Colorado Trust Litigation Attorney
Whether you are contesting or defending a trust, you may need to retain a Colorado trust litigation attorney to help you through the process. Contesting a trust is not always easy to do and may require meeting a high burden of proof that you cannot do on your own. At the same time, if the trust is challenged, an attorney can help defend it from attack in court. As you will see below, trust litigation can be a complex process.
What is a Trust?
When you create a trust, you transfer control of your assets to a trustee. This person is now responsible for making decisions about your assets and will make these choices as a fiduciary who is obligated to act in your interests. In many cases, you will be the Trustee, in other cases, a third party will serve as Trustee. When you establish a trust, you are often the beneficiary, meaning that you will still benefit or profit from the trust assets.
Types of Trusts
If you are contemplating establishing a trust in the future, you should be aware of the different options that you have. Below is some information about each of the many different types of trusts that there are. Even within each of these individual kinds of trusts, there are many different variations and options.
Revocable Living Trust
A revocable living trust is made while you are still alive. It will determine the disposition of you property after you die. This is called revocable because it may be changed at any point up until your death while you still have the capacity to sign the document.
In a revocable living trust, you take your property and transfer it to a Trust. You will sign a trust agreement which creates the terms and conditions of the trust. Since the trust is revocable, you can make changes to the trust instrument during your lifetime and can maintain total control over your assets.
The flip side of a revocable Trust is that you still own your assets in the eyes of the law. Therefore, a revocable trust is not as effective as an asset protection trust for protection from lawsuits and nursing home costs.
Through a revocable living trust, your assets will avoid probate and you still maintain flexibility. This is a suitable alternative for one who wants to avoid probate and protect assets for future generations.
A testamentary trust is a part of your will. It comes into operation after you pass away and it will determine who will inherit your property. This trust is established once you pass.
Your will contains the terms and conditions of the testamentary trust. It will name a trustee and set rules for how the assets are to be managed and used.
One purpose of a testamentary trust is to preserve assets for those who may not yet be in a position to use them. For example, you may want those who are currently minor children to eventually take control of your assets. However, they may still not be of the age of majority and therefore, cannot yet take control of the assets. A testamentary trust will preserve and manage the assets until the minors are adults subject to the oversight of probate court.
You can make a testamentary trust for practically anything. You can set up a charitable trust and use a trust to bequeath your assets. In other words, you are not limited to only one testamentary trust. Eventually, these assets will be distributed to the beneficiaries, but there is a trust in the meantime.
Asset Protection Trust
An asset protection trust can describe any one of a number of different vehicles that can shield your assets from lawsuits or other creditors. This is a trust that fully transfers control of your assets to a trustee while you remain the beneficiary. The main two types of asset protection trusts are domestic and foreign asset protection trusts.
There are foreign asset protection trusts that are legal and effective. You would simply move the assets to a trust that is domiciled offshore. There are numerous foreign jurisdictions that have laws that are conducive to asset protection trusts and are very aggressive in protecting your assets.
Domestic Asset Protection Trust
Depending on your circumstances, you may be able to set up a domestic asset protection trust. However, the trust must be irrevocable and it must also contain a spendthrift clause. In other words, if you maintain too much control over your assets, they will not be protected because you will still be considered the owner. Some recent court cases have begun to cast doubt on the effectiveness of domestic only asset protection trusts.
International Asset Protection Trust
It is becoming more common for people to move their assets to trusts in certain offshore jurisdictions. Countries both in the Caribbean and the Pacific have passed laws that make them favorable jurisdictions for trusts and these countries do not let the assets that are moved there be touched by creditors. Even though the trust is domiciled overseas, you would still be responsible for U.S. taxes. However, foreign vehicles are extremely effective in providing asset protections. These foreign jurisdictions have people at the ready who are experienced trustees to manage the trust. One possible issue is that U.S. courts may order the assets repatriated to the U.S. However, the trustees themselves are not subject to U.S. court jurisdiction and do not have to comply with a directive to send the assets back to the U.S.
Cook Island Trust
The Cook Islands is one of the leading jurisdictions for overseas trusts. The islands have laws that are very protective of foreign assets that are domiciled there, making it very hard for creditors or anyone else to bring the assets back to the U.S. The Cook Islands have among the strongest laws on the books in the world when it comes to making assets untouchable. With a Cook Islands Trust, if you lose a case and were ordered by the court to instruct the trustee to send the assets back to the U.S., the trustee is forbidden by the laws of the Cook Islands to listen to the court order.
In order for your assets to be legally viewed as not yours, the trust must be irrevocable. In other words, you cannot make any changes to it once the terms and conditions are set and the trust is executed. An irrevocable trust generally severs your ownership of the asset in the eyes of the law since the power to make decisions about the property is one of the major indications that you in fact own the property. Once you have set up an irrevocable trust, the assets are considered to be out of your hands and they are protected. However, your asset protection attorney can still build a great deal of flexibility into an Irrevocable Trust enabling you to have a great deal of control and management of the assets.
