A will is a legal document dedicated to setting forth an individual’s wishes regarding the distribution of their property and assets as well as the care of their minor children. A will is the most established manner of ensuring that an individual’s wishes on those matters are accurately carried out. Wills are also helpful for an individual’s heirs, making sure that the division of assets is a smooth process.

What is Interstate Succession?

In Colorado, if you die without a will, your assets are distributed to your closest relatives under the Colorado interstate succession laws. In various states, the interstate succession process occurs when someone without a valid will or other legal declaration passes away. The court distributes their property according to the current state laws rather than a pre-existing plan prepared by the decedent or with input from those closest to them.

Which Assets Pass Through Interstate Succession?

In Colorado, the only assets that pass through probate are impacted by interstate succession laws. Subsequently, a large variety of valuable assets are not subject to interstate succession laws as they do not go through probate. Common examples of items that do not pass through probate and are not impacted by the interstate succession process include (1) property transferred to a living trust, (2) life insurance proceeds with named beneficiaries, (3) IRA, 401(k), and other retirement account funds with named beneficiaries, (4) securities held in transfer-on-death accounts, (5) real estate with a transfer-on-death deed, (6) vehicles with transfer-on-death registration, (7) payable-on-death bank accounts, or (8) property owned with someone else in joint tenancy or tenancy by the entirety. Such assets will pass to the surviving co-owner(s) or named beneficiaries regardless of the existence of the existence of a will. One exception to this rule is if no will exists, and the named beneficiaries are no longer alive to accept the assets, the property could end up being transferred according to the interstate succession process.

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Trusts are a growing tool when it comes to estate planning. As a result, trust usage is increasing throughout the nation. Trusts offer many benefits when it comes to asset distribution, but also have limitations that other estate planning methods don’t have. Trusts allow for great specificity regarding how, when, and to whom assets are distributed. Additionally, trusts come in a wide variety of categories and subcategories dedicated to particular estate planning goals, such as charitable giving or tax reduction.

A trust not only designates who may benefit from the funds or resources in the trust, but addresses situations of incapacity, such as strokes, dementia, or Alzheimer’s. Those at risk of such circumstances may want to consider utilizing trusts to ensure that their resources and funds are preserved, managed, and spent in a manner that conforms to their wishes while in the care of loved ones or healthcare professionals.

What are Irrevocable Trusts?

Irrevocable trusts are a specific type of trust that cannot be modified, amended, or terminated without the permission of the grantor’s beneficiary or by the order of a court. While the precise rules governing irrevocable trusts vary from state to state, the grantor, having essentially transferred full ownership of assets into the irrevocable trust, legally removes their rights of ownership to the assets and the trust in this process.

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When it comes to estate planning, selecting a proper and capable trustee is one of the most important steps in the process. A trustee takes legal ownership of trust assets, manages the trust, and is responsible for carrying out the purpose of the trust.

Important Factors for Choosing a Trustee

There are several important things to consider when assigning a trustee. Most people choose a friend, family member, attorney, or corporate trustee to oversee their assets. Before making the final choice, consider the following things: (1) The potential trustee’s availability, (2) their ability to be responsible, (3) their level of expertise, and (4) any costs associated with choosing that trustee. Weighing these factors is important and can have a big impact on your asset management in the future.

Availability

Make sure that you and the future trustee are on the same page when it comes to the time commitment involved with being a trustee. Depending on your assets and the structure and type of trust you utilize, serving as a trustee can be demanding. Trustees may be required to spend substantial amounts of time processing requests, mediating between parties, and making decisions regarding the trust. Not everyone has the time or ability to be fully available for such a process, and you don’t want that to negatively impact the running of your trust.

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A will is a legal document dedicated to setting forth an individual’s wishes regarding the distribution of their property and assets as well as the care of their minor children. A will is the most established manner of ensuring that an individual’s wishes on those matters are accurately carried out. Wills are also helpful for an individual’s heirs, making sure that the division of assets is a smooth process.

