Ensure that your assets and properties will be passed on to your intended beneficiaries by having a well-crafted trust. This agreement efficiently distributes your estate without family disagreements, exorbitant taxes, and expensive probate costs.
To be prepared, you need to learn more about the basics and the different types of trusts you can choose from. You can discuss these with an experienced estate planning attorney in Colorado Springs, CO before determining your preferred option.
To put it simply, a trust is a legal agreement that allows an individual or institution to handle a trustor’s assets for a beneficiary. The parties involved are explained below:
The trustor is the individual who wants to give their funds and properties to others. They allow the trustee to have full control of the assets listed on their trust.
This is an individual or institution that temporarily manages the assets for the beneficiary. Once the assets are put into the trust, the trustee has the right to take action in the best interests of the trustor and the beneficiaries.
This is the party that will receive the benefits from the trust. The trustee will grant them the assets according to the terms written in the agreement.
Different types of trusts fall under revocable or irrevocable. Both are created during the trustor’s lifetime, so they are referred to as living trusts.
In revocable trusts, the trustor can alter, modify and even revoke the contents of the agreement within their lifetime. When the trustor dies, the agreement becomes irrevocable, and the assets don’t need to undergo probate.
On the contrary, irrevocable trusts do not allow alterations, amendments, and abrogation. Once the trust is set up, the trustor renounces ownership and control of all the assets included in the agreement. Irrevocable trusts are more tax-efficient because they involve little to no estate taxes.
This can be set up through a provision in a person’s last will. The appointed trustee will manage and distribute all the assets to the beneficiaries upon the death of the trustor.
In a bypass trust, the assets are divided into two sub-trusts: a revocable marital trust for the surviving spouse and an irrevocable family trust for the benefit of the spouse, children, and other beneficiaries. This type of trust protects the assets from being taxed multiple times since spouses can inherit each other’s properties tax-free.
Because there are many types of trusts, it can be hard to decide the right one for your goal. That’s why you need a reputable estate planning lawyer to help you. Let Beth Sparks Hunt Attorney at Law guide you on the best trust options available for you. Contact us today to learn more.
