Consult with our Arvada estate planning attorneys for guidance on what documents would work best for your specific situation. You can call our Colorado office at our office to set up a convenient time to meet.
What is Estate Planning?
Estate planning is the act of preparing for the management, transfer, or dispersal of one’s assets after death. Assets include personal wealth, bank accounts, retirement accounts, stocks, property, cars, and other valuables. Having an estate plan allows you to identify the people or organizations you want to inherit your assets, minimize the taxes placed on these assets after death, and express your wishes regarding medical care and funeral arrangements. Although everyone’s estate planning needs are different, having some form of an estate plan is beneficial for every adult regardless of age, material wealth, or stage of life.
To understand the role of estate planning, it’s important to first understand what happens to your property after your death. After your death has been established with a death certificate, an executor is assigned to ensure that all your debts are paid and that any remaining assets are distributed appropriately. If you have a will, your executor will be the person you named in that document. If you do not have a will, the court will appoint an executor for you. Probate is the legal process of auditing, identifying, and eventually distributing the deceased’s estate.
Why is Estate Planning Important?
The most obvious reason to take care of your estate planning is to ensure that your wishes are observed after death. After all, without proper documentation, there’s no guarantee that your desired heirs and beneficiaries will inherit your property after your death. Without a will, the executor is assigned by the court and assets are distributed according to state law. Estate planning allows you to ensure your own wishes, rather than that of the government, dictate the distribution of your assets.
Estate planning documents can also help prevent confusion and conflict between loved ones after death. Unfortunately, a death in the family can be expected to increase stress and familial tension, and disputes between siblings or heirs over inheritance may crop up. Properly drafted, legally binding estate planning documents can help reduce this conflict and avoid questions of the will’s validity. Even among family members without conflict, the probate process can be confusing and overwhelming. Having an estate plan in place, and communicating this plan to your executor and heirs, can reduce this confusion and allow them to prepare for this process. There may also be steps you can take, such as the creation of a trust, that can simplify or even avoid the probate process, which in turn reduces the stress placed on your loved ones.
Another reason to prepare an estate plan is to protect your money and assets. After death, your estate is subject to taxation that may reduce the value of your estate. By planning ahead, however, you can reduce these taxes and ensure that your loved ones inherit the full estate. For example, transferring assets to a trust account may help save your assets from large estate taxes.
Utilizing All Types of Estate Planning Tools To Best Fit Your Needs
No matter what your goals are when creating an estate plan, we can help you achieve them. As the author of the book “Estate Planning and Taxation in Colorado,” Karen L. Brady has a comprehensive understanding of all the tools available to you, including:
- Living wills: These documents help you decide how you would like to be treated in any end-of-life situation.
- Special needs trusts: We can set up special trusts that can protect your loved ones who have special needs.
- Life insurance trusts: If complex tax planning is something you are concerned about, a life insurance trust, also known as an ILIT, may be the best option for you.
Is Estate Planning The Same As A Will?
For most people, wills are an important part of their estate planning. A person’s last will and testament is a document that dictates their desires regarding their property, family, and loved ones after death. Depending on the needs of the deceased, the will may refer to other documents or court processes that must also exist in order to ensure that these desires come to fruition. However, the will is only one part of the estate planning process. Creating an estate plan will always involve a will, but your will is not the only document-and may not even be the most important document, depending on your situation.
When people mention a will, they usually mean their last will and testament. This is the legally binding document that describes the distribution of assets among your heirs. It is not to be confused with a living will, which describes your medical wishes in the event of a coma or other condition that prevents you from communicating your wishes with your doctor.
Will is shorthand for the last will and testament unless stated otherwise. However, it’s important to note that both the living will and the last will and testament are part of your estate plan. This is because an estate plan refers to the series of documents and actions necessary to distribute your assets after death. In addition to the living will and last will and testament, other important estate planning documents may include a living trust and power of attorney.
A will-based estate plan is usually composed of a last will and testament, living will, and power of attorney. With this type of plan, the will is the foundation of the plan and dictates the most important steps. In a trust-based estate plan, however, your last will and testament will be called a pour-over will, as it’s mostly intended to back up the living trust. A trust-based estate plan depends upon assets belonging to the client’s trust, so pour-over wills are designed to “catch” any assets that were not transferred to the trust.
Estate Planning for Blended Families In Arvada
Estate planning can become quite complex when dealing with all of the issues that arise with blended families. If you have entered a second or third marriage, estate planning is critical to ensure your assets go where you would like them to go. This is especially true if both spouses are bringing children into the family from different relationships. We know how to help you protect your children’s futures.
