Have you ever heard of “estate planning” and wondered if you need it? There are many ways to ensure your final wishes, and all of them encompass an estate plan. Regardless of how much you have, you get to decide how your assets are distributed and your affairs managed. The most well-known planning documents include:
The Last Will & Testament
A valid Will allows you to name the person (Executor / Personal Representative) to handle your affairs after you pass away. If you have minor children, the Will also allows you to nominate guardians to continue providing care. But above all, a Last Will serves as an instruction manual for inheritance, taxes, expenses, etc. The biggest and most difficult misconception, though, is that a Will avoids probate. Importantly, a Will only works inside a probate estate. The document still serves important functions, though. So it is important to work with an estate attorney to understand why you need a Will.
Living Wills (Advance Medical Directives)
Also called a “Declaration as to Medical Treatment,” the Living Will makes final wishes about “life prolonging procedures” (life support). Signing this documents means that your family does not need to make the decision for you.
Powers of Attorney
Powers of Attorney authorize another person to step into your shoes and take over your affairs. The triggering event for them is “incapacity,” when you lose the ability to make decisions in your own best interests. In the estate planning process, it is important to identify the most trusted people to make medical and non-medical decisions for you. Without a valid Medical Durable Power of Attorney and General Durable Power of Attorney, a person must obtain authorization to help you through the probate court.
Trusts are not just for the wealthy! Yes, trusts can address estate and gift tax issues when you have “too much money,” but the vast majority of people use trusts for other reasons. For example, trust-based estate planning can help you leave inheritance to young children who cannot otherwise manage it. Or it can ensure that your adult disabled child still receives an inheritance, but they will not lose any medical or financial assistance due to their disability. There are countless reasons to create a trust, but the most important piece of estate planning is that you understand how a trust may benefit you.
The most common version is a “Revocable Living Trust.” Created by one person or a couple during their lifetime, the trust is “funded” with all their assets while alive. The trust instructs about how inheritance is held, managed, and distributed when the creator passes away. Living trusts offer maximum flexibility for planning, and a creator can revise the trust up until incapacity or death. When a person passes away, Colorado allows a trust to exist and manage assets for up to 90 years.
How can an estate planning attorney help?
For more information and resources, follow our Facebook page, and check out our new Estate Protections Series here.