Wills & Trusts

The most well known documents for transferring estates are wills and trusts. A will is
a legal declaration that assigns a person or people to manage your estate,
transferring its property to your heirs when you die. A trust is a legal arrangement
where one or more trustees for the benefit of your heirs manage your estate.
Unlike a will, a trust is usually effective immediately, and carries on in the event of
your incapacity (i.e. inability to give informed consent) or death. Trusts and wills fall
into two basic categories: simple and complex.
1. Simple and Complex Wills
Simple wills usually apply to estates whose value is low enough to avoid estate
taxes, while complex wills usually apply to estates whose value makes them
taxable.
2. Simple and Complex Trusts
Simple trusts, also known as bare trusts, must distribute all of their income and
none of their principle until a certain condition set forth within the trust is met.
Complex trusts are not bound to distribute their income and can distribute their
principal.
Trusts can be further categorized as revocable and irrevocable. A revocable trust
can be modified and even terminated by its creator, while an irrevocable trust is
often impossible to modify or terminate. Irrevocable trusts are often chosen for
their tax benefits.
3. Family Limited Partnership
A family limited partnership allows family members with aligned financial interests
to combine their resources to achieve lower accounting, legal, and investing
expense. Family limited partnerships have two types of members: general
partners, who are qualified to manage the partnership and its assets, and limited
partners, who have financial interest in the partnership but not managerial
capacity. Family limited partnerships are often used to mitigate estate tax on large
estates.
To discuss whether a will, trust, limited family partnership, or any combination
thereof is right for you, contact an experienced Colorado estate planning attorney at
Ellmann P.C. today.
Other Types of Wills and Trusts
There are several types of wills and trusts that serve estates in different ways, such
as joint wills, living trusts, and testamentary trusts, to name a few.
1. Joint Will
As its name implies, a joint will is one that two people make together, with each often
leaving the other all of his or her estate. A joint will may also specify how an estate
should be transferred when both persons are dead.
2. Living Trust
A living trust ensures the management of an estate upon its creator’s incapacitation
or death. Living trusts are used to avoid probate costs, to reduce estate taxes, and to
keep the details of an estate from probate records.
3. Testamentary Trust
Also known as a will trust, a testamentary trust is included as part of a will. Ideal for
future estate distribution, testamentary trusts are often used to distribute an estate to
minor heirs when they reach adulthood or attain another condition set forth in the
trust.
Wills and trusts can enhance each other to ensure that your estate is distributed
equitably, punctually, economically, and in the best interest of your heirs. Wills trusts
and estates is a broad area that requires an attorney to identify best estate options.
For more information on which Colorado wills trusts and estates options are right for
you, contact our experienced wills trusts and estates attorneys today.