When we die we leave behind a collection of things we own, money, property, and possessions, such as valuable jewelry, pets, furniture, and artwork. These are called assets and can hold great value. We also leave behind liabilities, which are debts and obligations that we have accumulated over time in exchange for money goods or services.
So, what happens to all of your assets and liabilities when you die? Well, you have probably already heard of a person's last will and testament (will).
A will is a document made by an individual, often with the assistance of an attorney, that sets out their wishes for the distribution of their property after they die. In legal terms, this property is called your estate and consists of all of your assets and liabilities.
Making a will is also important as it allows you to choose an executor, who is someone that will oversee the distribution of your estate. Furthermore, creating a will allows you to nominate a person to act as the guardian of your minor children when you die.
In Colorado, a will can be made by any person who is 18 years of age or older and possesses the testamentary capacity. Testamentary capacity essentially means that the will-maker must have the mental capacity to understand what they are signing.
To possess testamentary capacity, you must not suffer from any mental illness and be able to understand:
When a will is created, there are certain requirements that must be met to deem it valid. In Colorado, these requirements are as follows:
Essentially, you can include any legal instruction in a will. You can even attach conditions to the will, controlling when and how a beneficiary should receive an inheritance.
A beneficiary is a person who inherits from or receives benefits from the will including money, property, or possessions that belonged to you. However, any condition you attach to the will must be lawful and in line with public policy.
As part of your will, you can appoint an executor. This is a person who will oversee the distribution of your estate in accordance with the instructions you leave in your will.
The duties typically performed by an executor include:
Usually, the executor is someone who you trust and who is capable of managing your estate.
Sometimes a will needs to be changed after initially being made. If you want to add something or make minor changes to your will, you can attach what is called a codicil. A codicil is an amendment to a will that must also be signed, dated, and witnessed.
If you need to make major changes to your will, you can revoke it and create a completely new will. A will is also revoked whenever a new will is made, when an existing will is destroyed, or when you marry or remarry.
In addition, when you get divorced, it invalidates any gift you made to your spouse, as well as, his or her appointment as your executor. Because of this, you must usually create a new will after a divorce.
If you die without making a will or leave behind an invalid will, you will have died “intestate”. When you die intestate, your assets will be distributed according to Colorado “intestate succession” laws.
This basically means that the assets in your estate will pass on to your closest relative. This can be a huge drawback when it comes to estate planning because intestate succession laws do not take into account how you would like to have had your assets distributed nor the actual needs of your survivors.
For this reason, any comprehensive estate plan usually begins with either a will or a living trust that serves as its foundational document and that expresses your wishes, as they pertain to whom should get what from your estate after you die.
In the simplest terms, a will allows you to dictate how your estate will be disposed of after your death. Whereas, a revocable living trust is created during your lifetime and assists in the management of assets, both during times of incapacity and after your death.
Wills are attractive to many people because they are inexpensive to put in place and work well to govern the distribution of your assets after you die. But, while wills are often initially cheaper to set up and work well to govern how the assets of a small or simple estate will be distributed, they have several disadvantages.
One of the biggest disadvantages of a will, as a foundational estate planning document, is the fact that it needs to be probated after your death. Probate is a court-supervised process of administering a deceased person's estate, including:
Probate can be costly, eating up money that would otherwise be passed on to your beneficiaries. Probate also takes time, often a minimum of six months, but in some cases, probate can last for years.
For this reason, if you have a sizable estate, own real estate, wish to structure distributions from your estate, provide asset protection for your heirs, and avoid probate, then a revocable living trust is probably a better foundational estate planning tool to have instead of a will.
There are many things to consider when deciding what to include in your Colorado will. Engaging the assistance of a knowledgeable estate planning attorney will ensure that you navigate the process successfully and can give you peace of mind, knowing that you have an effective and comprehensive will in place. For more information, contact an experienced Colorado estate planning attorney today.
This article discusses various types of wills, each having their own specific purposes.
In many instances, a will is drawn up in conjunction with a trust. Both instruments work to identify and distribute the testator's assets according to his or her wishes. A pour-over will goes a few steps further than a typical will in that it works as a security measure to take care of any assets that were not incorporated in a corresponding trust. Just to backtrack a bit, it is important to remember that a trust needs to be funded - that is, assets need to be routed to the trust in order for them to be distributed under the terms of the trust. This is where the benefits of a pour-over will come into play.
In the event someone fails to include assets in a trust, a pour-over will accounts for those assets that were either mistakenly omitted or accumulated after the trust was created and unaccounted for under its terms. Furthermore, it is common for a pour-over will to name its corresponding trust as a beneficiary. It is important to note that pour-over wills deal with personal assets, however, and any of the testator's property that passes through the pour-over will to the trust may go before a probate judge before it can be distributed under the trust's terms.
A holographic will is one that is handwritten by the person creating the will and is not required to meet some of the requirements of other wills, namely witnesses and notarization. While Colorado does not require that the instrument be entirely in the testator's handwriting, as some other states do, it does require that at least the material parts be in his or her handwriting in order to be considered holographic. It must also be clear from the writing that the testator intended for the document to serve as his or her last will.
In Colorado, a testator may file his or her own will with a probate clerk, or the will's executor must file the will with the probate court within 10 days after the testator's death. Failure to do so may result in the executor being held responsible for any damages and costs associated with the delay. Even in cases where the will does not necessitate probate, Colorado still requires that wills be filed. In instances where the testator personally filed the will, family members may simply contact the court within the 10-day period to inform the court of the death in order to begin the formal process of administering the will.
Unlike a typical will which can be revoked at any time prior to death, a joint will - one signed by both spouses - is irrevocable unless both spouses agree to revoke it. Among the benefits of a joint will is that both spouses can have peace of mind knowing that the surviving spouse will have to abide by the terms that they agreed upon together. For example, if the surviving spouse chooses to remarry with someone who has children of his or her own, that surviving spouse cannot then decide to distribute assets to any new stepchildren that were originally intended for other beneficiaries under the original joint will. The joint will is binding.
On the other hand, the limitations that a joint will places on the assets left for the surviving spouse can prove to be problematic if, for example, the original joint will included beneficiaries that the surviving spouse wishes to disinherit due to later strained relationships. These are very real considerations that must be given adequate thought when deciding how to plan for the distribution of assets with a spouse.
The cost of preparing estate-planning documents depends on many factors such as the types of will and/or trust that are needed, the extent of professional legal services rendered (if any), and the complexity of the assets to be distributed upon the testator's death. Legal estate-planning services, alone, can fluctuate between just a few hundred dollars to well into the tens of thousands, depending on the law firm. Of course, you have the legal right to prepare your own will, however, you may risk omitting important details that result in unintended consequences.
On the bright side, there are numerous do-it-yourself estate-planning websites to assist you if you decide to create your own will for budgetary or other personal reasons. Also, keep in mind that executors and trustees you appoint may be entitled to reasonable compensation for duties associated with administering your last wishes and executing the distribution of your assets. Legal professionals in your community are able to help you with any questions that you may have with regard to your estate-planning needs.
A will was the foundation of most estate plans before the uniform trust code was adopted by states. The will still plays an important role, but today most estates center around trusts, e.g. an asset protection or living trust. These instruments are generally best for avoiding probate and ensuring an efficient transfer of wealth.