Your Denver trust attorney will inform you of the documents you need. The documents requested depend on your financial situation and the reason you wish to create a trust. Some of the items you may need to source include tax returns, property titles and bank statements. Your lawyer may also use this information to conduct a full review of your finances.
2. Make Necessary Choices
When creating a trust, there are several specifics that you have control over. For instance, the first thing you often need to decide is whether you want to create a shared or individual trust. Shared trusts may make sense for married couples.
Secondly, determine who the successor trustee will be. This person manages the trust on your behalf if you are unable to do so and after you pass away. Your third decision is identifying what assets to include in the trust. Finally, choose your beneficiaries and the terms under which they may receive distributions.
3. Create the Document
Your Denver trust attorney will provide the necessary paperwork and walk you through the process of creating the trust. The trust formalizes the decisions you made, in writing. You then need to sign these documents before a notary public to make them legitimate.
4. Make Title Changes
The final step involves changing the titles of properties absorbed by the trust. This is necessary to ensure the proper transfer of ownership. Once transferred, if it is an irrevocable trust, the trust owns the property. For a revocable living trust, you own the property as a trustee of the trust, instead of as an individual.
WHY HIRE A DENVER TRUST LAWYER
There are several apps and automated service providers promising cheap trust services. Sometimes, these work perfectly. However, there are also instances where the apps or service providers miss a step and invalidate the trust. They also tend to offer one-size-fits-all plans that do not actually work for every situation.
Hiring an experienced trust lawyer ensures you have someone who knows your case, can provide specific recommendations and will answer your burning questions. Our Denver trust lawyer, Shannon O'Keefe brings exceptional experience to the table. Why settle for less? Contact us
to find out how we can help you create your trust as soon as possible.