As one ages, there are many decisions which must be made. Among these decisions, the Colorado resident needs to consider his or her health concerns, family dynamics, and assets. These issues provide the foundation for the various estate planning decisions that need to be addressed.
The most common estate planning tool is a will. However, many are finding that trusts offer a more cost effective and efficient way of transferring assets. In addition to the possible estate tax savings, trusts allow assets to be transferred without the need for and costs associated with probate.
Trusts are instruments that can be created during one's lifetime. Assets are transferred to the trust and a trustee, often the individual, is responsible for managing the trust. In the case of a revocable trust, the individual can make changes to the trust or even dissolve it if desired. This type of trust is typically effective in avoiding probate; however, estate taxes will likely still be a concern.
Irrevocable trusts are another consideration. With this type of trust, once the trust is established, changes cannot be made. In this case, the individual no longer has control of the assets; however, both estate taxes and the probate process may be avoided. This can be a considerable financial savings to beneficiaries.
Estate planning is essential for Colorado residents. With proper estate planning, the stress and uncertainty associated with determining how one's assets should be distributed is alleviated. An experienced estate planning attorney can assist in reviewing one's situation and making recommendation as to the best way to structure one's estate.
Source: bankrate.com, "What Is A Trust?", Jan. 9, 2018