Frequently Asked Questions About Estate Planning
We provide answers to a wide variety of estate planning questions. This includes questions as to why estate planning is important for you. Below are just some of the questions we regularly hear. For more specific inquiries, you may wish to contact our office to set up a free consultation.
What Is An Estate?
Estate assets concern everything you own including:
- Real estate
- Retirement accounts
- Property included in a trust
- Bank accounts
- Life insurance policies
- Personal property
Unfortunately, it is not always simple to pass on your estate without encountering expense. Nursing home costs can eat up a substantial amount of what you would wish to pass on to your heirs. You may also wish to set aside funds for funeral expenses. Finally, there may be expenses that will need to be paid from the proceeds of your estate after you pass away. These expenses include probate, taxes, estate administration expenses, etc. There may also be outstanding debts owed by your estate as well.
What Is Estate Planning?
Estate planning is a strategy you set up to ensure that your assets go to the people or charities you choose and in the way that you want after you die. Common tools used during estate planning include powers of attorney, wills and trusts. Wisely utilizing such tools can result in the probate and estate administration process going smoothly. This, in turn, saves on tremendous time and expense.
What Is The Role Of A Personal Representative?
In Colorado, the person who represents you is your personal representative. A personal representative can protect your property until payment of debts and taxes. They must be at least 21 years old and of sound mind.
A personal representative plays an important role in settlement of the estate. This individual needs to file a will with the court. A personal representative must also create an inventory of the estate and distribute the estate to the beneficiaries. They are also responsible for paying estate expenses and debts.
A well-prepared estate plan can make a personal representative’s job easier. For example, properly-worded provisions in a will make distribution of the assets easier. By stating your intentions regarding the distribution of the estate, there is also much less chance that disputes over the estate will arise.
How Can An Estate Plan Help?
A well-thought-out estate plan can:
- Ensure assets go to the people you want to receive them promptly and with as few legal problems as possible.
- Minimize taxes.
- Avoid time and costs associated with the probate process. It utilizes a variety of devices, including trusts.
- Set funeral arrangements.
- Set up a living will and power of attorney for healthcare, which dictates your medical care in life-threatening situations when you cannot make those decisions yourself.
It is not always easy to anticipate all of your estate planning needs. Having an attorney who regularly prepares such plans and who understands Colorado law is an invaluable asset. The lawyers at Chayet and Danzo, LLC, routinely provide such services in Denver and across the entire state.
Why Do I Need A Will?
If you die without a will, you may have no say about the distribution of your assets. The court may end up making determinations concerning your estate instead of you. In Colorado, if you die without a will, the court will distribute assets per the state’s intestate laws. Just having a will can reduce the expenses that accompany the settlement and probating of an estate.
Some of the benefits of having a will include:
- A will provides your personal representative and your heirs a description of what is in your estate. By having a document describe the estate assets, it reduces the risk of lost or missing assets. A will does this by allowing you to provide information regarding bank accounts or retirement accounts that your personal representative may otherwise not know exists.
- In a will, you can name an individual who you would wish to serve as guardian for your young children. You do not wish to leave such considerations to chance.
- By providing clear directions concerning the distribution of your estate, you reduce the chances of a will contest that could be lengthy and expensive. An orderly distribution of your assets will, in turn, save your estate additional expense.
- A will allows you to gift specific assets to individuals. This is especially important if such gifts are to go to individuals who are not close relatives.
- It allows you to provide direction concerning the care of loved ones with special needs
- In a will, you can provide direction concerning your funeral and burial.
- In some instances, a will allows you to create a testamentary trust. Such a trust can sometimes shield assets from taxation and expense.
A will can help make your wishes known. In itself, this provides direction to your personal representative and heirs, thus heading off disputes. But it is important to create a will properly. If a will does not comply with Colorado law, a court may find it invalid. Also, the more detail you provide in a will, the less chance there will be of confusion arising.
What Is The Difference Between A Will And A Trust?
Though both useful estate planning tools, a will, and a trust serve different purposes. While a trust concerns specific assets in your estate, a properly-prepared will covers everything you own.
A will allows you to distribute your estate assets contained in the manner you wish. You can list the personal property you own and provide instructions as to who should take possession of it. In a will, you can choose your personal representative to carry out the will’s terms. Again, a will allows you to make these sorts of determinations instead of a court.
A trust, on the other hand, allows for you to set aside property and assets for specific purposes. It allows you to provide instruction concerning the holding of assets. A trust can also set conditions regarding distribution of those assets.
Why Should I Avoid Internet Estate Planning Forms?
Quite simply, internet forms may not be legally valid. Many forms were not created with Colorado laws in mind. Also, all of us have unique financial circumstances and specific financial needs. Documents found on the internet may not address your specific situation. Relying on such documents may not meet the needs of you or your loved ones.
Can A Power Of Attorney Documents Help Me If I’m Sick Or Disabled?
There are situations when you will not be able to make decisions for themselves. A well-prepared estate plan will take into consideration dire circumstances, including hospitalizations or extended nursing home care. In such situations, having a medical power of attorney plays a vital role.
A power of attorney allows you to appoint someone you trust to make important determinations for you when you are unable to do this yourself. You can create a power of attorney to appoint someone to make medical decisions and healthcare directives on your behalf in the event of incapacitation. You can also appoint someone to make financial and business determinations for you while you are in the hospital or nursing home.
It is important to remember that you can word a power of attorney document in clear and precise terms that will limit or enhance the powers of the individual you choose to take care of your personal affairs.
Do I Need An Estate Plan?
Yes. An estate plan is important for every adult who has concerns about the care of their loved ones, and who also want to see their estate distributed according to their wishes. It is especially beneficial for parents, property owners, business owners, and entrepreneurs.
In Colorado, farmers and ranchers may, in particular, require a strategic estate plan to deal with their complex assets. Farmers and ranchers own substantial amounts of property and equipment. They may have an extended line of credit to pay for such assets. Farmers and ranchers also have several long-term concerns. It is important to have a plan in place to keep their farms and ranches running when they can no longer take care of their business.
All of us have to work hard to save money in taking care of our families and loved ones. It serves no purpose to see those hard efforts go to waste because of taxation and expense.
It is important to have an estate plan in place that will help make your wishes come true.
Call Us For A Free Consultation
Contact experienced estate planning attorneys at Chayet and Danzo, LLC. Call 303-355-8500 or email our Denver offices.