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The revocable living trust as a Colorado estate planning tool

| Jul 2, 2020 | Trusts |

Revocable living trusts – or RLTs – are flexible estate planning tools that facilitate the smooth transition of property and asset management in case of incapacity as well as allow families to avoid the probate process in state court. The RLT is “living” because it is created during the lifetime of the grantor (person who establishes it and puts their assets into it) and is “revocable” because the grantor can modify or terminate it.

Nuts and bolts

The usual structure of an RLT is for the grantor to execute the trust documents wherein they:

  • Name themselves as trustee
  • Transfer their real estate, vehicles, accounts, investments and other assets into the trust’s name
  • Designate themselves as the beneficiary during their life (so they can use the assets)
  • Name beneficiaries to receive the property after the grantor’s death
  • Name an alternate trustee should they become unable to serve due to incapacity, which allows the family to avoid having to get a conservator appointed in that situation
  • Name a successor trustee to distribute the property to beneficiaries and manage it after the grantor’s death

Other benefits

The RLT normally provides more privacy to the grantor and their family members and beneficiaries than a probate court proceeding would and may be a tool when there is discord within a family. For example, for a person who has had children with more than one partner or who has a spouse or partner who is in conflict with the grantor’s children with another person, the RLT may allow a distribution of property outside of a probated will that could be subject to challenge by disgruntled family members.

Tax benefits may also be available using an RLT.

An RLT is not a one-and-done endeavor

The living trust houses the grantor’s estate during their lifetime. Of course, people sell and buy assets – but to be sure that valuable property passes to beneficiaries as planned, the grantor must properly title and transfer new assets to the trust over time. Cultivating an ongoing relationship with an estate planning attorney allows the grantor (and likely trustee) to obtain legal guidance when selling assets from the trust or transferring them into the trust.

In addition, periodic check-ins with legal counsel allow the grantor to discuss whether changes in goals or circumstances justify trust amendments or even a termination in lieu of another kind of plan.

Staying on top of the trust assets will be a great help to surviving loved ones after the grantor’s death. After all, one of the primary reasons for a revocable living trust is to save the time and expense of probate.

 

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