boulder estate planning law

Revocable Living Trusts In Your Estate Plan

Estate Planning: The Use of a Last Will versus a Revocable Living Trust


Many clients come in asking about setting up a Trust rather then a Will for their estate planning. Trusts are very trendy right now, especially in states like California where the probate process is expensive and complicated.

Each of these estate-planning tools has pros and cons. The following information is meant to make sure you understand the differences and enable you to make an informed decision about which estate-planning method is right for you.

When a Last Will is used, it does not become an effective document until death. A Last Will requires the property of the decedent to go through the probate process prior to being distributed. Probate is the process by which a Last Will is presented to the court, the court authorizes the representative of the estate to take possession of the decedent’s assets, the creditors of the decedent are notified, and, approximately four months later, the representative pays the creditors and then distributes the assets to the intended beneficiaries.

When a Revocable Living Trust is used, the assets titled in the name of the trust are not part of the decedent’s estate, and do not need to go through the probate process. As soon as the individual who set up the trust dies, the alternate trustee named in the trust is entitled to take control of the assets without any court involvement. Importantly, this process also happens when the person who set up the trust becomes incapacitated.

Colorado has an informal probate process. The probate court is minimally involved with the process, and thus most probates here are both inexpensive and efficient. However, as noted above it does take about four months to complete the process.  In a Revocable Living Trust based plan, the immediate ability of the alternate trustee to access the assets in the trust upon the incapacity or death of the settlor of the trust is definitely an advantage if time is a consideration.

If you choose to use a revocable-living trust based estate plan, your personal residence, vacation home, and investment accounts and other types of property are usually transferred into the name of the trust, requiring retitling of these assets, but tax advantaged retirement accounts are usually not. This process of retitling the assets is one of the two disadvantages of using a Revocable Living Trust when compared to a Last Will-based estate plan. The second disadvantage to the Revocable Living Trust is that it is typically more expensive than a Last Will based plan.

I generally recommend a Last Will based estate plan here in Colorado because of our informal probate process. I recommend a Revocable Living Trust based plan to my clients who meet any of the following criteria:

➢ complex asset management needs or diverse types of investment assets since Revocable Living Trusts provide a very strong asset management tool;
➢ property outside the state of Colorado (since such property can be placed in the Trust, no additional probate proceeding will need to be opened in the other states);
➢ the need for privacy (Wills are filed at death and become pseudo-public documents) or the wish that their at-death disposition not be public; and
➢ impending disability (at the disability of the individual, the alternate trustee will be able to take control of the assets in the trust).

Feel free to call or email me if you have further questions regarding the differences between these two types of plans.

Review your estate plan to make sure it still fits your life plan.

Many clients have an estate plan in place - but for these documents to really serve the purposes they were created for they sometimes need to be updated as life circumstances change and time marches on.  

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Periodically reviewing your plan estate plan ensures it accurately reflects your current life plan - both your present needs and your goals going forward.   Make sure you review and update your estate plan if your personal or financial situation changes or if a number of years have gone by and for instance your minor children now have children of their own.

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Some of the most important triggers for updating your estate plan include:

Divorce. Once your divorce is finalized, your plan should be revised as quickly as possible to reflect your current situation.   In addition, you can take steps to protect your heirs from potential future relationships that might impact their legacy unintentionally.

Re-Marriage. If you and your new spouse both have children from a previous marriage or relationship, working with an estate planning attorney is essential to navigate the complexities of providing for the children of both parents.   

Birth or Adoption of Children. In addition to providing for your children’s financial future, any good estate plan will also allow you to appoint a legal guardian (both for finances and physical care) in the event you and your spouse die or are incapacitated.  The guardian designation should be updated as needed depending on circumstances and should always reflect the best interests of the child/children NOW.

Illness or Injury. If you or one of your family members becomes seriously ill, you may want to consider changing your plan to reflect increased needs and or the creation of trusts for special needs, etc.

Changes in Tax Laws. Tax laws are constantly changing and can dramatically affect your estate plan.   An estate lawyer can  help ensure that your plan takes advantage of new legislation and makes sure you have a viable, current asset protection plan in place so that your estate avoids taxes as much as possible.

Inheritance. If you receive a large inheritance, this could shift your estate planning considerably.   The increased value of your estate may cause you to change how your assets are distributed upon your death, as you might want or need to add trusts for your beneficiaries and or more charitable contributions or both.

