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If you are one of the many Colorado residents who has made creating an estate plan a priority for you, you should feel very proud of yourself for taking this step. A good estate plan can give you and your family a great deal of peace of mind. It also gives you the ability to be more in control of your life and your assets. If you are considering a trust, you’ll want to understand the different options so you can select the right one for you.
As explained by Forbes, a living trust is one that is created and that takes effect while you are still living. This is in contrast to a testamentary trust that is essentially a clause in a will that does not become effective until after you die. When selecting a living trust, you will want to assess what level of flexibility you might want to have and how important minimizing taxes is to you. Basically, you can choose a revocable or an irrevocable trust. One gives you great flexibility while the other gives you better tax protection.
If flexibility and control are primary concerns for you, a revocable trust may be the right option as you can amend this at any time. If taxes are your greater concern, an irrevocable trust may be wise as this trust takes assets out of your name. Because of this, they are not part of your estate and then not subject to estate taxes after you die.
This information is not intended to provide legal advice but is instead meant to give Colorado residents interested in estate planning an overview of the differences between revocable and irrevocable trusts and the benefits of each one.