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Golden Estate Planning Blog

Why business owners need estate plans

Colorado business owners and others throughout the country may benefit from including their companies in their estate plan. For instance, thinking about an estate plan may make it easier to create a succession plan. This may include training a new generation of leaders or creating a manager role that is separate from the new owner. Succession planning may also mean bringing in outsiders to help run the business.

It is important to know that a succession plan may take up to a decade to fully implement. Therefore, it could be harder to carry out such a plan on a whim after an owner passes. Having an estate plan may allow a business owner to create a buy or sell agreement. When an owner passes, the other owners have the right to buy his or her share of the company. It may also be possible to ensure that family members don't become owners after the current one passes.

Estate planning essential for singles

Everyone needs an estate plan, but many Colorado residents probably don't have one. Statistics indicate that more than half of all Americans don't have wills, which are the most basic of estate planning documents.

A will designates how people want their assets to be distributed upon their death. If a person does not have a will, the probate court will determine distribution, most likely in favor of the spouse and children. Problems can arise if the person is single. Who gets the assets then? The assets will be distributed in accordance with the state's laws of intestacy. Unfortunately, this could result in the estate going to relatives that the decedent did not particularly care for or that he or she had become estranged from. This is why having a will can be important.

Estate planning in Golden for high net worth individuals

Individuals who have a high net worth have a particular need for qualified estate planning. Complex asset portfolios require specific and strategic management. One of the most common errors that individuals make is simply not creating a comprehensive plan for their asset distribution in advance.

Here is some information to consider if you have a complex range of assets and are considering how to plan for your future asset distribution. There are several tools you can take advantage of as you envision how you would like to disperse your accumulated wealth after your death.

Important estate planning documents for every adult

Many people in Colorado may lack important estate planning documents. One survey has found that about half of all Americans do not have a basic estate plan. One reason for this may be that some people believe estate planning is only necessary for the wealthy. For Millennials in particular, making an estate plan might seem low on the priority list. However, estate planning is important for people of all ages and income levels.

Among the most important documents in an estate plan are those that make a strategy in case the testator becomes incapacitated. A living will expresses the kind of treatment the estate holder wishes medical professionals to perform or withhold. Health care proxy documents appoint someone to make medical choices in the event of incapacitation. Similarly, a financial power of attorney designates someone to take care of financial issues. This may be particularly important for spouses who do not have joint financial accounts.

How to pass digital assets to future generations

Bitcoins are assets that may be passed to another person when the original Colorado owner passes away. However, this assumes that the original owner left instructions as to how the bitcoins could be accessed. In most cases, an individual uses a private key to access an account or make a transaction. Without the key, the coins could be lost forever.

They could also be lost forever if a person has a key and doesn't know how to use it. In that case, no new coins will be made and the rest that are in existence simply become more valuable. Therefore, it is important that those who own bitcoins tell a beneficiary where the key is located and how to use it. This may be made easier by creating a shared account on sites like Coinbase.

The importance of making a timely estate plan

Making an estate plan is the type of activity that some people in Colorado might prefer to put off. However, the problem with this is that it can be put off until it is too late. While many people may think of an estate plan as deciding who will get a person's assets, it is also important to plan in case a person becomes incapacitated.

One man found this out when he phoned a lawyer about paying for his father's care in a nursing home because he had developed dementia. The man's father had him listed as the beneficiary on his bank account, but because the father was still alive, the man could not access the funds. When he phoned an attorney, he was surprised to learn that his father would have to sign a power of attorney so that the man could access the account.

Reviewing the estate plan for possible changes

In December 2017, Congress passed a new tax bill that may affect estate planning for some people in Colorado. Even those whose estates are unaffected by the tax bill may want to review their estate plan to make sure it is still effective based on current tax law and any other changes. This could include not just changes in a person's life or assets but changes in relationships with beneficiaries or in the lives of beneficiaries.

The estate tax has been doubled, meaning that people whose estates are worth less than $11.2 million do not have to worry about estate tax. The previous limit was $5.6 million, and people whose estates were above this may have designed their plans to avoid estate tax. This may no longer be necessary. Couples might want to talk to an attorney about the portability rule and how this affects their estate. Colorado, like most states, does not have a state estate tax any longer, so people do not need to be concerned about this.

Reasons anybody should create an estate plan

In 2018, the federal estate tax exemption will be $5.6 million for an individual. An estate worth more than that will need to file a return with the IRS. Therefore, that number may be the baseline when it comes to estate tax planning. However, those who are under that threshold may still benefit from having an estate plan. Without one, an individual may have less control over where his or her assets go after death.

It is also possible that assets will sit in limbo while courts decide what is to be done with them. Court costs and other fees may result in less going to beneficiaries. Two ways to avoid such uncertainty is to name beneficiaries and to keep as many assets out of an estate as possible. Beneficiaries can generally be named for assets such as retirement or bank accounts.

Why you should not procrastinate on estate planning

One of the biggest mistakes you can make with estate planning in Golden is procrastination. No matter your age, you might feel like you have all of the time in the world to do it. Or, if you already have plans in place, you might feel like you do not need to review them. Regardless of which side of the fence you are on, it is necessary for you to be proactive in case an unexpected event happens. 

You might feel primarily concerned with protecting your assets and passing your wealth down to your loved ones. But you should keep in mind that you might have end-of-life needs. You could live longer or fall ill or suffer a serious injury and require the care of others before you die. Your loved ones might not be in a position to contribute financially to your end-of-life expenses. Consider the following information to make your estate plans more comprehensive. 

The importance of up-to-date beneficiary designations

People in Colorado who are creating an estate plan must also pay attention to beneficiary designations. It can be easy to forget about these. One woman, who is a financial professional, did not realize until she transferred an IRA to another investment company that she had neglected to change the beneficiary on the account when it would have been prudent to do so.

The woman had divorced when her children were young. At the time, she made her father the beneficiary on her account so he could take care of her children in the event of her death. It was not until after her children were grown and her father had remarried that she discovered that she hadn't designated a more appropriate beneficiary. She made this simple error despite advising others regularly on estate planning.

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Golden, CO 80401

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