You can rely on our experienced estate planning lawyers to ensure your plan puts your goals down on paper and makes them binding. That way you can rest easy knowing your family is protected.
What Documents Are Needed For Estate Planning?
Every estate plan is different, just as every client’s home life and needs are different. Broadly speaking, however, there are two major types of estate plans. In a will-based estate plan, your will is the primary document that determines the distribution of assets. A will-based estate plan requires at least three documents: the last will and testament, power of attorney, and a living will or another type of advance directive. In a trust-based estate plan, the trust is the primary document-although it only functions if all assets have been transferred correctly to the trust. A trust-based estate plan will have the same documents as a will-based estate plan, with the addition of the revocable living trust.
For a detailed description of wills, please refer to the above section regarding the role of wills in an estate plan. Otherwise, brief definitions of these legal documents can be found below.
A power of attorney, or POA, authorizes someone to represent your interests and act on your behalf. When creating estate planning documents, most attorneys will specifically help you create a financial power of attorney, which grants authority to access your finances, accounts, and assets. A financial POA is often created to plan for the event of your incapacitation, but you if you need your agent to act on your behalf immediately, your POA can also specify that. A POA is only effective while you are alive and while the agent named is capable of fulfilling the named duties.
Although there are several different types of trust, your trust-based estate plan will include a revocable living trust. The qualifying descriptors mean that you can continue to change the trust in your life as often as you feel necessary. You, as the person who created the trust, are known as the grantor, while the person who manages the trust is known as the trustee. You and your spouse, if applicable, will most likely be the trustee of your own trust while you are alive. The trust will also name a successor trustee to take over in the event of your incapacitation or death.
What Is The Estate Planning Process?
The first step towards creating an effective estate plan is to assess your estate and its needs. In-office, clients will sit down with her and she’ll sketch a “road map” of their current situation and vision for their assets and heirs. With this road map, Karen will make sure you understand all of the options available to them. Many clients are not sure whether they want a trust-based estate plan or a will-based estate plan, and this is the time to discuss which option works best for you.
Once you and Karen have come to an agreement on the best plan for you, you’ll set a date to sign the documents. Karen will send you drafts of all relevant documents for your approval, usually by electronic means. Once you’re satisfied with the documents, you will return to the office to sign the documents in person. The original signed documents will be sent home with you.
If you needed a will-based plan, congratulations! You officially have an estate plan in place. It is, however, important to keep your plan up-to-date as divorce, marriage, and children change your goals.
If you needed a trust-based plan, you will still need to transfer your assets to the trust for the documents to be an effective estate plan. You may have chosen to undertake all or part of this task yourself, or you may have hired an office to help you. There may also be other services that you discussed with Karen in your first planning session with her. Either way, you will be well-prepared to take the next steps.
How Much Does Estate Planning Cost?
Unfortunately, there is no straightforward answer to this question. Establishing a baseline price among attorneys can be difficult because some attorneys may charge a specific fee for each service and some may charge by the hour. Additionally, because every estate plan is different, two clients who approach the same attorney with the same initial question will likely still walk away with different fees.
Broadly speaking, most will-based estate plans are less labor-intensive than trust-based estate plans. Trust-based plans require more documents than will-based plans. These plans also require a great deal of time and effort to transfer assets to the living trust. Although clients may choose to transfer these assets on their own time and hire an Arvada estate planning attorney to just draft the documents, many ultimately find it easier to complete this process with professional legal help.
Many clients tell Karen when they approach her that they just want a “simple will.” In Karen’s experience, there is no such thing. Your wishes may seem simple to you because they are so tied up in your experiences and values that they appear self-evident. However, every client has a slightly different vision of these allegedly simple values, each of which must be considered in conjunction with their needs and the laws of the state they live in. With such a wide variety of needs, desires, and laws, very few estate plans end up as simple as people might hope.
While searching for the right estate plan attorney, a savvy consumer will look for an agreement that clearly states the services covered by the quoted fee. If you’re given a lump-some quote for a plan, does that plan include court appearances or updates that need to be made in the future? Asking these questions early in the relationship with your attorney can prevent unpleasant surprises in the future.
Consult With an Arvada Estate Planning Lawyer For a Free Consultation
For more information on what tools may work best for your estate planning needs, call our estate planning attorneys in Arvada today. Our estate planning attorneys in Arvada, Colorado have over 30 years of experience. Contact us online today or call us at (303) 420-2863.