Basic Colorado estate planning documents explained
Documents that should be included in every estate plan
Estate plans can contain complex financial tools intended to minimize the estate’s tax burden while allowing beneficiaries to inherit according to the wishes of the deceased. It is quite possible an estate would benefit from an IRA inheritance trust, for example, or an intentionally defective grantor trust (IDGT trust). Unique needs may need to be taken into account, for example by creating a special needs trust to care for a loved one with a mental or physical disability while preserving eligibility for government benefits. What exactly is needed in an estate plan depends on the needs and goals of the family, loved ones and charities the estate will provide for. However, no matter a person’s individual circumstances, there are certain basic documents that every estate plan should include. They are:
- A will or trust
- A living will
- A financial and medical power of attorney
- Long-term care planning
These documents should be created regardless of age, health, or income. These documents are not just financial, they provide for the wellbeing of entire families.
Why these legal tools are needed
At the very least, a simple will can ensure that the deceased’s wishes are carried out with minimal controversy. Absent a will, state law governs the distribution of an estate, which is not always intuitive or what a person would want. At its simplest, a basic will sets out the names of beneficiaries, the name of the executor of the estate, and legal guardians for minor children. While there are more efficient and tailored legal tools than a simple will, a basic will is the minimum legal document needed by every estate.
A living will describes wishes regarding medical care when a person becomes mentally or physically incapable of communicating those wishes. Whatever one feels about end-of-life care, a living will can save loved ones stress and potential conflicts by clearly stating desires regarding such care in advance.
Financial and medical powers of attorney are similarly necessary should a medical condition prevent sound decision-making capabilities. Instead, a trusted loved one can provide for appropriate care and protect financial assets.
A tailored estate plan is best
Numerous options exist when creating simple estate planning documents, including online “fill in the blank” forms. However, these forms may not be tailored to Colorado state law, do not account for unique circumstances, and may ultimately cause more harm than good. A comprehensive estate plan requires planning according to individual circumstances. Sitting down with an estate planning attorney is the best method when creating an estate plan. In an initial meeting, an estate planning attorney can advise whether a will or trust is appropriate, what type of trust is appropriate, the goals of the estate plan, and the nuances of Colorado estate law.
Colorado residents looking to understand their legal options when creating an estate plan should speak to the team at Brady, McFarland & Lord, LLC.