These are just a few examples of when a meeting with your estate planning attorney is in order to make sure your estate plan meets your life plan.  I am happy to discuss my client's current plans with them any time they feel the need for such a review: and always available to review a new client's "old plan" as part of my complimentary initial consultation.  

Estate Planning and Personal Effects

Who gets mom's wedding ring?! When clients hire me to create their estate planning documents, we have a thorough conversation about their assets, how they are held, and to whom they want them to go to. This conversation is focused primarily on the large assets, such as the family home, retirement accounts, insurance policies, other properties and investment accounts. Part of the initial estate planning process is to really look at these and then clearly designate beneficiaries.

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Inevitably during this discussion, the client’s personal effects come up. In Colorado, personal effects, such as grandmother’s antique ring, grandfather’s favorite chair, mom’s jewelry, dad’s watch, etc., can be designated in a separate Memorandum of Personal Effects that is incorporated into the Will by reference. This allows my clients to keep a running inventory of bequests and beneficiaries for personal times that can be changed over time.

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I provide this memorandum as part of the estate planning notebook I create for my clients. The Memorandum, referenced in the Will, is binding and it simply has to be dated and signed. This allows the personal representative or family members peace of mind and ease. It avoids the stress and conflict of having to figure out who gets what. An analogy I recently read about in the New York Times is that without this Memorandum, its like waking up to a house full of kids on Christmas morning and having no name tags on any of the wrapped gifts – chaos!  To read this article click here.

The article, references a workbook called Who Gets Grandma’s Yellow Pie Plate, by Marlene Stum. She says that the process starts with recognizing that dividing up a loved ones’ belongings is laden with emotions and can be a real mine field for family members and friends. The workbook helps sort out the process by helping people:

  • Determine what you want to accomplish, decide what's fair to your family.
  • Understand belongings have different meanings to different individuals.
  • Consider distribution options and consequences
  • Agree to manage conflicts if they arise.

To learn more about this workbook, click here.

In representing my probate clients, I have seen sibling relationships torn apart because they don’t agree about how to divide up the personal property of the deceased.   My clients that are appointed as personal representatives really struggle, during a time of personal grieving, to try to figure out how to divvy up personal effects fairly, without hurt feelings.

All of this can be avoided with an estate plan that provides for a Memorandum of Personal Effects. I advise my clients to use this Memorandum as a living, breathing document that they can continue to add to and change as time goes by. So when a loved one expresses a sentimental attachment to a certain item, my client can simply add that to their Memorandum and know that that beneficiary will receive that heirloom.

Writing a "last" letter when your healthy

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I recently read an article in the New York Times that I thought was important.  I work in estate planning and so I meet with people all the time to discuss their end of life wishes in regards to both the care and control of their body should they become incapacitated and who they want to inherit their estate when they die.  Inevitably, as we discuss these important issues, we end up talking about and exploring their own views on both death and family.  I feel very blessed to participate in these conversations as I learn so much about life and the myriad of ways that it unfolds.  What is always apparent and such a constant teaching for me is that each of us is unique and all of us are full of love.  Sometimes the decisions are clear and easy and sometimes my client's really struggle with filling in the "estate planning blanks" such as who they would like to serve as their personal representative, who they would like to serve as their agent for their medical power of attorney, etc. Once my services are complete, I advise my clients about how to let their loved ones know where their documents are and to make sure their agents understand their wishes by having conversations with them about the documents that I have prepared.  The one thing that I am missing in these conversations because it is not a "legal issue" is that other conversation:  what is left unsaid that you would like to to say to your loved ones.  In this article from the New York Times, I learned that there is a letter writing project that encourages people to write to their loved ones.  The template allows people to complete seven life review tasks: acknowledging important people in our lives; remembering treasured moments; apologizing to those we may have hurt; forgiving those who have hurt us; and saying “thank you,” “I love you” and “goodbye.”

Here is the link to the article in the Times.  Here is the link to a template for people who are seriously ill.  Here is a link for healthy people who want to leave a letter for their loved ones.

What a great gift both for the letter writer and the recipients - I intend to tell my clients about this from now on - this is an idea worth sharing!

Beneficiary Deeds In Colorado - Avoid Probate for Small Estates

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Beneficiary deeds can help avoid the need to probate small estates. Under Colorado’s simplified probate process, Colorado's probate code allows the beneficiaries of an estate to collect the estate assets by using a small estate affidavit, rather than a going through a full probate procedure, if the estate consists only of personal property with a value not exceeding $64,000.00 in 2016.

