In addition to creating a will, many Colorado residents find that creating trusts may be in their best interests. The will does direct how the individual wishes his or her assets to be dispersed; however, a trust may provide increased benefits such as minimizing estate taxes and shielding assets from creditors. In some cases, adding an irrevocable trust as part of one’s estate planning portfolio is desirable.
With an irrevocable trust, the individual no longer owns assets that are placed into the trust. Additionally, the individual cannot make changes to the trust once it is established; the beneficiary of the trust is the one who can make changes. On the surface, this may not appear to be advantageous, and in some cases it is not. However, if the goal is to reduce taxes on income-producing property, it may be a good idea.
In addition, once assets are placed in an irrevocable trust, the individual no longer owns them. If the individual dies with outstanding debts, the individual’s assets are usually sold to pay off these debts. However, if assets are within an irrevocable trust, the individual does not own the assets; therefore, they are not subject to this process.
An irrevocable trust is not the proper estate planning tool for every Colorado residents. However, in some instances, it can provide the asset protection, privacy and security that the individual is looking for. It is one option that the individual will want to discuss with legal counsel to determine if it is a good addition in meeting his or her estate planning goals.