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Colorado Estate Planning Blog

3 questions to ask yourself before buying a small business

Buying a business can be an exciting and overwhelming venture. In order to obtain the most benefits, however, you have to choose the right business to purchase. Which one is the right fit depends on the answers to several important questions you must ask.

You can find much advice on what questions to ask owners about their companies. Before you take that step, though, you must first ask yourself the following questions to avoid any regrets.

DO NOT CONFUSE "LLC" WITH PARTNERSHIP TAXATION

This article by a Colorado lawyer is the second attorney I have found who is using the term LLC as an apparent shorthand for a limited liability company taxed as a partnership. All of the reasons he cites are good reasons not to use an LLC are reasons not to choose partnership taxation for your limited liability company. Some of them may also be reasons not to elect S corporation status for the LLC. These are reasons to have your entity taxed as a C Corporation.

Protecting your will against future challenges

You have invested a lot of thought into your estate planning, taking care to distribute your assets fairly and effectively. You definitely do not want your wishes challenged and your estate wasted in probate litigation after you pass.

Knowing the basics of a valid will can help you guard against contests based on technicality. Your attorney can also point out additional areas of likely challenges and devise a strategic approach.

How can I protect my IRA accounts for my heirs?

When it comes to estate planning and retirement accounts in Colorado, the one thing you should try to avoid is making your estate the beneficiary. If you do not name your heirs on your IRA retirement accounts, then probate court will attach them to your estate, leaving it vulnerable to creditors. Not naming your loved ones as beneficiaries on your IRA accounts can also cheat them out the tax benefits and their inheritances. 

Here is a brief overview on how you can protect your retirement accounts for your heirs. 

What happens if you die without a will in Colorado?

If you want to ensure you have a say as far as who is going to receive your assets after your passing, it is essential that you create a will. Otherwise, you relinquish control over your own belongings, and the duty of distributing them falls into the hands of the state.

If you die without a will, the decision of who will ultimately inherit your estate depends on several factors. Generally, if you die intestate, the state will look to see, first, whether you have close relatives, and if so, they may assume control over your assets. The Colorado Probate Code outlines the rules of succession.

Why do I need a health care power of attorney?

Many people in Colorado do not realize how important it is for them to establish health care power of attorney (POA) for the times they are unable to care for themselves. Accidents and illnesses can happen in the blink of an eye that could leave you unresponsive and unable to make critical decisions about your medical care. Even though you may want your family and loved ones to step up to make those decisions for you, without the right documentation in place, they may not be able to. 

It is important for you to establish a health care power of attorney so you do not have to rely on a court-appointed stranger and your medical doctors to manage your medical care without regards to you and your family's wishes. 

Proud grandparent? How to divide assets among your grandchildren

If you’re a grandparent with a large family, you likely take pride in all your grandchildren. As part of your estate plan, you may want to divide your finances and property among those grandkids.

However, this can be complicated—especially if you want to leave a house or other high-value physical property to your grandchildren.

Single parents and estate planning

One thing that single parents in Colorado should make a priority is estate planning. Even though the thought of not being around for their kids is not a pleasant one, the idea of having the courts choose someone random to raise their kids is even more distressing. Careful consideration should be given to the distant future so they can make plans to protect their children. 

According to ABCNews.com, single parents should make sure that everything they include in their wills and estate planning documents is “clear, up-to-date and specific.” There are some key areas single parents should focus on to ensure that their kids are properly cared for after their deaths. 

Creating a succession plan for your small business

As you near retirement as a small business owner, you need to start thinking about a succession plan. That may mean leaving the business to a family member or preparing for a sale.

No matter what you want to do with your business, it is important that you have a plan in place that protects your assets and ensures your business succeeds when you’re gone.

MY EMPLOYEE DIED, WHAT ARE MY RESPONSIBILITIES?

A CPA just asked for my help in advising the CPA's client on how to distribute the last paycheck(s) of a deceased employee. When an employee dies, the employer needs to treat the situation similar to any other termination of an employee. The estate would be entitled to the deceased's last pay, unused vacation time, etc. as if the employee was alive but no longer employed.

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