Living trusts may be useful for people in Colorado in a number of ways. With a living trust, assets will not go through probate and will instead be passed directly to beneficiaries or will remain in the trust according to a person's instructions. A successor trustee may be able to manage the trust if a person is incapacitated. A power of attorney may make it easier for the trustee to step into this role.
However, one common error people make is creating the trust but failing to fund it. Simply creating the document is not enough. It is also necessary to place assets in it. For property such as homes and vehicles, this may involve changing the names on titles and deeds. For accounts, financial institutions usually have their own paperwork for transferring ownership to a trust. If these steps are not taken and the trust remains unfunded, when the person dies, the estate will go into probate and assets will be distributed based on a person's will or state law.
Failing to involve the successor trustee in time is another error. The successor trustee should be brought in early on and should know where all important paperwork is kept. A person might consider introducing the trustee to staff at financial institutions where the person's accounts are kept.
Another consideration is choosing the right individual as trustee. If the estate is a complex one, this can be a time-consuming process requiring financial expertise, and if this is the case, a person might want to appoint a professional as trustee. With the right paperwork and trustee in place, a living trust may be a powerful tool that can protect assets if a beneficiary has issues with creditors, gets a divorce or is irresponsible with money. Trusts may also be used to donate to charity and take care of relatives who have special needs.