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Golden Estate Planning Blog

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.

Conservatorship and guardianship basics

If you have a loved one to take care of, either a special needs child or a senior, you know how demanding it can be. In the daily routine it’s common for people just like you to neglect the long-term planning that is essential to being sure their needs are met in all potential circumstances.

It’s important to be sure that the right legal framework is set up for their future needs. This is where “guardianship” or the more limited “conservatorship” are important concepts. Whether the key issue is your ability to make legally binding decisions or to be sure someone else is there if something happens to you, an experienced estate planning lawyer can guide you through your options.

Modifications to charitable trusts under the cy pres doctrine

Some Coloradoans want to leave money to benefit the public through charity. This can be done by establishing charitable trusts. These types of vehicles are established in order to help with poverty, to advance education, to benefit health, or for other charitable purposes.

In some cases, the charitable purposes that are identified in trusts are unable to be fulfilled. For example, if a grantor establishes a trust to benefit a specific community organization, the purpose of the trust may not be able to be realized if the organization closes. In instances like this, the cy pres doctrine will apply.

The family home can be a key part of an estate plan

For couples in Colorado who own their own homes, that asset can often be the single largest shared asset in a couple's life. Many couples own their home with joint tenancy with a right of survivorship, which means that either person will become the sole owner of the home in the case that the other party dies. This form of property ownership allows this significant asset to transfer without probate or including the home in the estate, protecting both parties into the future.

However, this can also lead some couples to leave the home out of the estate plan. While there's no need to plan for the transfer of property upon the simple death of one spouse, there can be some more difficult situations that mean thinking more about the house is important. This is especially true when it comes to dealing with the property after the death of the surviving spouse or in the case that the surviving spouse is incapacitated or incompetent to deal with the property.

Estate tax story shows importance of regular updating

Colorado residents who are creating an estate plan should also make sure they review the documents regularly and update them if necessary. Failing to do this can lead to other problems. For example, a North Dakota congresswoman has talked a great deal about how the federal estate tax hurt her family when her father was killed in a farming accident. However, a closer look at the documents shows that the issue was more one of not updating his will. Furthermore, his family did not take advantage of several opportunities that could have made the tax they had to pay less onerous.

The man had written a will in 1976, and he did not update it before his death in 1994. The will left half of his estate to his wife and half to a trust his brothers managed. In 1981, a spousal exemption to the estate tax was added. However, since he did not update his will to include this, his family had to pay the tax.

5 items to add to an estate plan for a child with special needs

Parents who have a child with special needs face unique challenges in all aspects of their lives. This is especially true for when it comes to estate planning.

When it comes time to start developing your plan, you may be wondering what needs to be included to ensure your child is financially protected and receives the same quality of care they have now, regardless of what happens to you. Here are five things to make sure your estate plan includes.

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Golden, CO 80401

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