Wills and Trusts
There are many excellent reasons why people chose to do wills and/or trusts as part of their estate planning. Here are some to consider:
- People prefer that they be the ones to make the decision as to whom their assets pass upon death rather than the laws of intestate succession.
- If a couple has minor children, they want to choose who the guardian(s) would be of their minor children in the event something happened to them. Having guardians set forth in wills by the parents insures the best upbringing of the children and precludes the decision being made by a judge and possibly feuding families.
- If a couple has children under the age of 31, it may be in the children’s best interest to have trusts set up for them upon the untimely deaths of their parents so that the children do not come into substantial money at an early age. For example. most couples provide in their wills for trusts that pay for a minor child’s expenses as they grow up, and in addition provide that when the child turns 23 he or she gets one-third of the trust amount, at age 27 the child gets one-half of the remaining amount in trust, and at age 31 the trust balance is paid to the child. It is also important that to parents that they be the ones to chose who serves as trustee over monies for the children.
- People choose to have wills that contain credit shelter trusts in order to avoid or lessen Federal Estate Tax due on taxable estates. If a married couple has a taxable estate, which is an estate over $2,000,000 (including life insurance, equity in real estate, IRAs, all other assets, etc.), then upon the death of the second spouse, the Federal Estate Tax is 48% of all amounts passed on to children in excess of $2,000,000. Much of the Federal Estate Tax can be eliminated for many estates using the proper wills and trusts.
- People in second marriages with children from prior marriages often like to provide for their new spouses and children from former marriages separately, and without the control of ex-spouses over assets that pass to children from a first marriage.
- The informal probate of an estate with a will is simpler than the probate of an intestate estate (a person who dies without a will).
Most people include a Living Will in their estate planning documents. This is the “pull the plug” document instructing your family members and medical providers to withdraw life sustaining procedures (i.e., a ventilator) if you have an incurable or irreversible injury, disease or illness which is determined to be terminal by your attending physician and one other physician, and for a period of at least seven consecutive days and you have been unable to communicate decisions concerning your health care. The Living Will also gives you the ability to provide direction as to the provision of artificial nourishment (i.e. intravenous feeding) if it is the only procedure being provided to you after the removal of life support.
Medical Power of Attorney
With a Medical Power of Attorney, a person appoints another person (often a spouse or adult child) to make medical decisions for that person when they are unable to do so. The powers can be quite broad or tailored to a person’s specific desire, but usually include decisions as to resuscitation, general medical care, operations, medications, nursing home or hospice care, and the disclosure of medical records.
General Durable Power of Attorney
This is a powerful document where a person appoints another person (generally a spouse or adult child) to act as that person’s agent with the ability to sign that persons name on their behalf for the transaction of financial matters, real estate matters, banking matters, etc. The purpose for this document is to allow a loved and trusted one to act on a person’s behalf and avoid having to go to court to have a conservator appointed to handle a person’s affairs in the event a person becomes incapacitated. This powerful document is usually prepared so that it may be used without a person’s consent or knowledge or disability so that it may be accepted and relied upon by financial institutions and others to whom it is directed. Once signed, the Power of Attorney may also be revoked if so desired.
Our firm provides legal counsel on the various aspects of probate, some of which include the following:
- Giving counsel on how can a person structure their estate and title their assets so as to avoid probate, when such avoidance is desirable.
- Giving counsel on the advantages, if any, of going through probate in Colorado. In some cases, there are advantages to going through probate (e.g. cutting off the rights of creditors and of challenges to the estate by beneficiaries or want to be beneficiaries). Colorado is considered a “probate friendly” state, meaning that the process, costs and availability of assets to beneficiaries are not unduly burdened by the probate process. Other states are quite different and necessitate different estate planning tools to avoid probate.
- The lodging of wills with the court, and recording of death certificates and supplemental affidavits concerning real property held in joint tenancy are all part of the probate type legal services provided by the firm. For example, the law in Colorado requires that a person’s will be lodged with the court within ten days of the date of death.
- In the probate process, a personal representative is appointed who has the task of administering the estate, including but not limited to making an inventory of the assets, paying debts and taxes, making distributions of assets in the estate, notifying beneficiaries, and filing the necessary tax returns.
Owning real estate, oil and gas rights or tangible personal property in several different states will pose a unique challenge when planning your estate. This is because the laws of the state where the real estate or tangible personal property is physically located will govern what will happen to the out of state property after you die, not the laws of the state where you live at the time of your death. This lead to ancillary probate.
Ancillary probate refers to a probate proceeding that is required in addition to the primary probate proceeding that will take place in your home state. Typically ancillary probate will be necessary because you own a piece of real estate that is located outside of your home state, although it could apply to tangible personal property, such as a car, boat, or airplane, that is registered and titled outside of your home state, or livestock or oil, gas, or mineral rights that are attached to real estate located outside of your home state. The recent oil and gas rush inColoradohas led to many ancillary probates for interests that had been forgotten about many, many years ago and now with the activity those old interests need to be administered to place title in the correct heir.