The old saying goes that there are two inevitabilities in life -- death and taxes. In many states, death triggers yet another tax for the survivors of the deceased.
Colorado individuals who are contemplating planning the disposition of their estates may feel that putting together a will or a trust is sufficient, but it may also be important to take steps to ensure it is less likely that those documents can be contested. Wills and trusts cannot be contested by just anyone. Only certain people may challenge the validity of these documents, and they can only do so under certain circumstances.
Colorado residents may benefit from learning more about the facts concerning estate taxes. The federal government taxes all gifts, generation-skipping transfers and estate taxes. Gifts that exceed specific limits may be taxable during someone's lifetime or after their death. Transfers made during the lifetime are taxed when they exceed the exemption limits for taxable gifts. Transfers that exceed exemption limits after death may be subject to estate taxes.
When parents die, their adult children not only must deal with their grief, but also tend to the practicalities of arranging their funerals and handling matters of their estates. Some Denver residents may be shocked to learn that one or both parents died heavily indebted.
Colorado residents with large estates may have questions about the $5 million federal estate tax exclusion and how it affects them. Because it doesn't affect the majority of residents, few may have even heard of it.
Too many people put off the task of estate planning out of fear of confronting their own mortality or simply because they are too busy with life's day to day activities. But doing so is short-sighted in the long run and can only cause problems for your loved ones when you have passed on.
Nobody likes to dwell on their own mortality, but some issues need to be addressed before health declines or the mind begins to fail. Some of those issues affecting Colorado residents of any age include planning for the distribution of assets after death.
In 2011, Congress introduced a tentative tax planning device that eventually became a permanent part of the tax code due to an act passed in 2012. Dubbed "portability" by tax agents, the new law could provide for some big tax savings if correctly implemented in an estate plan.
The life of a new parent, while often rewarding, can also be incredibly hectic. Between feeding, changing and scheduling, every day that a new parent spends with their young children can be challenging and overwhelming. New parents in Colorado and all over the country may find it difficult just to get through each day, let alone planning for when their children are grown. However, young parents might find it beneficial to do some estate planning even when their children are very young. Creating a broad plan when the children are still young could prevent some confusion and turmoil should anything happen to one of their parents. Also, performing some estate administration could set some clear goals for the children that the family can help them achieve, as well as setting them on a positive trajectory.