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If you have just begun researching why having a trust in place is a good idea, it can feel overwhelming to determine the ins and outs. A trust can provide peace of mind for you and your family during your lifetime and upon death. But what do you include in the trust? Who do you place in charge of these crucial decisions upon your death? Read below to learn more about some of the options available to you in Colorado.

What is a Trustee Responsible For?

In Colorado (and most states), a trustee has a duty of loyalty, a duty of care, a duty to maintain records, and more. It is a highly trusted responsibility, and with that comes a necessary knowledge of the trust laws.

The duty of loyalty requires that the trust be administered in a way solely in the beneficiaries’ best interest. A trustee’s personal opinions or their benefit must not be part of the equation.

A duty of care, generally speaking, requires the trustee to utilize their skills or hire experts (for example, a bank) to administer or aid in the administration of the trust. The trustee must invest and manage the investments in the best interest of the beneficiaries. In most cases this is done by working with appropriate advisors such as financial and investment professionals.

A duty to maintain records refers to ensuring the trustee keeps adequate and thorough records of transactions, distribution, investments, change of ownership, and more regarding trust management.

Several other requirements of a trustee are in place to protect the beneficiaries. Things like the trustee being required to provide specific information regarding the trust management to the beneficiaries and acting impartially when managing the assets are required. Also, acting in good faith that their decisions are what they truly believe is best for the trust and its beneficiaries are protected by law.

Why Do Some Families Choose a Bank as a Trustee?

There are several reasons why a corporate trustee, such as a bank, is an appealing option for families.

With a revocable living trust, people often act as their own trustee. However, if they become incapacitated, or the assets go to an irrevocable trust for their heir upon their death, or if they are just the beneficiary of an irrevocable trust, someone other than the beneficiary will need to be the trustee. This is where issues can arise.

Suppose there is general discord or strain between family members, for example. In that case, it can be difficult to choose someone in the family to be responsible for making impartial decisions without creating arguments between family members. A corporate trustee helps to avoid these concerns because they are a neutral party, vs. a family member catering to the needs of one beneficiary over another due to personal reasons.

Due to a trustee’s extensive responsibilities, it can feel overwhelming and cause tension between family members when putting a family member in that position regardless of how trustworthy they are.

Perhaps most of the family members reside in other states or countries rather than locally, making it harder for them to facilitate the needs of trust management. Or, perhaps there just is not anyone in the family who is appropriate for the role of Trustee.

Several complex assets may require specific skillsets or knowledge to handle them adequately, even with the help of financial and other advisors. This may be out of reach for some family members.

Does it Cost More to Have a Bank Act as Trustee?

It can feel counter-intuitive when preserving assets for beneficiaries to spend money on a corporate trustee. This isn’t always the case. Most families will need to seek the help of CPAs or attorneys to ensure their decisions are in the entire family’s (or beneficiaries’) best interest. Having an impartial third party as the Trustee overseeing everything can help avoid stress and create peace of mind that a neutral party is responsible for crucial trust management and other decisions. It can also save money by having the same knowledgeable individual or institution making all the decisions. This can include avoiding unnecessary tax consequences, avoiding duplicate fees for multiple advisors, or making decisions that aren’t following Colorado laws.

How are Corporate Trustees Governed?

Just as there are strict and thorough laws individuals who are trustees must comply with, the same laws apply to corporate trustees. If they breach their duties, the beneficiaries can pursue legal action to rectify the situation. 

For example, if it can be shown to a court that the bank trustee is in breach of their duties, the court may order the trustee be removed and replaced, order the trustee to take certain actions, or even hold the trustee or their institution financially responsible for the consequences of their decisions.  

If a breach is proven, damages may also be pursued in some cases. Damages can include interest, attorney’s fees, the amount equal to what is necessary to restore the trust before the breach, and more. While individual family members often do not have insurance to protect the beneficiaries, in most cases a Corporate or Bank acting as trustee will be required to have insurance either by the terms of the trust or state law..

Why Consult an Attorney?

However uncomfortable planning for our own incapacity or for those we leave behind after our death may be, it is necessary. There is an inherent need in most of us to protect both the people we love and what we have worked our entire lives for. We want to make sure our assets are dispersed as we wish long after we are gone so we can continue to provide for our families.

Putting together an effective estate plan typically includes a trust. Choosing a trustee may be one of the most challenging aspects due to the role’s immense responsibility. By working with a trusted attorney, you have an advocate who can help answer your questions and help ease your mind.

