By Myka Landry
The documents included in an estate plan will vary, depending on your unique situation. However, there are some basic documents that everyone should have in place. These documents create your foundational estate plan. If you have a more complicated situation, those issues can be dealt with after your foundation is in place.
There are two basic types of foundational estate plans: a will-based plan and a trust-based plan. Both plans include a health-care and financial powers of attorney, and usually a living will. However, with a will-based plan, your main document is a last will and testament. In a trust-based plan, your main document is a revocable living trust. A will is also needed in a trust-based plan to cover property that may not have been placed in the trust.
Whether a will- or trust-based plan is right for you depends on your unique situation. However, using a revocable living trust to avoid probate is usually not necessary in the state of Colorado. A trust-based plan is more expensive to set up and, in order for it to be effective, property must be retitled in the name of the trust. Often, this is more trouble than it is worth just to avoid probate. A good will-based plan will make probate as easy and efficient as possible, and may work better for you.
A trust-based plan also will not avoid creditors, nor will it, by itself, accomplish tax planning. However, there may be certain situations in which a revocable living trust would be beneficial. What is most important is that you discuss your situation with a knowledgeable attorney and get all of your questions answered.