What is a Living Revocable Trust?
Guidance from Our Denver Estate Planning Attorney
A living revocable trust is a written agreement where one person holds property in trust for the benefit of another. The person who establishes the Trust is known as the Settlor or Grantor and the person that manages or holds the property is known as the Trustee. Trusts are an important element of the estate planning process.
Under Colorado law the Trustee has a fiduciary duty to manage the property with care for the benefit of the beneficiary. Typically, the Grantor is both Trustee and beneficiary. During his or her lifetime, the Grantor may modify the Trust and may dispose of trust property as they wish. Upon the Grantor's death the Trust becomes irrevocable and the Successor Trustee assumes management of the Trust.
Like a Personal Representative, the Successor Trustee is responsible for paying the Grantor's creditors and taxes and distributing assets to the beneficiaries. Unlike a Personal Representative, his appointment is made by the Grantor, not the probate court.
What is a Trust? Do I Need One?
Characteristics of a living revocable trust:
- Can be modified or revoked by the Grantor at any time
- Does not require the filing of a separate income tax return
- No restrictions are imposed on the use of trust assets by the Grantor
- Major assets, excluding retirement plans and automobiles, are transferred to the Trust
- Established during the Grantor's lifetime for his or her benefit and for the benefit of the Grantor's spouse
Advantages of Having a Living Revocable Trust:
- Maintains family privacy
- Provides flexibility – the Grantor can "rule from the grave"
- Doubles the federal estate tax exemption for married couples
- Can be designed to shelter assets bequeathed to spendthrift beneficiaries
- Eliminates probate reducing the cost and time involved in settling the estate
Are You Considering a Living Revocable Trust?
At the James A. Littlepage Law Offices, Attorney James Littlepage provides detailed and personalized estate planning services to individuals throughout the Denver area and has assisted clients throughout Colorado for more than 40 years. He was recognized with a 2015 and 2016 Five Star Estate Planning Attorney℠ award. In 2014, 2013, 2012, 2011 and 2010 he received the Five Star Wealth Manager℠ award, as seen in 5280 and ColoradoBiz magazines.