A revocable living trust is an agreement under which a trustee holds and manages property for the benefit of the beneficiaries you choose. In most living trusts, you are the trustee and the beneficiary during your life, so you keep complete control of your property and can amend or revoke the trust at any time. When you die (or become unable to manage your affairs), the successor trustee you named takes over and follows the trust’s instructions without the involvement of a court.
When a Trust Makes Sense
A trust is not necessary for everyone. Colorado probate is comparatively simple, and many families are well served by a Will and good beneficiary designations. A trust is worth considering where:
- you own real property in more than one state (e.g., a home in Texas and a cabin in Estes Park), since each state may otherwise require its own probate proceeding;
- you want your estate plan to remain private, since a probated will becomes a public court record;
- you want a beneficiary’s inheritance managed over time instead of paid out at once; or
- you want a single document to govern management of your property during a period of incapacity as well as after death.
Funding the Trust
A trust only controls the property which is titled in its name. After the trust is signed, your home and other real property are conveyed to the trustee by deed (see Property Deeds), and accounts are retitled or given the trust as beneficiary. Elkhorn Law prepares the deeds and gives you written instructions for each account, along with a “pour-over” will that sends any property left outside the trust into it at death.
What a Revocable Trust Does Not Do
A revocable trust does not reduce estate or income taxes by itself, and it does not shield your property from your own creditors during your life. Where those are goals, other trusts may apply, and we will discuss them with you and your CPA. For a trust built to hold a shared family property across generations, see Family Cabin Trust.