Please refer to the below for answers to common questions we receive.
These are unprecedented times. Although planning for the unknown is scary, it's also essential. As always, putting a comprehensive legacy and estate plan in place will preserve the entirety of your intentions and wishes. That being said, we are happy to provide simplified and unbundled services as well. At the very least, we encourage you to have certain medical documents in place, power of attorney documents to ensure that someone you trust can make decisions on your behalf if you are unable to do so, and guardianship provisions for any minor children.
To protect you, your loved ones, and the community, all meetings, including your free initial consultation, will be carried out virtually at this time. While we love meeting our clients in person, we are confident that virtual meetings can achieve the same results. We look forward to talking with you soon.
A comprehensive estate plan includes a will and/or a trust, a general (financial) durable power of attorney, a medical durable power of attorney, and an advance directive (living will). These documents designate agent(s) to make decisions on your behalf, the medical care you wish to receive during your lifetime, and the legacy you would like to leave once you pass away. You also choose a personal representative (referred to as "Executor" in some states) to manage your estate after your death, those who you would like to inherit your assets, and a guardian for any minor or disabled children. In order to create an estate plan, you must be mentally competent and not under the influence of another person.
As people are living longer, and as we face evolving medical challenges, the likelihood of becoming incapacitated increases. Planning for incapacity during one’s lifetime is just as important as planning for after death. We will explain the different options, help you understand the law as it applies to your specific circumstances, and advise you on the impact of your potential decisions.
While a good estate plan typically includes the following legal documents, ask us about our discounted and unbundled services to meet your pressing needs now:
- Last Will and Testament
- A Trust (advisable in some, but not all cases)
- General (Financial) Power of Attorney
- Medical Power of Attorney
- Advance Directive/Living Will
A Will is a document that is effective upon your death. It provides your instructions for designating a personal representative (referred to as “Executor” in some states) to be in charge of administering your estate, to whom your property shall be distributed, and under what conditions your beneficiaries are to receive their inheritance. Your will may also include your appointment of a guardian for any minor or disabled children you may have. This is the most common estate planning document that everyone should create regardless of your financial status.
A Trust is an agreement by which a person (typically referred to as the “Settlor”) designates another person or entity (the “Trustee”) to manage any assets titled in the name of the Trust for the benefit of certain beneficiaries such as children.
There are many types of trusts, most commonly testamentary trusts (also referred to as contingent or residuary trusts) and revocable (or living) trusts. Trusts may help to avoid probate (the court process of proving the validity of a will and winding up a person’s affairs after death), but only if the trust is drafted and administered properly. A trust can also provide privacy and certain protections for your assets and beneficiaries. Trusts can be more complicated and expensive than wills, both to create and administer, but they can also be simplified. Many think a trust is necessary to meet their needs and goals, when a will is frequently sufficient. We work with our clients to find the best fit.
A testamentary trust (also referred to as a contingent trust or a residuary trust) arises upon the Settlor’s death, and the terms of the trust are detailed in an individual’s will. The Settlor’s property and assets are transferred into the trust only once the Settlor dies. Using a testamentary trust as a component of your will allows you to leave an inheritance to a child and name a trustee to manage the child’s assets until the child is old enough and/or capable enough to manage the property.
A revocable or living trust arises during the Settlor’s lifetime, the Settlor is typically the Trustee of the trust, but the Settlor designates a successor trustee to take over if the Settlor becomes incapacitated or dies. There are advantages and disadvantages to both trust vehicles, which we can discuss with you to determine whether either meets your specific goals.
What is a general (financial) durable power of attorney and a medical durable power of attorney, and why do I need them?
These documents only govern during your lifetime. In them, you may designate someone you know and trust (referred to as your “Agent”) to make financial or medical decisions for you, if you are incapacitated for any period of time or otherwise unable to manage such affairs for yourself. During your lifetime, your Agent under a general (financial) durable power of attorney may step into your shoes to help you manage your financial affairs and make time-sensitive decisions. Your Agent under a medical durable power of attorney can make treatment decisions for you, in consultation with your physicians, if you are unable to communicate your own wishes. The Agent’s decision-making abilities are specifically limited by the parameters stated in your documents. We recommend powers of attorney for anyone over the age of 18.
Power of attorney documents may also include a HIPAA release authorizing your Agent to obtain your medical information to the extent necessary to carry out its duties. You are able to handle your own affairs when you have a signed power of attorney, but it ensures that someone you trust, who understands your values and priorities, will be able to help if the need arises.