No such procedure is available in Colorado to clear title to real property at death. However, if a beneficiary deed has been filed prior to the death of the property owner, marketable title to the beneficiary can be transferred after death, without the need for probate administration. The beneficiary deed transfers the property outside of the estate and the value is not included in the estate.

Colorado’s beneficiary deed statute carefully defines the interest of the beneficiary in order to protect the rights of other parties interested in the property. First, during the lifetime of the owner who grants the beneficiary deed, the beneficiary has no legal right or interest to the property whatsoever, and the owner retains full power and authority with respect to the property without the need to notify or obtain the consent of beneficiary for any purpose.  The beneficiary deed also provides an alternative method to transfer real property to an owner's trust at death, avoiding issues with lenders that might occur when mortgaged property is transferred to a trust during an owner's lifetime.

Under Colorado’s beneficiary deed law, the beneficiary deed must be recorded before the death of the owner. If not recorded before the death of the grantor, the property will then eschew to the deceased’s estate. A beneficiary deed can be revoked during the owner's lifetime by recording a revocation of the deed, or by recording another beneficiary deed executed after the revoked deed. A subsequent beneficiary deed revokes all beneficiary designations in their entirety, even if the subsequent deed doesn't convey the owner's entire interest in the property. At the owner's death, the most recently executed beneficiary deed or revocation of all beneficiary deeds or revocations recorded before the owner's death controls. It is important to note that if there is an effective beneficiary deed in place at the owner's death, the owner's Last Will does not control disposition of the real property, regardless of the date of the Last Will.

An owner of an interest in real property in joint tenancy may execute and record a beneficiary deed, but the deed is only effective if the joint tenant-owner is the last joint tenant to die of all the joint tenants. If the joint tenant-grantor is not the last joint tenant to die, the beneficiary deed is not effective at his or her death, and the grantee-beneficiary does not become a joint tenant with the surviving joint tenants. The law specifically provides that a beneficiary deed does not sever a joint tenancy.

The grantee-beneficiary named on a beneficiary deed effective at an owner's death does not immediately receive marketable title. The grantee-beneficiary's interest is subject to all conveyances, encumbrances, assignments, contracts, mortgages, liens and other interests affecting title to the property, regardless of when they were created, as long as notice of the interest is recorded within four months after the owner's death. After this four-month period, the grantee-beneficiary can pass marketable title to a purchaser of the property. However, the grantee-beneficiary may remain accountable for the proceeds of the property to persons interested the owner's probate estate for up to three years. If the probate assets are insufficient to cover claims by creditors, by a surviving spouse or children for statutory allowances, or a Medicaid recovery claim, the personal representative may bring a proceeding against the grantee-beneficiary to recover a share of the equity in the property, to the extent necessary to discharge the claims. The personal representative must begin such a proceeding within one year after the death of the deceased owner. Other persons whose claims against the grantee-beneficiary might be brought as late as three years after the owner's death can be barred earlier, if the owner's death certificate is recorded in the real property records.

The beneficiary deed statute specifically provides that a person cannot qualify for Medicaid assistance if the person has a beneficiary deed in effect. To ensure that a revocation can be made should a person require Medicaid assistance, any person executing a beneficiary deed should also execute a power of attorney specifically authorizing an agent to execute and record a revocation of any beneficiary deed, if necessary for purposes of qualifying for Medicaid.

Shimer Law can answer your questions about the possibility of using a beneficiary deed in your estate planning to avoid probate and ensure that your real property passes as you intend it to.

Disclaimer -- Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.

Estate Planning is Life Planning!

Having an estate plan in place is an important part of your life plan - if not for you, for your loved ones!

Having an estate plan in place is an important part of your life plan - if not for you, for your loved ones!

Regardless of whether a loved one in your family is facing a debilitating disease such as Alzheimer’s, ideally you should have your legal planning in place for such an event – thereby taking one less major stressor off the table should something occur. Legal life planning should include: Estate planning documents including Last Will, Powers of Attorney and Living Will. If you have already completed these documents then it is important to review existing legal documents and make necessary updates. This allows you and your family to:

  • Make legal plans for finances and property
  • Put plans in place for enacting your future health care and long-term care preferences
  • Name another person to make decisions on your behalf when you no longer can

At a minimum your estate planning documents should include:

General durable power of attorney .  The power of attorney allows you (the principal) to name another individual (called an attorney-in-fact or agent) to make financial and other decisions when you are no longer able. A successor agent or agents should also be named in case the original agent you choose is unavailable or unwilling to serve. Power of attorney does not give the person you appoint (agent) the authority to override your decision making. You maintain the right to make your own decisions, as long as you have legal capacity. A durable power of attorney for finances/property allows you to designate another person to make decisions about your finances, such as income, assets and investments, when you can longer do so.