Medicaid Protective Trust
This is a general name for any type of trust that enables you or a family member to preserve their assets and qualify for Medicaid to pay for their nursing home care. There are numerous types of trusts that can qualify for this type of protection. An important rule is that the trust must have been established prior to the start of any lookback period. You cannot simply move your assets out of your name and into a trust and qualify for Medicaid tomorrow. In most states, the lookback period is five years. This is also the rule in Colorado. Creating a Medicaid Protective Trust is a better option than gifting the money because Medicaid does not allow you to simply give away your money to qualify. Moreover, there may be capital gains tax considerations when it comes to gifting assets. Creating a Medicaid Protective Trust moves the asset out of your name while at the same time preserving them for future generations and keeping them out of the hands of nursing homes and probate.
Certification of a Trust in Colorado
Colorado Revised Statute § 15-5-1013 states that instead of giving someone the trust instrument as proof that the trust exists, you can give them an abridged document with certain information about the trust. A certification of trust contains selected information that proves that the trust exists and gives enough data about the trust without revealing private information such as the assets that are a part of the trust and the name of beneficiaries.
The certification of trust may be necessary for the trustee to conduct business in the name of the trust. For example, the trustee can be dealing with a bank or an investment company that will want proof of the trust. The other parties will then be able to view the certificate which will set forth the authority of the trustee and any other co-trustees. Anything that is contained in the certificate of trust will be treated as if it were a representation made by the trust. If it turns out that the information is incorrect, the trust can be liable.
Contesting a Trust in Colorado
Contesting a trust in Colorado will be different depending on the type of trust that it is. Revocable trusts can only be challenged after the grantor dies because it is always changeable right up to the point of death. In order to challenge a revocable trust, you need to file your action in civil court as opposed to probate court. You would use the same general grounds to challenge a trust as you would use for a will. After you file your complaint with the court, you will have the ability to obtain information from the trustee through discovery. As the plaintiff, you would have to provide the court with evidence that your grounds for challenging the trust are true.
Irrevocable trusts are difficult but not impossible to challenge. Since terms of an irrevocable trust are not subject to change, you will need to challenge the trust in order to change anything about it. Irrevocable trusts can be challenged during or after the lifetime of the grantor. You can use many of the same grounds that you would in order to challenge a revocable trust. A Colorado trusts attorney can be helpful if you need to challenge a trust.
Why Fund a Trust?
Funding a trust involves taking assets that are titled in your name and moving them into the trust and retitling them in the trust’s name. There are many different reasons why you would fund a trust as opposed to just leaving your assets to your heirs in a will. One of the primary benefits of funding a trust is for tax reasons. Funding the trust keeps your assets outside of probate and for an irrevocable trust, protected from lawsuits and nursing home costs.
There are numerous other benefits of funding your trust. The trust is your foremost way of controlling your wealth both while you are here and after you are gone. You have gone to the effort to set up the trust because you want your assets controlled by it, but without funding it, your assets still retain their previous status.
Purposes of Funding a Trust
In reality, the trust is just an empty vehicle until it is funded. The trustee can do nothing with the assets until the trust is funded. The trust cannot provide any protection to your assets and you cannot realize the legal protections of a trust until it actually has assets in it.
Assets that are not a part of your trust are subject to probate, being seized by creditors, or may be required to be paid to nursing homes for care. Even if you have a will that directs the executor to transfer assets to the trust after you die, these assets may still be subject to probate. Therefore, it is important to actually title the assets in the trust because this is not done automatically. This is a process that involves changing the names and beneficiary designations for your assets.
If you do not fund your trust, your assets are subject to the court system and are unprotected. An unfunded trust defeats the purpose of setting up the trust and will mean that you expended effort and money to create something that you are not taking advantage of its benefits.
Colorado Trust Administration Lawyer
No matter how much people tell you how easy it is to do on your own, you simply cannot afford to make an error when it comes to establishing and administering a trust. If you have an error in any document, it could render the trust invalid or it can lock in something incorrect in an irrevocable trust. While trusts are sold as DIY options, a Colorado trust administration lawyer is familiar with all aspects of the law and will make sure that your trust is established and executed correctly.
The trust administration lawyer will also be able to advise you if you either need to contest a trust or if you are defending a trust from being contested. The area of trusts is technical and it can seem archaic so it helps to have experienced legal counsel on your side. The trust administration lawyer will advise you on the trust option that makes the most sense for you and will then help you to establish the trust.
The Trust Administration Process
The trust administration process generally refers to the way that the trustee manages the trust according to the conditions and terms of the trust. Specifically, this process is the distribution of the trust’s property in accordance with the wishes of the grantor after they have passed away.
