Estate planning encompasses both financial and emotional considerations. It ensures your assets, privacy and end of life wishes are respected. The end result is your family avoids infighting and saves money. There are also potential asset protection and tax benefits available during your lifetime. Each family is different, whether the concern is qualifying for Medicaid or ensuring your children have proper guardians. It would be our estate planning attorney's pleasure to assist you with the various considerations.
The foundation of most estate plans in Colorado are a trust or a will, accompanied by a living will (a.k.a. a health care directive), durable power of attorney and health care power of attorney. These estate planning documents help you avoid probate, qualify for medicaid, choose a guardian for minors, minimize estate taxes and more.
This section will cover common estate planning goals, with the second section focusing on the documents we use the achieve them.
Nobody wants to experience probate court. Probate is expensive, public and time consuming. There are no benefits to having your estate distributed via probate.
Fortunately, avoiding probate in Colorado is easy. There are a few exemptions, such as the small estate limit, along with joint tenancy, beneficiary designations, and the drafting of a will or trust. We generally advise the use of a living trust for our clients.
Colorado has no estate tax. However, there is still a federal limit. In the previous thirty years the federal estate tax limit for an individual has ranged from $500,000 to $10,000,000. The purpose of pointing this out is to highlight that while the limit may currently be high it can swing wildly and unpredictably. For that reason an estate plan should plan for the contingency of higher rates or lower ceilings regardless of where things currently stand.
Of equal importance is ensuring the assets you leave are used responsibly. We have often seen the curse of too young of children, or irresponsible family members, receiving a large lump sum of cash. This invites irresponsible decisions and is easy for a creditor to attack. For these situation, we generally recommend drafting an asset protection trust. The trust can provide protection during your lifetime and ensure you leave a responsible legacy.
Planning for long-term care is a frequently overlooked element of estate planning but is crucial if there is a chance you may require assisted living or a nursing home. This is referred to as avoiding the medicaid death tax, which is in effect a hidden estate tax. There are various gifting strategies and trusts that can prevent you from exhausting your assets to pay for long-term care. Emergency medicaid planning strategies are also available for those facing immediate decisions.
Ensuring your wishes are well articulated is important not just for you, but family as well. It's important for you because it's your life. Further, while you may believe you've made your wishes clear through conversations over the years, having a document on hand for family helps prevent any potential confusion.
It's important for your family as well so they're not burdened with having to choose in case things are unclear. Being forced to decide whether to cease care, keep you in a coma, or how to proceed can weigh emotionally on family for years after. They'll always be left wondering if they made the right choice, or fearing they made the wrong one.
Our process is designed to avoid inconveniencing you and your family. The estate plan documents we draft are ready to print and sign. Our process involves a consultation and questionnaire which enables us to provide a comprehensive solution for your Colorado estate plan. Our job is to make things easy on you.
A Colorado trust is foundational to most estate plans. Colorado recently passed the uniform trust code, making us the 34th state to do so. The most common trust is a revocable living trust, with some families requiring more advanced planning in the form of a special needs, asset protection or medicaid trust. If a trust is advantageous, then our estate planning attorneys will help craft one appropriate for your situation.
When most people think about estate planning, they think of writing their will. This is among the most important documents as it can accomplish multiple goals. A will in Colorado outlines instructions for distributing your property when you pass. In the case of those with minor children, it outlines who will become their guardians. In some situations, a will may be all that you need for estate planning. This is more common among those with small estates. Larger estates still must be probated, though, even if there's a will. For this reason alone, we generally advise using a revocable living trust.
A living will in Colorado acts as a legal document outlining your chosen medical care. This directive is used if you are unable to make independent decisions or communicate in the future. These directives commonly indicate scenarios where you do not want doctors to make efforts to extend your life, such as a do-not-resuscitate order (DNR). A living will is also referred to as an Advanced Health Care Directive (AHCD).
A durable of attorney is a legal instrument that allows someone else to legally make decisions on your behalf. You can craft the power of attorney to give very narrow power to make decisions in only certain situations or to give vast power in almost any situation. With a power of attorney, you select someone that you trust to make important life-altering decisions for you if you become incapacitated.
It's important to note a standard power of attorney ceases when you become incapacitated. That is why a durable power of attorney is needed. Having someone to make financial decisions on your behalf can prevent poor outcomes resulting from your assets, such as businesses, stock accounts or real estate, from being effectively frozen.
Planning your estate should be done with the assistance of a law firm that has compassion and experience. This allows for individualized strategies that work best for your particular situation, to prepare yourself as well as your family for what comes in the future.
It can be intimidating to create an estate plan because most people do not want to face their own mortality. But having a plan is essential if you want to ensure your property and assets are divided up according to your wishes and without government interference. With the right guidance, a Colorado estate plan becomes relatively straightforward.