Estate tax rules are constantly discussed by politicians. In this election cycle, one of the candidates has suggested doing away with what he calls the "death tax." Thus, it may not come as a surprise that tax rates and exemption levels on estate have changed 20 times since 1976.
What if you have a loved one who is disabled or unable to care for him- or herself, and you want to make sure he or she is financially taken care of if something happens to you -- or you just want to put aside some money for him or her? This is when you should contact a Colorado estate attorney and set up a special needs trust. Whether your loved one is an elderly parent, a mentally impaired child or a disabled spouse, a special needs trust has some significant benefits when it comes to protecting assets you wish for them to have.
A trust may be modified under Colorado law for a number of reasons. Circumstances may change so that the trust no longer effectively carries out the wishes of the settlor. Terminating a trust early or modifying its terms is not generally a simple process. Modification is controlled by the wording of the trust itself. Any other document, such as a will, is not sufficient.
There are several factors that an individual may need to consider prior to creating a trust in Colorado. An important question to ask is whether a trust is necessary to protect the assets within the estate. Generally, those who have more than $100,000 in assets should consider using a trust. Trusts are also good for those who want to protect a family business or want to provide for a disabled family member.
Some families in Colorado may be interested in establishing a special needs trust for their children's benefit. In some situations, a special needs trust can be a preferable alternative to other forms of trusts because it can allow someone to transfer savings to their child without compromising their ability to receive government benefits in the future. Special needs trusts can be created to take effect both during a parent's lifetime and after their death, and are also known as supplemental care trusts.
Although both types of documents are designed to aid people in distributing their assets according to their wishes, there are significant differences in how wills and trusts work. In some situations, a living trust is more advantageous, and in others, a will is the better option. There are a number of situations where the use of both kinds of documents is advisable.
Benefactors in Colorado have the option of using a living trust to provide a safe method of transferring assets to named beneficiaries. This instrument of estate planning differs from the traditional will in that a living trust includes directions for the management of property while the benefactor is alive. This can be especially useful if the benefactor serves as the trustee and loses the ability to manage the trust.
Almost all Colorado residents need to make a will. This most basic of estate planning documents details how you want your assets and possessions disbursed after your death. But even more importantly, it allows you to name a guardian for any minor or disabled children. Without it, your child(ren) may become the center of a courtroom battle between family members fighting for the right to physical custody.
Colorado residents who wish to preserve their legacy for generations to come may have concerns about the financial savvy of their designated heirs when it comes to asset management over time.
An irrevocable trust has long been known to be challenging to change, even if it is the trustee wanting to do the changing, but they are still used because of the tax advantage. Decanting a trust provides one solution by letting the trustee move the assets from the old trust to a new one and change some terms at the same time. It is called decanting because the person is "pouring" from one trust to another.