Effective trust planning in advance can reduce the likelihood of problems. But sometimes it is too late to make changes to the plan. In that caseyou or your family can consult an attorney should you feel that a breach of duty is occurring with a trustee. They can help you determine if a breach can be proven, devise a plan to remedy the situation, and further protect the trust and the assets associated with it.

We have several years of experience helping clients with their trust questions and how they can make the most of them. Contact our office today at (720) 420-1039 to learn more about how we can help you to provide for your family now and in the future.

Estate planning can feel grim, not least of all because you are attempting to make plans for how to take care of your beneficiaries after you are gone. Perhaps the grimmest of all considerations might be the concern as to whether the government will attempt to tax your estate in the event of your death, thus inherently limiting the assets that can be distributed amongst your loved ones.

The estate tax says that any value over the current year’s exemption amount can be taxed by the government. Federal estate tax exemptions can change yearly. And each state may have different estate tax laws across the country.

In 2022, the US government sees that any individual’s estate valued at less than $11.7 million is exempt from federal estate tax. Married couples’ estates can be exempt for up to $23.4 million.

Does Colorado Have Estate, Inheritance, or Gift Taxes?

Colorado does not have an estate tax, an inheritance tax, or a gift tax. Only a dozen states across the country have an estate tax at the state level. But even for those states which don’t have their own estate taxes, their citizens may still be liable to federal estate taxes if their estate was particularly wealthy.

While Colorado does not have an inheritance tax, if you are inheriting something from an estate established in another state, those assets may be subject to that particular state’s inheritance tax laws.

What is the Death Tax?

There is no such thing as a ‘death tax’ in Colorado or America. The term death tax is not official and is mainly used by those who strongly oppose taxation of any kind. The term has a scare value to it that catches your attention, is all.

When someone mentions a death tax, they are usually referencing inheritance or estate taxes, as they only go into effect after the death of those in charge of the estate.

How Best to Avoid Estate Taxes?

Across America, very few taxpayers ever need to concern themselves with paying estate taxes to the IRS. Partly this is because they’ve kept their estates at a level that rules them exempt, but also, it is because many wealthy estates have found ways to protect their assets from estate tax.

One such option for wealthy estate owners is to put some of their assets into an irrevocable trust. This act will give up ownership of the assets in favor of your beneficiaries, defending them from taxation and probate court.

People in Colorado can also gift thousands of dollars worth of assets yearly to their loved ones, free of taxation. Donating to a tax-exempt charity through a trust can also be a viable option. Some may opt to establish a family-limited partnership, which can make heirs your partners. To better understand how to defend yourself from the federal estate tax, please speak to an estate planning attorney. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

In 2004, the Colorado state government authorized that a transfer-on-death deed (or TOD deed) can transfer property rights to beneficiaries upon the deaths of the property owners. Known as a beneficiary deed in Colorado, this allows you to pass real estate property on to a selected individual or entity without the need for passing the property through probate courts.

However, these deeds are not for everyone. Couples need to understand that joint tenancy of a property can supersede a beneficiary deed, rendering it inoperable. TOD deeds can also affect Medicaid eligibility.

How to Obtain a Beneficiary Deed?

The state of Colorado provides a downloadable form that can be filled out and then signed by a notary. The form then needs to be properly filed.

Deeds that have been filed can later be revoked, so long as this act occurs before the deed owner’s death. The named beneficiaries can also be changed.

What Types of Property Can Be Transferred Via a TOD Deed?

Colorado law states that a TOD deed can be used to convey the interest of “real property.” In this definition, real property means real estate. By ‘interest’, the law includes any individual’s sole ownership of a real estate title, partial ownership, or certain lesser real estate interests.

A Colorado beneficiary deed can only transfer properties located within the state. Out-of-state property may potentially be eligible for transfer, but only under certain conditions established by laws in other states.

Is a Beneficiary Deed the Right Estate Planning Tool for You?

TOD deeds are non-probate transfers and do not need to go through the extra steps and processes that a typical will might, like probate court. These deeds are especially useful for estates of smaller sizes, as they may help keep the family home out of probate. However, if you leave the family home to all your surviving family members, this could result in conflict with indecision about what to do with the property as it is divided amongst everyone.