Initiating a Claim to Contest a Will

A will can be contested for a number of reasons, including but not limited to when an individual believes they should have been a beneficiary of the will in question. Contesting a will is an expensive and formal process and requires evidence and expertise. The grounds for contesting a will vary to some degree from state to state, but the driving force behind each system is similar. To legally contest a will, an individual must have otherwise benefited from the will. The most common manner in which this manifests is with the children of a deceased person. Other common instances also include when an individual did not have children and extended family members litigate their alleged claims to the estate.

The process begins when a will is filed in probate court, resulting in the interested parties receiving notice. Once the process begins, the interested parties must object within the time period stipulated by the relevant jurisdiction. The court then determines if the will is valid and determines heirs, beneficiaries, worth, and assets.

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Trusts are increasingly utilized in Colorado and throughout the nation. Trusts offer several benefits in estate planning and asset distribution. Trusts allow for great specificity regarding how, when, and to whom assets are distributed. Additionally, there is a wide variety of special-use trusts dedicated to particular estate planning coals, such as charitable giving or tax reduction.

However, a trust not only designates who may benefit from the funds or resources in the trust but addresses situations of incapacity, such as strokes, dementia, or Alzheimer’s. Those at risk of such circumstances may want to consider utilizing trusts to ensure that their resources and funds are preserved, managed, and spent in a manner that conforms to their wishes while in the care of loved ones or healthcare professionals.

Contesting a Trust

Similarly to a will, trusts can be contested for a number of reasons, including but not limited to a lack of testamentary capacity, undue influence, or a lack of requisite formalities. Additionally, beneficiaries may challenge a trustee’s actions for violating the terms or purpose of a trust. Many, if not all, settlors will utilize mechanisms to limit challenges, such as inserting no-contest clauses in the trust that sever a beneficiary’s interest if they unsuccessfully challenge the trust.

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Estate planning strategies and the creation of trusts are often used to protect a family’s assets from high tax burdens or other preventable attacks on an estate. The most common way for anyone seeking to control the division of their estate is by drafting a will, which mandates how the estate assets are divided. Some people instead choose to place their money into a trust that may offer additional protection for the assets in an estate. Traditionally, parents planning a bequest to their children or grandchildren might set up a trust themselves for the heirs’ benefit; however, there are alternatives to a benefactor-initiated trust that may work better for your family.

An “inheritor’s trust” is a trust that is set up by the heirs to an estate before the death of a benefactor. Using an inheritor’s trust can further help protect the assets of an estate from creditors, divorcing spouses, and high tax burdens. Unlike traditional trust instruments, which are designed from the top down, an inheritor’s trust is designed to be initiated from the bottom up. This change represents a growing movement for beneficiaries and heirs to an estate to take a more active role in managing the estate while the benefactor is still alive.

Although inheritors need not know the exact amount of their inheritance to create an inheritor’s trust, the trust still must be created with the consent of the benefactor. This could create uncomfortable conversations, as the benefactor must be alive at the time of its creation for the trust to function properly. If properly created, an inheritor trust can protect a family’s assets for generations as the trust continues to function, even as the generations pass. Anyone seeking to leave a legacy for their children or other heirs should research and ask questions about the possibility of an inheritor’s trust to manage and protect their assets most effectively.

As of 2022, Colorado features a 4.40% state income tax rate. According to the Tax Foundation, state income tax rates throughout the nation can run as high as 13.30% in California, or as low as 0% in Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming. Some states are known for promoting favorable asset protection laws designed to attract wealthy families and individuals from across the country and the world.

Nevada is one such state looking for innovative ways to help families and individuals protect and save their wealth. One such method and tool that Nevada has introduced is the Nevada Incomplete Non-Grantor Trust (NING). NINGs are not a one size fits all solution to addressing state income tax issues but can be highly advantageous in certain circumstances.

What is a NING?

A NING is a trust in which income is placed to be paid out to beneficiaries living in a state with no income tax or an income tax with lower rates. In order to avoid state income tax, the trust must not be categorized as a “grantor trust” under the income tax laws of the state in which the settlor resides. Further, to avoid any federal gift tax issues, trust contributions must not be treated as gifts for federal gift tax purposes. Transfers that are not gifts are often referred to as “incomplete gifts.”

