What is a protected trust?

A protected trust is a type of legal trust structure used to protect assets specifically for individuals with disabilities. In Colorado, these trusts are authorized by a Disability Planning Law that allows individuals to set up a trust and designate beneficiaries to ensure that the assets are used solely for the beneficiaries’ benefit, even if the individual with disabilities does not receive public assistance. Protected trusts provide a number of benefits for individuals with disabilities and their family members. First, they secure assets for the disabled individual without decreasing their chances of receiving public assistance. This means that the disabled individual can benefit from the trust without the fear of losing government benefits. Additionally, these trusts provide legal protection and privacy for the assets within the trust, ensuring that the beneficiary can use the assets only for their own benefit. Protected trusts also allow individuals to manage their assets and funds even while incapacitated, as a trustee is appointed to manage the trust in the case of incapacity. Moreover, assets in a protected trust are not subject to income and estate taxes, meaning more money is available to the beneficiary. Overall, protected trusts are an important tool in Disability Planning Law in Colorado to provide individuals with disabilities and their families with financial security and peace of mind. They allow individuals to designate beneficiaries and manage their assets to ensure that their own funds can be used solely for the benefit of those they love.

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