Frequently Asked Questions About Colorado Estate Planning & Elder Law
At Chayet & Danzo, LLC, we help clients who are planning for the future through estate planning, those who are planning for the future well-being of an elderly loved one and family members who are dealing with the legal aftermath of a death in the family.
We invite you to browse the FAQs below for answers to your questions. Otherwise, if you are interested in scheduling a free consultation with one of our lawyers, please call us at 303-872-5980.
Index of Questions
Estate Planning and Probate Questions
- What is estate planning?
- Are internet estate planning forms valid?
- How do you maintain your estate plan?
- What is elder law?
- What is long-term care insurance?
- What does probate mean for Colorado residents?
- What is a will?
- What is a living will?
- When should I update my will, trust or estate plan?
- What is the difference between a will and a trust?
- What is a CPR directive?
An Explanation of Roles in Estate and Probate
- What’s the role of a personal representative?
- What is a medical power of attorney?
- What is a financial power of attorney?
- What is a proxy decision maker?
- What is a conservator?
- What is a legal guardian?
Medicaid / Medicare
- What is the difference between Medicaid and Medicare?
- What is an exempt asset according to Medicaid regulations?
- What steps can you take to plan for unexpected medical costs?
- Are there ways to protect your personal assets from major medical costs while becoming eligible for Medicaid or other government resources?
- If someone dies with unpaid debts, can those end up reducing the amount that heirs receive from the estate?
Social Security and Social Security Disability
- What is the definition of disabled under the Social Security Administration’s regulations?
- What are work credits for determining SSDI eligibility?
Estate Planning and Probate Questions
What is estate planning?
Estate planning is planning for your property, your loved ones and yourself in the event of death or incapacity. The most important aspect of estate planning is early planning to eliminate or minimize problems before the crisis happens.
Why do I need an estate plan?
If you have a family, you will need an estate plan to designate who will take care of your minor children should the unthinkable happen to you and your spouse. If you have a home, a car, investments or property, a will is important for farmers, ranchers, business owners and entrepreneurs. A trust can protect your assets from significant taxation while also enabling your estate to avoid the Colorado probate process, which can take time and money and may require court. There are several tools that can be included in an estate plan.
Are internet estate planning forms valid?
Not necessarily. In addition, you may have unique financial circumstances and specific wishes these forms do not include. It’s always a risk to use these forms.
What information should I maintain or include in my estate plan?
Leave a list for your family specifying location and explaining the following items:
- Name, address, and phone numbers of your clergyman/rabbi, attorney
- Will, trust, living will, and power(s) of attorney
- Birth and marriage certificates
- Records of business and investment interests
- Contracts (including installment purchase agreements)
- Account numbers for checking, savings, and credit union accounts
- Social Security, IRA, and pension plan numbers, and the administrator or contact person, accountant/tax preparer, physician(s), stockbroker, and insurance agent(s)
- Burial or cremation preferences
- Safe deposit box and key, checkbooks/passbooks
- Registration and proof of ownership for vehicles
- Real estate deeds, title policies, closing statements, mortgages, record of debts besides normal monthly bills
- Income tax returns
- Mortgage payments, tax receipts and leases
- Stock certificates and bonds (plus records of cost and date of purchase)
- Records of loans, credit cards, and charge accounts, record of divorce, veteran service and discharge records
- Insurance policies – life, medical, health, disability, property, auto, mortgage
- Receipts of appraisals of valuables
What is elder law?
- Elder law encompasses all aspects of planning, counseling, educating, and advocating for the senior client, or their family, concerning illness, incapacity, and death.
What is long-term care insurance?
- Long-Term Care (LTC) Insurance is a new type of private health insurance that is designed to cover long-term care costs. Services covered by such policies include skilled, intermediate, or custodial care received in a nursing facility, the home, or assisted living facilities.
- LTC insurance can range from providing simple assistance with activities of daily living (such as bathing, eating, hygiene, household chores, etc.), to full time skilled care or even respite care for a family member or friend who is a caregiver. The type of coverage you get depends on your individual needs and the amount of premiums you are willing to pay.
- There are now plans where a husband and wife can share the coverage, depending on who needs the care first, or most. A couple can buy a plan that covers six years of long-term care for either spouse. Therefore, the husband can use three or four years first, and the wife can use the remaining years later.
What does probate mean for Colorado residents?
All probate estates have a person who is responsible, under the court’s supervision, for the administration of the decedent’s estate in Colorado. This person is known as the Personal Representative (formally called executor or executrix).
What is a will?
A will is a legal document that allows for the distribution of your property upon your death. Wills can come in many different forms, from very complex wills that have different trusts for tax planning purposes, to simple wills. Each will should be tailored for the client’s individual needs and form wills should be avoided.
What is a living will?
A “Living Will” is a document used to express your health care wishes. Generally, the living will comes into play when someone has a terminal condition or is in an irrevocable coma state. The living will is where you would indicate that you do not want to be kept alive by medical procedures, such as life support, which would merely postpone death.