Power of attorney for health care.  A power of attorney for health care allows you to name a health care agent to make health care decisions on your behalf when you are no longer able.

Health decisions covered by the power of attorney for health care include:

  • Doctors and other health care providers
  • Types of treatments
  • Care facilities
  • End-of-life care decisions, such as the use of feeding tubes
  • Do not resuscitate (DNR) orders
  •  

Discuss your wishes regarding care with your chosen agent early and often to make sure that this person understands your wishes and is willing and able to act on your behalf when the times comes.

Living will .  A living will, a type of advance directive, expresses your wishes for what medical treatment you want, or do not want, near end of life, such as life-prolonging treatments. In Colorado, this document should be respected and adhered to by medical personnel so long as it has been signed in front of two witnesses and notarized. It is a document you should prepare and sign before any disease such as Alzheimer’s progresses.

Last Will and Testament.  Your Last Will and Testament provides information about how your estate will be distributed upon death. In your will, you may name a personal representative, the person who will manage your estate, and beneficiaries, the person(s) who will receive the assets in the estate.

Seniors Getting Married - Estate Planning Considerations

Seniors getting married and estate planning.

Seniors getting married and estate planning.

People are getting married later in life.  Marriages, with one or both spouses being seniors, retired, and  having grown children, have become quite common. And while its fantastic to know that love can blossom at any age and usually children and grandchildren are happy that their parents have companions to spend their later years with, these marriages require unique estate planning considerations.  

Estate planning for later life marriages is complicated for a number of reasons. These "senior" marriages can directly impact the inheritance of the children and other family members on both sides. Remarriages also can affect a spouse’s right to alimony payments from a prior spouse, retirement benefits, social security benefits, health insurance, and the spousal medical care obligations. Its important for both spouses to clearly address who their assets are intended to benefit, whether it’s the new spouse, the children and families or a trust – both while the spouses are alive, upon the death of one of them, and when both die.

Other considerations that should be addressed as a part of the estate planning process should include whether long-term care insurance is needed; should income and assets be blended or kept separate; how the primary residence is treated both during life, and upon the death of one spouse, and then both spouses; is a post or prenuptial agreement necessary or advisable as part of the estate planning process; how do the parties wish to pay for future medical expenses (for example, is it advisable to deplete the assets of one spouse first).

People in later year marriages also should consider the conflicts that could arise between the spouse and children should agents named for medical and general powers of attorney need to act. The best way to avoid this is to think these conflicts through in the planning phase and coordinate the choice of fiduciaries in the documents – with the fiduciaries having a clear understanding of the spouse’s agreements to the later life marriage concerns, as delineated above.

Intestate Rules for Non-Married Individuals In Colorado

Singles (aka non-married individuals) often procrastinate about estate planning.  If you are one of my friends or colleagues who fall into this category here is a brief summary of who will inherit your assets should something happen to you.  By taking the mystery out of what happens I am hoping to alleviate some of the worry and maybe even encourage some proactivity in this regard.

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Colorado's intestacy rules are similar to the rules found in other states but don't provide for inheritances by remote relatives, such as distant cousins. State laws set the inheritance rules for the estate of a person who died intestate; however, these rules don't take the financial needs of his heirs into consideration.

If a non-married individual dies with children, their children inherit their estate. If a non-married individual dies with no children then surviving parents inherit his/her entire estate. If both parents are dead, the estate goes to the parents' surviving descendants: for example, the siblings of the deceased person. Surviving grandparents may inherit the estate if the parents have no surviving descendants. If both grandparents are dead, their surviving descendants inherit the estate. In cases where the deceased person's parents and grandparents left no surviving descendants, the estate may go to the state of Colorado.

Colorado's laws allow inheritances by a birth parent who adopted out the deceased person or any birth children the deceased person put up for adoption, but only to prevent the estate from going to Colorado because of a lack of heirs.

Not all property is subject to Colorado intestacy rules, some of it if properly designated/titled can pass out of these intestate rules. Money from retirement accounts, such as 401(k) accounts, and insurance plans go to the person named as the beneficiary on the account or plan paperwork. Property owned with another person as a joint tenant —the family home, for example—belongs to the surviving owner. Any property transferred to a living trust belongs to the trust and isn't subject to intestacy laws. Bank accounts that have another person designated to receive the funds if the account holder dies—known as "payable on death" accounts—pass to that designated person.