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When a loved one passes away unexpectedly, it can be a shocking, emotionally intense, and confusing time. The confusion may stem from figuring out what happens next. When it comes to figuring out who has legal rights to a deceased person’s property, it is not as straightforward as one may think. According to a recent CNBC news report, two-thirds of adults living in the United States have no will. On the one hand, different states have different laws when it comes to will and estate planning. In addition, after a loved one passes without a will, it can cause intense complications between family members and potential heirs because of varying goals.

The probate court is a section of the court system that oversees the execution of wills and the handling of estates, conservatorships, and guardianships. In an intestate situation or a situation where someone has died without a will, the matter will likely be handled in probate court. If a person passes away without a will or intestate, the probate court decides who gets the deceased person’s property, although it is up to the survivors to claim their right to the property. When there is no will in place, you can never be sure how a court will decide to distribute the deceased person’s property.

In an intestate situation, the probate court appoints an executor for the estate. This executor will follow the laws of the state where the deceased person lived. This process may involve identifying the kinship of the deceased and may cause the children to have the burden of proving that they are the offspring of the deceased. The family members also will need to locate the records of the deceased, including proof of residency, amongst other records. The process can take a lot of time.

Family trusts can offer a lot of advantages, including tax advantages and benefits from long-term care planning. However, it is not uncommon for there to be disputes and conflicts between trustees and beneficiaries. When such disputes arise, there may be a time when you consider whether a trustee needs to be removed and you may be wondering what this entails.

Understanding the Terms

As a quick review of some essential terms, the person who creates a trust is called a trustor, grantor, or settlor. A family trust is created when the trustor and the beneficiaries of a trust are members of the same family. A trust agreement is the legal document that sets up a family trust, and the agreement typically designates an initial trustee or two or more initial co-trustees. The trust agreement also designates one or more successor trustees in the event that the initial trustees are no longer able to serve (i.e. in cases of death, removal, or resignation). The trust agreement should include the circumstances under which a trustee may be removed by the trustor.

Understanding How Removal Works in a Revocable Trust

It is important to note that the removal of a trustee is governed both by the trust agreement and by state law. When looking at a trust agreement, in a revocable trust, the trustor may amend the trust agreement in order to remove a trustee. Trust agreements typically allow the trustor to have the ability to remove a trustee, and this may be done at any time and also may be done without the trustee giving a reason. However, in an irrevocable trust, the trustor cannot remove a trustee.

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All cultures worldwide have different rituals and traditions pertaining to the end of one’s life. As the radius of influence between cultures is shortened by technology and migration, some of the death traditions of all cultures become available for discovery and possible adoption. The Swedish practice of döstädning, or “death cleaning,” could help American and Colorado families to ease the burden on loved ones when someone passes away.

Death cleaning, while it may have a morbid-sounding name, is truly a service that is done by someone approaching the end of their life to help ease their heir’s difficulties in managing the estate. Swedish author Margareta Magnusson, author of the popular book, “The Gentle Art of Swedish Death Cleaning: How to Make Your Loved Ones’ Lives Easier and Your Own Life More Pleasant,” explained that the practice stems from the Scandinavian values of simplicity and minimalism. Death cleaning involves going through one’s personal effects and belongings and handling their disbursement or disposal before one’s death.

Death cleaning can benefit both the aging person as well as their heirs and beneficiaries. The work of managing a deceased loved one’s estate can be physically and emotionally taxing. Grieving family members are often forced, while under emotional distress, to decide what items are important and what can be disposed of or donated. Through the practice of death cleaning, an aging person can make some of these decisions themselves, helping their heirs make remaining decisions after their death. Studies have shown that minimalist practices, including death cleaning, can also have a positive effect on the mental health of the person going through their belongings. The act of organizing and cleaning in anticipation of death can be both sentimental and cathartic, possibly improving the cleaner’s quality of life for the last few years and months.

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