Create a living trust in Colorado

A living trust allows you to avoid probate when you pass away. Probate can be time consuming and expensive. Find out more about probate and living trusts in Colorado.

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by Brette Sember, J.D.
updated May 11, 2023 ·  3min read

A Colorado living trust, also called an inter vivos trust, allows the trustmaker to transfer ownership of personal assets into a trust during his life. The trustmaker continues to use the assets during his life (living in the home, driving the car, and spending the money). After death, the trust directs how the assets are distributed to the beneficiaries chosen by the trustmaker. A Colorado living trust provides many benefits and flexibility for estate planning purposes.

Living trusts in Colorado

One of the primary benefits of a living trust in Colorado is that it gives you complete control over your assets at all stages. You name a trustee, the person who will manage the assets. It can be anyone and many people name themselves (with a successor trustee in place for after your death). The trust directs that the assets be maintained and used for the trustmaker’s benefit during life by the trustee. They are then distributed to beneficiaries after the trustmaker’s death.

When you create a living trust in Colorado, it’s up to you to decide what to put in the trust, but generally adding as many asset as possible is the point. Note that you cannot place IRAs, 401(k)s or Keogh plans into a trust. A revocable living trust can be changed or ended by you at any time during your lifetime. An irrevocable living trust becomes permanent immediately.

A living trust passes assets outside of probate, reducing the time and expenses involved in handling an estate. However, Colorado uses the Uniform Probate Code so its probate process is considered to be streamlined. If your estate totals less than $50,000 at your death, you qualify for a simplified probate process, which may make a living trust unnecessary. Anyone who owns a home likely has an estate larger than this amount though. If you do not have a trust or a will, your assets are distributed according to Colorado intestacy statutes, which determine who gets your assets with no input from you.

Do I need a living trust in Colorado?

Living trusts are an option to consider as part of your estate plan. Many people prefer to use a trust because it allows complete control over assets. You can personally manage the assets during life and can set up any conditions or parameters you like for how they are distributed to your beneficiaries. For example, you can pass assets when beneficiaries reach specific ages or complete certain tasks. A trust allows you to have control beyond the grave. If you create a will, all of your assets are transferred to your beneficiaries as soon as probate concludes.

A living trust is an important tool during your later years as well. If you ever become mentally incapacitated, you have already placed your assets into the trust and your trustee manages them. Everything will continue to be managed in the same way and no court procedures are needed.

One of the primary reasons to use a trust is for the absolute privacy it creates. If you pass your assets via a will, it must go through a court procedure which is public record. Trusts are never made a part of public record so your assets and who you leave them to remain concealed. All terms of the trust are private.

Living trusts and estate taxes in Colorado

Most living trusts confer no protection from taxes. However, an AB trust, or marital trust (sometimes called a QTIP trust) is an exception. Although Colorado has no estate tax, federal law taxes estates in excess of $5.4 million. An AB trust moves assets from one spouse to the surviving spouse while avoiding all estate tax, even for an estate over the $5.4 million exemption. No living trust can protect assets from Medicaid statutes however.

How to create a living trust in Colorado

Once your trust document is prepared with all of the details and restrictions you have selected, you sign it in front of a notary public and it becomes effective. You must fund the trust by placing the ownership of your chosen assets in the trust’s name. Once this has been completed, the trust is operational.

Living trusts offer privacy, flexibility, and control of assets both during and after the trustmaker’s life. Creating a trust can offer peace of mind about the future.

Create a Colorado living trust online with LegalZoom. LegalZoom living trusts include a pour-over will, transfer deeds, a document organizer, and more.

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Brette Sember, J.D.

About the Author

Brette Sember, J.D.

Brette Sember, J.D., practiced law in New York, including divorce, mediation, family law, adoption, probate and estates,… Read more

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.