Important Documents Locator and Contacts

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Clients always ask me how to store their estate planning documents and other important papers once their estate plan is done.   I always recommend that they fill out the attached Important Document Locator and Contact Sheet as a part of this process so that family members and friends know who to contact and where to locate important records if necessary.   I also recommend that they store their estate planning documents as follows:

Originals.  Your original Will should be kept in a safe place, preferably in a fireproof safe or safe deposit box. Your original powers of attorney can be kept in your reference notebook.   If you have revised or updated your documents, any old/former documents—including any copies—should be shredded.

Reference Set.  If I did your estate plan, you have been provided with a reference set of your documents in an estate planning binder, creating complete set for your records.  The copy of the will in this binder is not signed—you have only one valid, executed will, which you should keep pursuant to #1, above.  If you decide to provide anyone with a copy of your will, be sure to copy the unsigned, reference will and not the original, signed will.

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Copies for Agent.  You should provide your agents with copies of your executed Powers of Attorney, both General and Medical.  This will enable them to have the documents and act upon them without the necessity of obtaining copies once a disability or other unfortunate circumstance occurs.  They should also be told about your complete estate planning binder (if you have one) and where it is located.

Copies for Physicians.  You should also provide your physicians with copies of your executed Medical Power of Attorney and Living Will.  They will then be able to keep these important documents in your files so that your agents will not have to search for them in the event of illness or accident.

Copies for Home.  For clients living alone, especially aged clients, I recommend that copies of your Medical Powers and Living Will be kept in a readily accessible location such as your refrigerator or freezer in the kitchen, along with a note on the refrigerator door indicating that the documents may be found inside. First responders are taught to check the refrigerator door for important medical and pharmacological information.  Finding the Medical Power of Attorney and Living Will along with other such information will make their treatment decisions easier, and better insure that your dignity is protected.

Fill out the Important Document Locator and Important Contact Information forms that follow. Keep them in a safe but obvious place such as the inside of a desk drawer or kitchen cabinet near the telephone.   This will help your family members and friends in the event of an emergency and also might result in you feeling more organized and in control of your life!

Important Documents Locator and Contacts

DOCUMENT

LOCATION

NOTES

Durable Power of Attorney

Medical Power of Attorney

Original Last Will and/or Trust Documents

Living Will/MOST declaration

Property Deeds

CD Certificates

Personal Banking Accounts

Promissory Notes

Automobile Registrations

Birth, Marriage and Death Certificates

Medical Insurance

Passports

Retirement/Pension Accounts

Life Insurance Accounts

Credit Card Accounts

Stock and Bond Certificates

Long-term care insurance

Safety deposit box information/key

Internet accounts  and passwords information

IMPORTANT CONTACTS

NAME

TELEPHONE NUMBER/EMAIL

Agent for health care power of attorney

Agent for general durable power of attorney

Person named as personal representative in will

Attorney

Accountant

Insurance Providers

HomeAutoLife InsuranceLong-term Care 

Primary Care Physician

AdultsChildren

Personal friend/housesitterfamiliar with home

Veterinarian

Child care provider

Children’s school contact

Children’s local guardian

Children’s preferred babysitter

If you have a hard time printing these sheets I am happy to email you a copy either as a PDF or as a word document that you can customize to suit your needs.  Just send me an email and let me know.

Medical Power of Attorney: Your Agent and You!

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Medical power of attorney:  When choosing an agent for your medical power of attorney for health care its important to select someone who will respect your wishes for the care and control of your body should something happen to you. They need to have a good idea of what your feelings and beliefs are in this deeply personal area. Here are some areas to explore with your agent about you:

Lifestyle: How essential are these in terms of your quality of life?

1. Being able to eat and drink 2. Being able to enjoy entertainment, movies, TV, reading, listening to music 3. Physical movement and being able to get outdoors 4. Attending outside activities such as church or other programs 5. Avoiding pain and discomfort 6. Being with loved ones 7. Being self‐sufficient and able to communicate

8.  Spirituality.   How much of your comfort and support comes from your spiritual practices such as personal pray, meditation, or interaction with a spiritual or religious community?

9.  Last days.   What are your wishes in regards to the last days of your life? For instance, quiet meditation, lots of friends, or close family members only.

By getting your powers of attorney in place and conveying your wishes to your agent your wishes will be honored and your loved ones spared confusion and last minute guess work.

Tibetan couple in Dharamasala, India
Tibetan couple in Dharamasala, India

Disclaimer -- Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.