There are pros and cons to every estate planning tool available, and beneficiary deeds are no different. To better understand whether this is the right option for you and your beneficiaries, please speak with an experienced estate planning attorney in the state of Colorado. Every estate is unique in its way, and what’s best for one family may not be right for another. But rest assured, you do have options. A transfer-on-death deed may sound grim, but it could possibly be the best way to protect your family’s real estate for future generations. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

You can make the decision to revoke power of attorney for any number of reasons, not least of all the simple notion that maybe you just changed your mind. However, the how, when, and why of revoking these legal powers should be considered, lest you risk issues like lapses in representation.

Only you, or someone the court appoints to act in your best interests, have the ability to revoke power of attorney from any previously selected agent. The court also asks that you be of sound mind to make these changes.

Why Should You Consider Revoking the Power of Attorney?

The reasons why you may consider making changes to your power of attorney agent can be personal or legal in origin. Perhaps your relationship with the selected agent has changed dramatically, maybe even deteriorated completely, in the time since you initially named them. Or maybe the person you selected simply does not want to be your power of attorney agent anymore, for reasons including but not limited to using up their personal time and/or mental well-being in the role. It would also likely be necessary to select a new attorney-in-fact if your agent was your spouse, but the marriage ended in divorce.

If your agent has passed away or is no longer mentally or physically competent for the demands of the role, it is necessary to select someone new. And while you may select an agent who lives out of state, their availability must come into mind in relation to their ability to perform the duties of the role they’ve been given.

How Can Powers of Attorney Be Revoked in the State of Colorado?

You can revoke power of attorney by either destroying all documents and copies relating to the original selection or by filing an official Notice of Revocation. Filing the official notice is the preferred course of action, however, as it creates a paper trail of your intentions in cases of future legal conflict.

You may transfer power of attorney to someone new before or after declaring an official notice of revocation. However, it is recommended that you file these documents separately.

If you wish to amend your power of attorney, do not simply edit the document, as this may call the document’s authenticity into question. Even if only minor changes are being made, it is advisable to start over with a new document.

When is the Right Time to Make This Change?

So long as you remain mentally capable, you may change your designation of durable power of attorney at any time between its initial creation and the time when it comes into effect. The most obvious times to amend your power of attorney are after marriage or divorce, after moving to a new state with its own particular laws, or if you lost the original document.

When making changes to your POA, it is important to notify relevant parties, such as banks, creditors, landlords, lawyers, doctors, and insurance companies. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

What is a Spendthrift Clause?

Most estate plan trusts include provisions of some kind or another. The spendthrift clause can limit a beneficiary from using the assets in the trust. This can be especially useful when you are aware that an intended beneficiary has money issues or poor spending habits. The spendthrift trust could prevent these beneficiaries from spending or borrowing against trust fund assets.

The spendthrift clause usually requires that only a certain amount of the trustee’s money can be given to the beneficiary. But it also usually makes it so that the beneficiary’s creditors cannot place liens or other judgments against the assets of the trust.

Why Would You Want to Consider Implementing a Spendthrift Clause?

Typically, one would consider putting a spendthrift provision into a trust if they thought a beneficiary would misuse or mishandle the assets or otherwise borrow against those assets in order to repay creditors. It is important to note that one cannot set up a spendthrift trust to protect their assets from creditors looking to settle debts. The spendthrift trust only provides protection for the people named as beneficiaries.

Proper estate planning means protecting assets for future generations and intended heirs. However, sometimes we know that those heirs aren’t the best at handling money, or perhaps they have creditors breathing down their necks. A spendthrift clause can help protect assets meant for the beneficiary from the beneficiary if this is deemed necessary.

Which Debts Cannot Be Avoided Via Spendthrift Trusts?

Though a trust can help defend assets from creditors, taxes, probate, and reckless spenders, no trust should be considered 100% bulletproof.

Spousal support, child support, and certain government claims may be enforced against assets locked up in a trust if they cannot otherwise be repaid. State law can decide that such entities are not creditors and therefore not blocked by spendthrift clauses.

How Could a Spendthrift Trust Help Your Family?

So long as assets remain in a trust, a beneficiary’s creditors cannot attach interest to those assets. The beneficiary could have their money troubles, but with a well-written spendthrift clause, those financial issues should never threaten to suck the trust dry. A spendthrift provision is meant to block any “voluntary and involuntary” transfers of assets from the trust.

A well-written will and trust can be the determining factor in whether your estate plan best defends your interests both for your legacy and for the futures of your beneficiaries. If you think a spendthrift clause may be a smart provision to add to your trust, please contact an estate planning attorney in your state. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.