Once the Living Will is executed, it can be applied when you have been certified as being in a terminal condition by at least two physicians; have been in a coma for at least seven days, and not pregnant. The physician must give notice to the nearest family members and wait another forty-eight hours after certification for a response. If there is an objection, a court hearing is held and a guardian ad litem is court-appointed for you. With court permission the physician may withhold life support, which does not include withholding pain medication.
Your attending physician must honor the directives of the Living Will, or relinquish your care. The statute governing living wills specifically states that death due to compliance with the Living Will is not suicide or homicide.
A Living Will only applies in situations where death is imminent. It does not apply where death is not imminent, but you are unable to make medical decisions for yourself.
When should I update my will, trust or estate plan?
If any of the following circumstances apply:
- You have recently married or divorced.
- You recently adopted or gave birth, or you lost a child, grandchild, parent or spouse.
- There was a change in whom you want to name as a trustee or personal representative or guardian.
- You have minor or disabled children or grandchildren and you don’t have a will that names a guardian or creates a trust.
- You have a parent who is disabled and there has been no planning for long-term care.
- Your estate has increased in value, or you have inherited property, but you have not provided for any estate tax planning in your will.
- You have moved from a community property state to a common law state, or you have moved from a common law state to a community property state.
- You have a disabled spouse and you have not provided for a trust, or a trust in your will.
- You have remarried and you have children by a prior marriage and/or children by a second marriage.
- You have adopted a child, or your child has adopted a child.
- There has been a change of ownership in the family business.
- Your child has filed for divorce or bankruptcy.
- You have an estate subject to federal estate tax and your will uses a pre-1981 marital formula clause.
- You have purchased or sold property that was specifically devised in your will.
- You have acquired assets in another state that you have not placed in a trust.
- A loved one has entered or is about to enter a nursing home.
- You need to take advantage of the new family estate tax business exclusion, or you are contemplating making significant gifts to your children.
Is your estate plan up-to-date? Many people are unsure of when to change a will and how to go about doing so. Fortunately, the process isn’t as complex as many fear. Working with an experienced estate planning attorney is advisable to ensure that your assets are protected and wishes made known. If you are interested in speaking to an estate planning attorney about updating or revising your will, please call Chayet & Danzo, LLC, at 303-872-5980.
What is the difference between a will and a trust?
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.
A trust, on the other hand, allows 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. If you have a child who will need lifelong care, a special needs trust may be a good idea.
What is a CPR directive?
It directs that CPR should not be performed on you.
- If you want a CPR directive, it is advisable that you wear an official necklace or bracelet to notify emergency medical personnel
- You can obtain the CPR Directive Form from your family physician, a home health agency, or a licensed health care facility. If you do not have access to one of these sources, you can obtain a CPR Directive from the University Hospital or Denver General Hospital.
An Explanation of Roles in Estate and Probate
What’s the role of a personal representative?
In Colorado, the person who represents your estate after you die is your personal representative. This person must be at least 21 years old and of sound mind. The duties of the representative you designate are to:
- File your will with the court
- Create an inventory of the estate and distribute the estate to the beneficiaries
- Pay your estate expenses and debts
A well-prepared will will make your personal representative’s job easier by laying out your wishes.
What is a medical power of attorney?
A Medical Durable Power of Attorney (MDPOA) appoints an agent to speak for you regarding medical treatment decisions when you cannot do so yourself.
- It has much wider application than a Living Will because it actually names an agent to look out for your wishes. MDPOAs are also much more flexible because you can set forth your wishes regarding “quality of life” issues. Health care providers are required to comply first with your wishes, then a Living Will if one is executed, and finally the decisions of your agent under an MDPOA.
- On June 4, 1992, new laws were passed that state a previously executed Living Will would take precedence over the authority given to an agent under an MDPOA. Since living wills are much less comprehensive than an MDPOA and they do not allow for an agent to stand up for your health care wishes, most elder law attorneys favor MDPOAs over living wills. In addition, you will always want to revoke any previously executed living will when you execute a new MDPOA. This can be done within the MPDOA itself, with a clause stating that you are revoking any previous living wills. Colorado is currently contemplating g a change to the MDPOA statute. Look back here for updates.
What is a financial power of attorney?
If you are incapacitated, a Financial Power of Attorney, also known as a Durable Power of Attorney, is crucial because it allows your agent that you trust to pay your bills, manage your assets, and generally attend to your affairs.
- If you don’t have a Power of Attorney and you become incapacitated, the court may appoint someone to serve as your conservator and guardian. This procedure is expensive, time consuming, and very stressful.
- A Durable Power of Attorney is very important and is one of the least expensive tools available for estate planning. Remember, the time to execute a power of attorney is before you may need it, not when an accident or illness has already occurred. You cannot execute a Durable Power of Attorney AFTER you have become incapacitated.
What is a proxy decision maker?
If you become incapacitated and you did not previously sign an advance medical directive, a proxy can make some medical decisions for you.
