Updated April 16, 2024
A Colorado living trust is a legal form and process that allows a grantor to place their assets in the trust to efficiently transfer to beneficiaries upon death. A correctly executed living trust allows for the avoidance of a public probate process, which can be costly and time-consuming. Living or revocable trusts can be modified, whereas other types of trusts cannot be altered.
Requirements
- The grantor has sufficient mental capacity and intention to create the trust or a legal authorization warrants creation of the trust;
- The trust is required to have a defined beneficiary or must be a charitable trust, trust for animal care, or a trust for a noncharitable purpose defined in C.R.S 15-5-409
- The trustee must carry out specific responsibilities;
- A single person cannot be designated to be both sole trustee and beneficiary;
- A beneficiary is clear if it can be determined who they are, either now or in the future, taking into consideration any relevant rules surrounding perpetuity; and
- A trustee’s authority to choose a beneficiary is valid, but if the trustee doesn’t use this authority within a reasonable timeframe, the power is void, and the property goes to those who would have inherited it if the power hadn’t been granted. [SOURCE 1]
Registration
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Laws
Amending/Revoking – The grantor/settlor may revoke or amend the trust unless the terms of the trust expressly state that it is irrevocable [SOURCE 2]
Bond Requirement – A bond is not required unless the court determines it to be necessary to secure the trustee’s performance. [SOURCE 3]
Certification of Trust
Co-Trustees – Cotrustees may invoke a majority decision if the trustees are unable to agree on matters. If a cotrustee is unable to perform because of illness or another valid matter, the remaining trustees may carry out duties. Actions cannot be delegated by a cotrustee that the grantor expected trustees to engage in jointly. [SOURCE]
Contesting a Trust – Anyone who wishes to contest the trust must do so within three years of the grantor’s death or within 120 days of when the trustee provided a copy of the trust to the interested party and a notice of the time required to contest the trust, whichever is earlier. [SOURCE}
Costs Related to the Trust
Jurisdiction – Trusts made in another state are valid if the trust was created in accordance with the laws of that state.
Oral Trusts – Credible evidence must be available in order for an oral trust to be valid in Colorado.
Pet Trusts
Signing Requirements
Spendthrift Provision
Trustee’s Compensation –
Trustee’s Duties
Trustee’s Powers
Laws – Title 15, Article 5 (Uniform Trust Code)
Registration – Only required for Irrevocable Trusts. The Registration Statement (JDF 732) must be filed with the District Court of the Trustee.[1]
Will (Last Will and Testament) – Used to designate all assets not mentioned in the Living Trust. All property in a Will is subject to the probate process.
Individual Roles
Within the structure of a Living Trust, there are four (4) major roles:
Grantor (or “Settlor”) – Initial creator of the Trust and owner of the assets to be distributed to the Beneficiaries.
Trustee – Person managing the assets within the trust. The Trustee will distribute the assets to the beneficiaries upon the death of the Grantor. In a Revocable Trust, the Grantor may also act as the Trustee.
Successor Trustee – The Successor Trustee will act on behalf of the Trustee should he/she become incapacitated or otherwise unable to handle the Grantor’s affairs.
Beneficiaries – Individuals who will benefit from the assets placed within the Living Trust.
How to Make a Living Trust in Colorado
There are no set laws on the requirements for Living Trusts in Colorado other than spelling out the powers of the relevant parties (Grantor, Trustee, and Beneficiary) and listing the assets which are to be transferred to the trust for the benefit of the Beneficiaries. In order to create a Trust that is binding, it is recommended to have the document be fully completed and signed with the Grantor and Trustee in the presence of a Notary Public.
If it is an Irrevocable Trust, the document must be authorized and registered in accordance with Colorado law by completing the Registration Statement (JDF 732) and filing with the Local District Court of the Trustee.[1]
Motor Vehicles – If a vehicle is to be placed in the trust, a Statement for Certificate of Title (Form DR 2170) must be completed and returned to a DMV Location.
Real Estate – A Colorado Deed should be filed when transferring real estate to a Trust. The form must be notarized and filed with the County Recorder’s Office.
Websites – The Grantor must alter their settings with the company hosting their domain (e.g GoDaddy) so that the listed information is in the name of the trust.
Do I Need a Living Trust?
Under Colorado law, if the value of an individual’s estate is less than sixty-four thousand dollars ($64,000), there may not be a sufficient reason to create a Trust.[2] With a Small Estate Affidavit, the heirs of the estate may be able to bypass the probate process when it comes time to distribute assets and property. If an individual wishes to spell out specific provisions in regards to their Beneficiaries, it is recommended that a Living Trust be created; without a trust, the heirs will receive equal ownership of assets and property.