The process begins with notice to the beneficiaries and the settlor’s heirs. They will then have a certain amount of time to contest the trust or else they waive the ability to do so.
The trustee will then begin the process of distributing the property to the beneficiaries. The end result is that all of the trust’s property is distributed. Unlike probate, this process is done outside of the courts. As part of the process, the trustee will also need to settle the debts and pay necessary taxes of the settlor.
Trust administration will generally be a quicker process than probate and will cost you less than if you have a will. So long as the trust is not contested, the trust process should be smoother and easier than a will. However, there is the possibility that there could be a dispute that could slow the trust administration process. Proper trust planning can help reduce the chance that this could happen and a trust administration lawyer is helpful in this regard.
Guidance During Trust Litigation in Colorado
The trust is a legal entity, even if it is not a person which means that it is subject to being sued. This type of litigation is usually not simple. There can be a number of things that can be challenged in trust litigation and sometimes, many issues will come up at once. When this happens, the standards by which the court judges the case may be nuanced and archaic. The process of trust litigation is also detailed and requires following it precisely.
Trust litigation can involve any one of a number of things including trustee misconduct and the validity of the trust itself. As a beneficiary to the trust, you have the power to sue the trustee if they have failed to live up to their fiduciary duty. Alternatively, there may be a problem with the trust document and, as a result, there could be competing interpretations of what it says.
If we can give guidance, it is to expect trust litigation to be complex since it involves esoteric laws and trustee conduct. A Colorado trust litigation attorney will fight for you throughout the process.
What Is Trust Litigation
If a trust dispute cannot be worked out among the parties, one of the beneficiaries of the trust can file suit against the trustee as the representative of the trust. They can also allege that there has been some undue influence in the establishment of the trust.
Many times, trust litigation may involve a situation where the beneficiaries believe that the trustee has done something wrong and not acted properly as a fiduciary. If that is the case, they have the ability to file a lawsuit against the trustee for a breach of their fiduciary duty. Beneficiaries may also sue in order to remove a trustee from their capacity. Finally, beneficiaries can also file a lawsuit in order to force the distribution of the trust.
Both the beneficiaries and the trustee will need legal representation when it comes to trust litigation. The trust litigation process is like any other court case, meaning that it has multiple phases and will have motions, discovery, and a trial. Trust litigation can be a time-consuming process that may take several years to resolve through the court process.
The Responsibilities of a Trustee in Colorado
Being a trustee involves numerous responsibilities. There is a high standard of conduct that a trustee must live up to in their role. The trustee must act as a fiduciary, meaning they have a duty to act for the benefit of the trust.
The trustee’s responsibilities primarily involve the property of the trust. They will manage the affairs of the trust both administratively and financially according to the terms of the trust.
The trustee will also need to communicate with various individuals on behalf of the trust. This includes beneficiaries to whom the trustee will need to distribute information and keep informed. The trustee will also need to discuss matters with financial professionals when it comes to managing the investments and property of the trust. In addition, the trustee will also need to ensure that the trust follows all applicable laws.
The trustee will be responsible for anything that the legal owner of the property will need to do with respect to its assets. This will include taxes and other filing requirements as necessary.
Representation for Trust Beneficiaries
When the trust relies so heavily on the trustee to act in its interests, there are possible legal issues that can arise. The trustee does not always manage the property in accordance with the terms of the trust. Alternatively, the trustee may not properly give information to the beneficiaries or follow the conditions of the trust when it comes to distributing the property.
The beneficiaries will, in some instances, be opposed to the actions of the trustee. The beneficiaries have their own interests to protect and may sometimes be unaware of the relevant laws and the obligations of the trustee.
Beneficiaries who are concerned that the trustee may not be following the terms of the trust or living up to their fiduciary duty should seek a trust litigation attorney to represent their interest. Trust issues can be brought to court if they cannot be worked out privately, and the interests of the beneficiaries can be litigated. The trustee can be held personally liable for certain actions.
Consulting with a trust litigation attorney and obtaining representation can be helpful if you are either unsure of your rights or have an idea that your rights are being violated.
How to Deal with Trustee Fraud
In a worst-case scenario, the trustee commits fraud by embezzling the assets of the trust. Obviously, this is illegal and the beneficiaries have recourse when something like this happens. If there is a trustee mismanagement, which includes fraud, the beneficiaries can take the trustee to court where they can hold the trustee personally liable.
Colorado Trustee Fraud Lawyer
In order to bring an effective legal action against the trustee, you will need the assistance of a Colorado trustee fraud lawyer. Oftentimes, it is difficult to prove in court that the trustee is acting fraudulently as it is not always easily apparent. A Colorado trustee fraud lawyer can help investigate the facts of your case and will know what to look for when trying to prove fraud. They will then compile the evidence and figure out the most effective presentation that can persuade a judge that the trustee has committed fraud. Your Colorado trustee fraud lawyer will fight for your rights as a beneficiary as you try to recover from the trustee for the fraud that they perpetrated, An attorney can not only help prove that the trustee committed fraud, but will also know how to go after them for their assets to help recover the property in which you have an interest.
