Trusts and Estate Planning
Control beyond the grave is often the phrase used to describe trusts, as they pertain to estate planning.
They are also used – in now rare cases – to reduce or eliminate estate and inheritance taxes.
Today, the most common use for trusts is the avoidance of probate.
According to Legal Zoom, probate is the process of transferring the legal title of assets from the person who died to their heirs and other beneficiaries. https://info.legalzoom.com/probate-mean-3815.html
Thankfully, there are legal processes for establishing that transfer prior to death.
One of options available to us is the co-ownership of assets, with rights of survivorship – also known as JTWROS titling. When one of the owners dies, the other owner assumes sole ownership of the asset. No probate process is necessary.
Another option is through a Beneficiary Deed. The document designates the beneficiary owner of a home and thereby keeps the residence out of the probate process. According to Justia US Law, the real property is effectively transferred on death. https://law.justia.com/codes/colorado/2017/title-15/colorado-probate-code/article-15/part-4/section-15-15-404/
A third option is a beneficiary designation. If you own a retirement account, life insurance contract, or annuity you probably remember completing the beneficiary designation form when you first opened the account(s). That form is used to determine the recipient of your account(s) when you die. It also serves as a means to avoid the probate process. Legal Zoom refers to this as a Transfer of Property By Contract. https://www.legalzoom.com/knowledge/living-trust/topic/transfers-of-property-by-contract
A transfer of property by contract can also be used with bank accounts by completing and submitting a Pay On Death form with your financial institution.
To ensure that any additional assets avoid the probate process, a living trust is established and your assets are titled in the name of the trust. Since your trust has named beneficiaries, probate is unnecessary – you’ve already established the identity of the recipients of those trust assets.
Let’s assume that the avoidance of probate is just part of your estate planning goals. You may also want to ensure that the money you leave to beneficiaries and heirs is responsibly managed – especially in cases where minor children are involved, heirs from a previous marriage, or an individual with special needs.
If large sums of money are involved, you may want to ensure that funds are preserved for future generations. Whatever the case may be, you want to exercise control of the money you leave from beyond the grave.
There are myriad options when it comes to trusts that “control wealth from beyond the grave”. If that is your intention, an estate planning attorney can guide you through the process.
In my next post, I’ll discuss Advance Medical Directives.
If you live in the Loveland area – or anywhere along the Colorado Front Range – and have concerns about your estate plans, consider scheduling a complimentary consultation meeting with me.