The legal term for a living will is an Advance Directive for Medical or Surgical Treatment. An Advance Directive is a written statement of your beliefs, decisions, and wishes regarding various medical issues if you suffer an injury or medical condition that causes you to be terminally ill or in a permanent vegetative state, such as in a coma. This includes how long you would like to receive artificial life support. Depending on how it is drafted, your Advance Directive must be followed by your family, doctors, and any Agent under a power of attorney, if you are unable to express these preferences yourself. In the case of an emergency, Advance Directives offer peace of mind and clarity, eliminating any guesswork by your family members as to your wishes.
Your living will is effective during your lifetime, while your will (or last testament) is effective upon your death and contains instructions directing the settlement of your estate after your passing.
There are types of assets that are not governed or distributed under the terms of your will. Assets that have a beneficiary designation, such as life insurance policies or IRAs, and assets owned in joint tenancy, like real property or a bank account, pass to the beneficiaries under the specific terms of those assets. As such, the assets are not subject to the provisions of your will or probate (the court process of proving the validity of a person’s will if they own real estate in their individual name or cumulative non-real estate assets in excess of $70,000, in 2020, and indexed for inflation). We will work with you to determine how each of your assets is factored into your estate plan.
Generally, you may amend or revoke your estate plan, provided you are mentally competent and not under the influence of another person. You may also execute a new estate plan that will replace the older documents. An amendment to a will is specifically called a codicil. A codicil must be signed and witnessed just like the original will. You should never write directly on your original estate planning documents, as this will likely trigger increased court involvement and potential litigation after your death.
After you execute your estate plan, there will be many changes in your life and to state and federal laws. If you move to another state, for example, you should have your estate plan reviewed by an attorney in that state. Although Colorado law recognizes wills from another state, rules vary from state to state, including spousal and dependents' rights. We recommend that you reach out to us periodically to review your plan and determine the necessity of any updates. Typically, every 3-5 years is a prudent time-frame to review your estate plan for potential revisions.
If you don’t have an estate plan in place, your estate will be subject to the state's intestate succession laws. This means Colorado law essentially writes your will for you and dictates who is entitled to what. The process may require significant court involvement and expense. Court proceedings will also be required to determine the guardian of your minor children.
If you are incapacitated during your lifetime without a designated power of attorney and unable to manage your financial and medical affairs personally, you and your family will be involved in a court proceeding for this as well. The judge will appoint someone to make decisions on your behalf (referred to as a “Conservator” for managing your finances and property or a “Guardian” for other personal affairs), and the process will involve ongoing supervision. This can be costly and time-consuming, and it also increases the likelihood of family disputes in the absence of you clarifying your wishes and instructions.
While you may hear about the federal estate tax, the tax actually has minimal impact on the majority of estates due to the dramatic increase in what is called the estate tax exemption in recent years.
As of January 1, 2020, the federal estate tax exemption, gift tax exemption, and generation-skipping transfer tax exemptions amounts increased to $11.58 million per individual (up from $5 million in 2011 and $600,000 in 1997). That means an individual can leave $11.58 million to their heirs, while a couple can leave $23.16 million, and pay no federal estate or gift tax on the transfer. In 2020, the annual gift exclusion is $15,000 per person.
It is important to remember that these laws all have the potential to change as political outcomes change. We work with our clients to ensure sufficient flexibility within estate planning documents and recommend that you periodically review your estate plan.
What is estate administration, and what does it mean if I've been named as a personal representative (i.e. executor) or a trustee?
Estate administration is the process of winding up an individual’s affairs after death. This may include probate, the court proceeding to prove the validity of a person’s will if they own real estate in their individual name or cumulative non-real estate assets in excess of $70,000, in 2020. Outstanding debts and taxes are also paid, assets are distributed to the beneficiaries, and/or depending on the terms of the estate plan, to a trust. In many cases, we can work with clients on estate planning to simplify or avoid probate altogether, but other administration tasks may still be necessary.
If you are named as the personal representative, you are responsible for locating original estate plan documents, if possible, and conducting a wide range of tasks to settle the estate in accordance with the directions in the will. A trustee collects, preserves, and distributes assets placed in a trust and must act in accordance with directions contained in the trust agreement. These roles are unique to every probate process, estate and trust administration, and it can be overwhelming, which is why many people seek the assistance of attorneys to carry out the myriad legal duties.
Our estate planning services for comprehensive plans and specific documents are typically based on flat fees. We believe this payment structure offers highly competitive prices for our clients and ensures you don't have to worry about every question raising the price. Our current price for a full-service plan, before any applicable discounts or flat-fee options, starts at $1,500. Once your specific needs are discussed at your free consultation meeting, we will provide you with the price of your desired plan. All other services are billed hourly, and we are careful to communicate with our clients along each step of the way to ensure transparency.