Denver Trust Lawyers

Trusts can be revocable or irrevocable, a designation that determines whether they can be modified during your lifetime. Primarily, these estate planning tools are used to protect and manage assets for beneficiaries. Many types of trusts, particularly irrevocable, offer tax benefits and shield assets from creditors and other liabilities. Additionally, assets in trusts do not have to go through probate. This can streamline the transfer of assets to your loved ones and other beneficiaries. 

Common Types of Trusts

Many types of trusts exist, each with its own purpose and benefits. Some common types of trusts include:

Revocable Living Trusts

This type is established during a grantor’s lifetime (the grantor is the trust’s creator). Just as the name implies, you can modify a revocable living trust at any time. Assets in this type of trust can be passed to beneficiaries without probate. However, revocable living trusts do not offer the tax benefits you can get with irrevocable trusts. 

Irrevocable Trusts

These cannot be changed or revoked by the grantor after they have been established. In exchange, they provide significant asset protection and tax benefits. In fact, assets in an irrevocable trust do not count toward an estate’s value, lowering tax liability. Assets are also generally safeguarded from creditors. 

Special Needs Trusts

These are designed to provide for individuals with special needs while preserving their eligibility for government programs like Medicaid and Social Security income. There are many rules governing special needs trusts, so it is important to consult an attorney before establishing one and as you manage it. 

Charitable Trusts

These allow individuals to donate assets to a charity and receive tax benefits while doing so. Charitable trusts can be complex to set up and manage, so you must work with a knowledgeable attorney you can trust to steer you in the right direction. 

Asset Protection Trusts

These operate just like other trusts, transferring ownership of assets and property to a third party. In turn, this can safeguard them from creditors and lawsuits. However, it is important to note that Colorado law has certain provisions that permit certain people to assess distributions of the trust assets. 

These include:

• Children who have support orders against the beneficiary of the trust
• Creditors with valid judgments against the beneficiary of the trust