- Your physician must first try to locate as many of the following people as possible: your spouse, your parent, your children or grandchildren, and your close friends. These family members and friends select a proxy medical decision-maker for you. Then the proxy has authority to make limited medical treatment decisions for you.
- The proxy may not withdraw artificial nourishment or hydration “tube feeding” except under limited circumstances that are specified by statute.
What is a conservator?
- A conservator is responsible for the person’s estate or financial affairs
- A conservator may be appointed by the court for a minor or an adult who is incapacitated, missing, detained, or unable to return to the United States.
- A conservator cannot be the same person or entity as the guardian
What is a guardian?
- A guardian is responsible for a protected person’s medical and health care decisions, and for their well-being.
- A guardian may be appointed by the court for an adult who is determined to be an “incapacitated person.”
- A guardian cannot be the same person or entity as the conservator
Medicaid / Medicare
What is the difference between Medicaid and Medicare?
- Medicare falls under the Entitlement Programs category, while Medicaid falls under the Need Based Programs category
- You will be entitled to Medicare when you reach the age 65. Medicaid requires an income and asset limit, as well as a need for custodial type care.
- Medicare will pay for most care if it is considered skilled care, but once the patient has plateaued and is diagnosed as not needing any more skilled care, the Medicare coverage ceases. Medicaid will cover custodial type care.
What is an exempt asset according to Medicaid regulations?
- Exempt assets are not considered when attempting to qualify for Medicaid
- The home of any value, including the land on which it sits and adjoining property;
- Household goods and personal effects with a value up to $2,000;
- One wedding and engagement ring, and any items required by physical condition, i.e., prosthesis or wheelchair, or any value;
- One vehicle of any value if equipped for a handicapped person, or used to obtain medical treatment or used for employment (must be verified by a letter from a physician or employer); exemption limited to $4,500 in all other circumstances;
- Value of any burial space;
- Value of any burial plan if it is irrevocable; if it is not irrevocable, a burial plan of $1,500;
- Life insurance with a cash surrender value of $1,500
- Shifting (converting) countable assets to exempt assets is permissible. Examples include: making improvements to the home, purchasing an exempt vehicle, purchasing an irrevocable burial plan, etc.
What steps can you take to plan for unexpected medical costs?
Being retired and having assets to pass along is fortunate. But large, unexpected medical expenses can really start to drain even the most well-managed wealth.
What steps should you consider in order to prevent this from happening? Let’s discuss five key points.
Is it possible to get hit with large medical bills even when you’re insured?
Yes. The problem is two-fold. First, healthcare costs keep going up. And second, the copayments and deductibles insurance companies try to put on policy holders keep going up as well.
What can you do if a medical bill seems excessive?
Financial planners and wealth managers are increasingly encouraging clients to push back against excessive medical bills.
For example, it may be possible to negotiate a discount on a pricey procedure from a provider that is outside of your insurance company’s network.
Another possibility is to offer to pay cash in exchange for a reduction in the overall bill.
What if the charges on certain medical bills don’t seem accurate?
It is definitely legitimate to raise concerns about questionable charges.
For example, if you were supposed to be charged in-network rates, it is improper for a healthcare provider to switch that up on you and charge out-of-network rates.
Are there ways to protect your personal assets from major medical costs while becoming eligible for Medicaid or other government resources?
Absolutely. By using a trust or other advance planning methods, it is possible to preserve certain assets and pass them along to heirs. A knowledgeable elder law attorney can guide you in this process.
If someone dies with unpaid debts, can those end up reducing the amount that heirs receive from the estate?
Yes, that can happen, especially when an estate goes through probate.
With effective estate planning, however, there are ways to preserve assets to the greatest degree possible. As we’ve discussed in this post, this includes being proactive about addressing large unanticipated medical bills.
Social Security and Social Security Disability
What is the definition of disabled under the Social Security Administration’s regulations?
- You are considered “disabled” and entitled to disabled worker’s benefits if you meet the following conditions:
- You cannot engage in any substantial gainful activity because of a physical or mental impairment. You must not only be unable to do your previous work, but also any other type of work considering your age, education, and work experience. (Note: It does not matter whether such work exists in your immediate area, whether a specific job vacancy exists, or whether you would be hired if you applied for work.) Your impairment is determined medically by a doctor;
- It is expected that your impairment(s) can either result in death or last for at least 21 months in a row; and
- Your impairment(s) must be in the primary reason for your inability to engage in substantial gainful activity.
- In addition to the definition of disability, you must have worked long enough – and recently enough – under Social Security to qualify for disability benefits.
What are work credits for determining SSDI eligibility?
- Work credits are based on your total yearly wages or self-employment income. You can earn up to 4 credits each year. The amount needed for a credit changes from year to year.
- The number of work credits you need to qualify for disability benefits depends on your age when you became disabled. Generally, you need 40 credits, 20 of which were earned in the last ten years ending with the year you become disabled.
- Younger workers may qualify with few credits
What are and how can I use Colorado ABLE accounts?
What are the roles and responsibilities of a fiduciary?