Trustee Misconduct and Fraud Claims
The trustee can break the law in many different ways. The trustee can breach their fiduciary duty, engage in self-dealing, steal the trust’s assets or commit fraud. The trustee can be held legally responsible for these actions and they will be required to pay the trust if a court finds that they have engaged in these behaviors. If you are the beneficiary of a trust and something seems amiss, you should contact a lawyer immediately. The attorney will then help you investigate and file a misconduct or fraud claim if necessary.
You can get your day in court if you feel that a trustee has acted fraudulently. Depending on the court’s findings, the trustee can be removed from their position. The court could also order a distribution of trust assets to the beneficiaries. Additionally, the trustee can also be ordered to pay for their actions and can face fines and other penalties as well. In Colorado, you have five years from the conclusion of the trust to file a fraud or misconduct claim against the trustee. However, if you have received a final account of the trust, you have two years from that date to file a lawsuit. You can either sue the trustee for fraud or breach of fiduciary duty.
If you are considering establishing a trust or are the beneficiary of an existing trust, you likely have questions about different types of trust. A Colorado trusts attorney can answer all of these questions including the ones below.
Many people are looking for a way to pass their property directly down to their loved ones or other beneficiaries without having to go through probate. A revocable living trust does exactly that. You can name the beneficiaries for trust and the fact that the trust is revocable means that you can change the terms of the trust as long as you are alive. This is an alternative to establishing a will and offers numerous advantages to a will.
The elements of a revocable living trust are the grantor, a trustee document with the terms, a trustee and beneficiaries. You then place assets into the trust that has been established. The revocable element of the trust enables you to maintain control over the assets. However, the property remains in the trust until you die. Then, it either becomes part of a subsequent trust, such as when the beneficiary is a minor, or it is distributed to the beneficiaries. The advantages to this are that you will maintain privacy since there is no reading of a will and you can avoid challenges to the terms of the trust. In addition, revocable living trusts are a way to segregate assets in a manner that keeps them easily identifiable.
An irrevocable living trust has many of the same elements as a revocable living trust except for the fact that it usually cannot be changed once the trust is established absent permission from a court. The trust is often permanent and cannot be terminated once established. This type of trust is set up to give you a degree of separation from your assets for purposes such as protecting them. Surrendering the ability to make decisions regarding your assets severs one of the indicia of ownership such that the assets are no longer considered yours when creditors come looking for your property or when you would be expected to use it to pay for nursing home care.
An irrevocable trust can also help you reduce taxes on the estate. For example, when one spouse dies, they can place their property into a trust. The surviving spouse can use it, but they do not take ownership of it, sparing them from the obligation to pay estate taxes on it. A charitable trust is another type of trust that can reduce income tax obligations. There are many different options beyond the basic irrevocable trust and a Colorado estate planning attorney can help you decide the right option for you.
A trust is a generally superior option to a will. While people sometimes opt for a will because they do not want to pay the extra cost of a trust, there are numerous benefits to a trust that make the cost worth it. The first, and most obvious advantage to a trust is that it, unlike a will, it will not need to go through probate which will slow the distribution of the property. A trust can also provide further protection to the assets after you die by controlling how they are used. A will just simply gives property to the beneficiary, leaving it subject to their creditors or their spending habits.
Trusts can be important when administering assets for minor children who are not ready to take control of the assets before they turn 18 or even thereafter. At the same time, the property can be used for their benefit. Finally, if property is bequeathed through a will, it is more vulnerable to taxes than it would be through a trust. Of course, you are still subject to estate taxes, but trusts can be used to reduce the obligation.
The general rule is that a revocable living trust does not require an income tax return while you are alive. While you will not have to file a separate income tax return for the trust, you will still need to pay income taxes on the property contained in the trust because you still own the property. That is not to say that there are not any benefits from filing a separate income tax return for the trust.
When you have an irrevocable living trust, the entity becomes a separate one and an income tax return is required. The trustee will be the one filing the income tax return since legally you are not in control of the trust’s property.
There are many different types of trusts available to help with your estate planning needs. All of these trusts will be either revocable or irrevocable. Then, within these categories, there are various trust options. Here are a few:
Testamentary Trust - This is a trust that is created in a will and comes into being when the trustor dies. This can be used to protect assets that would otherwise go to a minor or to ensure that care is provided for when it comes to a spouse or a dependent.
Asset Protection Trust - This is a trust that is created to protect your assets from creditors. You can also create an irrevocable trust in order to qualify for Medicaid for nursing home care so long as it is done more than five years before you have applied for Medicaid.