A new year is an excellent time for Colorado residents to take stock of their estate plans. Changes in federal tax laws can be evaluated to determine the potential impact on one's heirs. Additionally, this is an important time to make adjustments related to major life events that have occurred recently. In 2014, the federal government received nearly $13 billion in estate taxes, making closer scrutiny of one's plans a priority.
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.
When it comes to windfalls of any kind, Uncle Sam usually has his hand out. But there are ways for Colorado residents to limit the taxes that heirs have to pay on any legacies they receive.
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.
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.
Any individual in Denver, Colorado, who has assets or a legacy to pass on to loved ones should carefully consider how wills and other estate documents are written. Failure to make wishes known and set expectations about how assets are handled could result in future disputes between heirs. According to recent news reports, disputes have been the norm for the three surviving Martin Luther King, Jr. heirs.
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.
A well-established estate plan clearly defines the beneficiaries who will be receiving your assets when you pass away. Beneficiaries are named for assets such as mutual funds, IRAs, retirement plans, life insurance documents, brokerage accounts, bank accounts, 529 plans and annuities. A mistake that some Colorado residents end up making involves failing to update designated beneficiaries when circumstances change. For example, if you get a divorce but never remove your ex-spouse as a beneficiary, some of your assets could end up going to your ex regardless of what's stated in your will.