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Golden Estate Planning Blog

Don't forget digital assets in an estate plan

Investors in Colorado and throughout the country may need to create specific provisions in their estate plan to account for digital assets. For instance, individuals who own digital coins should keep a list of each coin that they have and how much they have. This list should be updated on a regular basis depending on how often they trade. In addition to keeping good records related to digital holdings, they will need to tell others how to access those assets.

For instance, if an account is protected by a password, it will need to be written down somewhere an executor can access it. If an account can only be opened with a signature, an executor or other authorized person would need to know that as well. Anyone with digital currency holdings or other digital accounts should be sure that someone has the legal authority to access them after they pass.

Keeping the children in mind during estate planning

A typical feature of an estate plan for the parent of minor children in Colorado is a document about guardianship. This statement tells the court who the deceased or incapacitated parents designated as the legal guardian of their minor children. However, such a plan too often overlooks the immediate aftermath of a tragedy when young children receive the news of the loss of their parents. Their legal guardian might not be immediately available, and a court still has to review the estate plan and make the custody of the children official. Additional documentation from the parents could resolve this situation.

This supplemental document states who should care for children as soon as authorities announce the loss of parents. The intermediary caregivers could be neighbors, friends or relatives. They should be known to the children and hopefully nearby and able to take immediate custody. The legal notice should be in the home, and babysitters should know about it so that they can call the appropriate person in the event of a tragedy or emergency.

Estate planning myths

Colorado residents should consider the benefits of having even the most basic estate planning documents in place to ensure that their wishes are adhered to when they die, even if getting the right documents to arrange their health, home and financial affairs can be confusing and intimidating. When creating an estate plan, it can be helpful to be aware of common misconceptions about estate planning.

One common myth about estate planning is that a will is enough to ensure how assets are to be distributed. While a will can be used to dictate how assets should be distributed, it is only effective for assets that are solely in the decedent's name. A will may have no controlling power over joint financial accounts or accounts that have designated beneficiaries.

Estate planning can involve many other people

When Colorado residents think about planning for the future, they may often pay more attention to how they distribute their assets than to the people they name to act as their executors or representatives. However, these people can play a significant role in determining whether or not an estate plan is truly successful and the tone of family relations moving forward. While many people may take these decisions lightly, determining who to appoint in these types of positions can be at least as critical as the ways in which a person divides property.

There are a number of people that a person could empower during the estate planning process, not only the executor of the will. People may name an agent to act in their stead under a power of attorney or advance health care directive. This person can make medical or financial decisions in case of the principal's incapacity. In addition, many people make use of trusts in order to pass on their estate without probate and more closely direct the future of their assets. A named trustee makes the final decisions about how investments are managed and distributions made after the settlor passes away.

Two trust options that protect an inherited IRA

If an IRA account represents a significant asset, you may want your child to receive it with as few penalties and as many protections as possible when you pass. Estate taxes and income taxes can take a chunk out of an inherited IRA, and if your child has debt issues, an inherited IRA does not have protection from creditors like a traditional IRA does.

In addition, although you must begin taking the required minimum distributions from your IRA at the age of 70 1/2, your beneficiary must begin taking them from an inherited IRA the year following your death. He or she must pay income tax on the amount received from the IRA.

Legacy planning can separate control of assets from beneficiaries

A successful business person in Colorado will typically want to pass on wealth to family members. Concerns about the abilities of heirs to run the business, however, could cause someone to look for alternatives to an outright handover of a business upon death. Careful succession planning might assign the management of a business to professionals or key employees. This approach may leave the business in capable hands so that it can continue generating revenue. The management of profits and distribution to heirs could also be placed in the hands of a competent individual or organization.

During succession planning, a person needs to identify and hire people with the qualifications to manage a business and oversee distributions to beneficiaries. The same person does not necessarily need to be in charge of both control and distribution. They are distinct tasks that might be best served by different professional parties.

Defining fairness during estate planning

When people in Ohio think about the future, deciding how to divvy up assets during an estate plan can be an emotionally challenging experience. It might be difficult to determine what kind of asset division makes for a fair distribution, and thoughts of avoiding future conflict among family members can weigh heavily on a person developing a plan. While fairness is a common goal during the estate planning process, it may be defined differently by different people.

For example, in the case of a hypothetical family with three adult children, some may consider that the fairest distribution is always a simple three-way split. However, others may consider the needs of grandchildren for future college educations, previous gifts or the relative needs of the siblings. If one child received a large monetary gift during the parents' lives, it may seem fair to reduce that child's gift in the will. In order to avoid future hard feelings and bitterness between different beneficiaries, open discussion during estate planning can help avoid unpleasant future surprises.

Clearing up some estate planning misconceptions

Estate planning attorneys in Colorado often find that prospective clients have misconceptions about what an estate plan is or what it entails. Often, the confusion comes from either over-thinking the estate plan or under-thinking it.

In the under-thinking category, many people believe all that is needed is a will for planning. Although a will helps to transfer some assets after death, other documents should be included. For example, powers of attorney are available to provide another authority to act on a person's behalf in the event of disability.

Special needs trusts to provide for disabled loved ones

Colorado residents who have loved ones with special needs might worry about how they might be cared for during their lives. It is possible for people to establish special needs trusts to benefit their loved ones.

When a special needs trust is established, money is placed in a trust so that the beneficiary can still continue to receive benefits from the government. These trusts are established because of Supplemental Security Income regulations, which state that disabled individuals may not have more than $2,000 in his or her name while receiving benefits. If a disabled person who is receiving SSI receives a substantial sum of money, such as an accident settlement or an inheritance, the regulations mandate that he or she places the funds in a first-party special needs trust that names him or her as the beneficiary.

3 things you should know about a POD account

When you are planning your estate, you have a number of options that allow you to ensure your loved ones are cared for and financially secure. You might opt for a will or a trust, but there are other options that you should consider. One of these is establishing a payable on death directive that can be distributed upon your passing. According to The Balance, POD accounts are increasingly popular.

What do you need to know if you are considering establishing a POD? There are a few key facts that might affect your decision, but ultimately, you should seek out counsel from a legal representative to establish an estate plan as soon as possible. Learn whether a POD account is the right option for you. 

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