Personal Planning


 

Basic Estate Planning

 

 

 

 

 

 

 

Last Will and Testament

 

 

 

 

 

 

 

 

The Last Will and Testament, aka Will, is the document in which a person sets out his/her wishes to take effect upon death.  There are a variety of issues handled in the Will, such as a statement of testamentary intent, names of spouse and children, marital status, directions regarding payment of creditors and taxes, disposition of remains, distribution of assets, trusts for minor children and for other purposes, designation of fiduciaries, such as personal representatives (previously termed executor/executrix), guardians for minor children and trustees, designation of supervised or unsupervised probate, among other things.

 

 

 

 

 

 

 

General Durable Financial Power of Attorney

 

 

 

 

 

 

 

 

This document gives your designated agent the ability to make non-healthcare decisions for you.  For instance, if you suffer a heart attack or stroke and cannot function temporarily or permanently, there are some decisions that may need to be made on your behalf.  As an example, in the event your residence needs to be sold, even your spouse would not be able to accomplish this without a Power of Attorney or the establishment of a Conservatorship.  The Power of Attorney, of course, must be established prior to your incapacitation.

 

 

 

 

 

 

 

Medical Durable Power of Attorney for Health Care Decisions

 

 

 

 

 

 

 

 

This document gives your designated agent the ability to make health care decisions for you.  In many situations, your spouse may be able to make such decisions, but the medical community, and rightly so, is leery of allowing this method without the document.

 

 

 

 

 

 

 

 Living Will

 

 

 

 

 

 

 

 

The Living Will (LW) is the “pull the plug” document.  Generally, the LW says that if you are comatose (medically unresponsive and cannot make a decision for yourself) and your attending physician and one other physician certify in writing that your condition is terminal and irreversible, you desire that life support be terminated.  In addition, since some people do not die immediately upon termination of life support, the second part of the LW allows you to determine what you want to happen with certain “life-sustaining procedures” such as intravenous feeding and hydration.  These decisions are personal to each person.

 

 

 

 

 

 

 

Trusts

 

 

 

 

 

 

 

Often a trust can be embedded in the Will, called a Testamentary Trust, but often, clients may desire and need a number of trusts for particular assets and specific needs.  There is a lot of talk about Revocable Living Trusts (RLT), but most of the time, the RLT is not needed.  On the other hand, it can be a good planning tool for providing for management of assets after death by appointed trustees.  It is especially important to consider a RLT if you own real estate outside your state of residence since your estate may require a probate in both states.  A RLT can avoid double probate.  There are some states that have complicated, expensive and tedious probate procedures.  Most states do not.  More on probate later, but do not believe all of the probate “horror stories” about which you have heard and read.

 

 

 

 

 

 

 

Tax Planning

 

 

 

 

 

 

 

Tax planning in this field is very specialized.  My personal approach is to work with my own Certified Public Accountant as I plan and prepare the documents.  As of this date, most people do not need tax planning unless the single person’s estate does not exceed $5.2 million, or the married couple’s estate does not exceed $10.4 million.  Many people believe that a Revocable Living Trust avoids taxes, but this is not the case.

 

 

 

 

 

Private Foundations

 

 

 

 

 

 

 

Depending on the size of your estate and your desire to accomplish certain social or religious objectives, the Private Foundation might be a good planning tool for you.

 

 

 

 

 

Probate

 

 

 

 

 

 

 

Colorado, as many states, follows the Uniform Probate Code (UPC).  It is fairly quick, easy and inexpensive to probate in UPC jurisdictions, though you should do some shopping since attorneys charge varying rates and take varying times to complete.  Costs and times vary based upon the complexity of the assets and the possibility of Will contests.  Absent these factors, a typical probate should cost a few thousand dollars and take six to nine months to complete.  Colorado courts have held that fees may not be based solely and even primarily on the size of the estate.  Colorado has adopted the standard of reasonableness and other factors listed in the Probate Code.