If you die without an estate plan, state law determines who receives your property that doesn’t otherwise pass automatically to someone upon your death. This is known as dying “intestate.”

Colorado law establishes a default order of inheritance based primarily on your surviving spouse, children, parents, and other relatives. These rules apply regardless of what you might have wanted. Your estate may also need to go through probate, and a judge may need to appoint someone to administer it.

If you have minor children, dying without an estate plan also means you haven’t formally nominated the person you’d prefer to serve as their guardian.

An estate plan allows you to make these decisions yourself rather than relying on the default rules provided by law.

Estate planning isn’t just for the wealthy. Even if you don’t own substantial property, an estate plan can serve several important purposes.

For example, a will allows you to decide who should receive your property after you die and nominate a guardian for your minor children. A trust can provide additional control over how and when your property is distributed. Powers of attorney allow you to appoint trusted individuals to manage your financial and medical affairs if you become incapacitated. These documents can be valuable regardless of the size of your estate.

The type of estate plan you need depends on your circumstances. Someone with relatively few assets may not need a trust or other sophisticated planning tools, but that doesn’t mean they wouldn’t benefit from having an estate plan.

One of the biggest advantages of a trust is that property properly transferred into the trust generally doesn’t have to go through probate after you die. A will, by itself, doesn’t avoid probate. Instead, it provides instructions for how your property should be distributed if probate is necessary.

A trust can also provide greater privacy and continuity in the management of your property. Unlike probate, which involves court filings that generally become part of the public record, trust administration can ordinarily take place privately. If you become incapacitated, your successor trustee can also take over management of the trust property without first obtaining a court appointment.

Both wills and trusts can provide instructions for how and when beneficiaries receive their inheritances. However, a trust can make the administration and distribution of your property significantly easier and more efficient by avoiding the need for probate.

A trust isn’t necessarily for everyone, but it can be a valuable estate-planning tool depending on your assets and goals.

The length and cost of probate depend on the size and complexity of your estate. In Colorado, even a relatively straightforward probate often takes at least six months to complete and may take considerably longer. This is due in part to statutory waiting periods, including the time that must be allowed for creditors to present claims against your estate. When disputes arise among beneficiaries or creditors, probate can easily take a year or longer.

Probate also involves expenses that may include court filing fees, publication and other administrative costs, attorney fees, and compensation for your personal representative.

The total cost depends largely on the complexity of your estate and the amount of work required to administer it.

A trust only controls property that has been transferred into it. This process is commonly referred to as “funding” the trust. Simply signing a trust agreement doesn’t automatically transfer your property into the trust. Depending on the asset, additional steps may be necessary, such as recording a deed or retitling an account.

Real estate, bank accounts, non-retirement investment accounts, and tangible personal property are commonly transferred into a trust. Other assets may require different treatment. Retirement accounts, for example, generally cannot be transferred into a trust during your lifetime and instead pass according to beneficiary designations. Life insurance policies also typically remain in your individual name, although you may choose to name the trust as a beneficiary of the policy.

Exactly what you should transfer into your trust depends on the types of property you own and how you want that property to pass after you die. You may ultimately decide that some assets should be transferred into the trust, while others may be better left in your individual name with an appropriate beneficiary designation.

A revocable trust is a trust that you can change or revoke during your lifetime. You generally remain in control of the trust property and can add or remove property, change beneficiaries, or modify the terms of the trust as your circumstances change.

An irrevocable trust generally cannot be changed or revoked as easily. Creating one usually requires giving up some degree of control over the property placed in the trust. Depending on how the trust is structured, it may provide benefits that a revocable trust cannot, such as certain forms of asset protection or planning for Medicaid eligibility.

For most people whose primary goals are avoiding probate and controlling how their property will be distributed after they die, a revocable trust is the more common estate-planning tool.

In some circumstances, an irrevocable trust can help protect property while planning for future long-term care needs. One common planning tool is a Medicaid asset protection trust, which is designed to transfer certain assets out of your individual ownership while preserving benefits for you or your beneficiaries.

However, transferring property into a trust doesn’t necessarily make it exempt for purposes of Medicaid eligibility. Medicaid generally examines certain transfers made during the five years preceding an application for long-term care benefits. Transfers made during this look-back period can result in a period of ineligibility for benefits.

A properly structured trust can help protect assets if it’s established and funded sufficiently in advance of the need for care. However, the terms of the trust are critical, particularly the extent to which you retain access to or control over the trust property.

Medicaid planning is highly dependent on your circumstances, including your assets, income, family situation, and anticipated care needs. For that reason, it’s generally best to explore these options before long-term care becomes an immediate concern.

A comprehensive estate plan does more than determine what happens to your property after you die. It also allows you to decide who will make financial and medical decisions for you if you become unable to make or communicate those decisions yourself.

A financial power of attorney, for example, allows you to appoint an agent to manage your financial and legal affairs, while a medical power of attorney allows you to appoint an agent to make healthcare decisions for you. A living will allows you to provide instructions regarding medical treatment if you have a terminal condition or are in a persistent vegetative state and cannot communicate your wishes.

If you have a living trust, the trust can provide another layer of incapacity planning. Your successor trustee can take over management of the trust property if you become incapacitated, providing continuity in the management of your assets.

Yes. As long as you have the required legal capacity, you can generally change or revoke your will or revocable trust during your lifetime.

A will can be amended through a codicil or replaced with a new will. A revocable trust can likewise be amended or revoked. This allows you to update your estate plan as your circumstances change, whether because of a marriage or divorce, the birth or death of a family member, changes in your assets, or simply a change in your wishes.

Different rules apply to irrevocable trusts, which are generally much more difficult to modify or terminate.