On October 10, 2012

One of the reasons so many people fail to plan for their future — and their children’s and grandchildren’s future — is that ironing out all the details can quickly become too confusing and overwhelming. This is especially true when it comes to estate planning and trust administration, both of which are unfamiliar to most people. And since the end of life for most of us seems like a long way off, these planning elements don’t feel very urgent most of the time. But since none of us knows exactly when that end will come, it’s never too early to take a closer look at your estate planning options and learn a few new things.

One element of estate planning foreign to many people is the trust. A trust tends to be more complicated than a will, but that shouldn’t stop you from determining whether you need one.

One type of trust is a revocable living trust. The primary purpose of a living trust is to avoid the probate process, which kicks in if a person dies without a will or any kind of estate plan. In probate, a judge determines what will become of your assets, and this can be expensive, time-consuming and emotionally difficult for your family, especially if they disagree on what should become of your estate. In a revocable trust, your assets are automatically passed down to your beneficiaries and not subject to capital gains taxes.

Trusts are often used in place of wills by those who have significant assets they want to protect, either from taxes or probate. They’re also a good option for those with dependants who are disabled and/or receive government benefits. Others opt for them to make sure their affairs are well managed in the event they become mentally incapacitated. While more complex and initially more expensive, revocable trusts offer more protections than a standard will. One thing to remember, however, is that for a trust to be effective, you must fill it. Setting up a trust won’t do you or your family any good if you don’t transfer the necessary assets into it.

The trust setup and administration process can be complicated, but working with an attorney who focuses on estate planning can ensure you take all the necessary steps. Having peace of mind that your assets will end up in the right hands may be well worth it in the end.

Source: Toledo Free Press, “Retirement Guys: Don’t leave your family an empty box,” Nolan Baker and Mark Clair, Oct. 5, 2012

· Our firm handles trust administration and a wide range of estate planning services. To learn more about our practice, visit our Colorado trust and administration page.

Categories: Trust Administration

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