FAQ
Estate Planning
Estate planning is planning for your family and your assets during life and death. It is important to provide for your family after you are gone but also to protect your assets throughout your life. It also helps to plan for potential emergencies or disabilities that could arise. Estate planning is especially important if you have children, grandchildren or someone with special needs that depends on you for support.
Everyone should have a Will regardless of whether you have a lot of money or assets or not. A Will does more than devise assets. It provides a written record of your wishes after your death. It allows you to not only decide how your property will be distributed upon your death, but for parents with minor children, it is a means for you to decide who will act as guardian to your children if something happens to you. A will can also help reduce or eliminate the risk of family disputes after your death. It also allows you to name the person you would like to be in charge of managing your estate. If you do not have a will, state law and the courts determine who will receive your property after you are gone, and will also determine who takes care of your minor children.
An estate plan usually includes the drafting of a will, a personal property memorandum, a general durable power of attorney, a medical durable power of attorney, an advanced directive, often called a living will, and a disposition of last remains. Some people choose to create a trust to hold their property rather than have a will. If a person has minor children, then the estate plan often includes nominating a guardian and including a trust provision in the will to protect the child should he or she inherit before reaching the age of majority.
The first step to creating an estate plan is to understand your assets and how the law applies to your assets. The second step is to evaluate your current relationships and family situation. Next, you will establish a plan which allows you to be in control of the important decisions you need to make in your life, such as naming the person or persons that will assist you when you have medical or financial needs that you are unable to manage on your own. You will select who the trust members of your ‘team’ will be that you can turn to. You will be able to name the person to care for your children should you be unable to do so, or how long you would like to be on life support at the end of your life; and where you want your assets to go when you die and how you want them managed before and after death.
You do not have to have an attorney draft a will but we recommend that you use an attorney. An estate planning attorney can talk with you about your assets, your wishes and your goals. Attorneys can provide useful advice and strategies. They can explain the outcome of certain decisions or actions. Software cannot do that. An attorney will customize your estate plan to your individual situation and make sure the goals of your estate plan are accomplished. Attorneys provide guidance and advice about how the law will apply to your situation which you cannot get from a downloaded a form or follow instructions from an unknown source on the internet. An estate planning attorney can help you avoid future costly problems and family conflict.
The danger of writing your own will or downloading something is that you don’t know who created it, whether it was drafted under the current law, or whether it fits your needs. Attorneys don’t sell documents. They make sure to write an estate plan that fits the needs of your situation. Attorneys can answer your questions and provide direction that you cannot get when you download forms.
Colorado law has specific forms and language that is used in estate forms. The laws change frequently. An estate plan should accommodate your specific needs in consideration with the current state of the law. You should have an estate plan drawn up by a competent attorney. The danger of downloading forms, buying a package online or at an office supply store is that you think you have created a valid will and are protected when you may not be. Trying to save money on the front end can create very expensive mistakes in the long run. The law requires documents to be executed (signed, witnessed and notarized) in a certain manner. If you sign in the wrong place, or on the wrong page, you may think you have a will that fits your needs when in reality, it is not effective, and you are completely unprotected. Other services may allow you to enter names of those you want to inherit property and it generates the document for you. If you name a minor child as a beneficiary on your life insurance, retirement account or name the child in your will without setting up an appropriate way for the gift to be held in trust until the child is older, you will incur unnecessary legal costs by having to go to court and set up a conservatorship to hold the money for the child if the parent dies when the child is a minor. Most importantly, you don’t have a trained professional to give you advice as to whether the documents you create will actually work the way you want them to.
A will is a private document. It is not filed with any agency or court until after death. You should keep your will in a safe place. After a person dies, the will is lodged with the Court.
Trusts hold assets for the benefit of someone or something. There are many different types of trusts that accomplish many different goals. Trust are usually more expensive to create and take time to manage effectively.
A trust is an arrangement where assets are held by a trustee for the benefit of another person called the Beneficiary”. A revocable living trust is may be used as an alternative to creating a will. A revocable living trust is created by a person called the Settlor while he or she is living. The Settlor titles his or her assets in the name of the trust during his lifetime which is called funding the trust. The trust document indicates who is the settlor, the trustee and the beneficiary. Often when a revocable living trust is created the Settlor is also the Trustee and the Beneficiary during his lifetime, which allows him to manage the property in the Trust and receive the income and principal from the assets during his life. A revocable living trust is “revocable” while the Settlor is because he can change or cancel it at any time.
Upon the Settlor’s death, a revocable living trust becomes “irrevocable.” The trust document directs who should be the new Trustee if the Settlor becomes incapacitated or dies. The document also directs who are the new Beneficiaries of the trust’s assets after the settlor’s death. A trust usually avoids administration of the Settlor’s estate in Probate Court. A trust can also make it possible for Beneficiaries to receive regular income from the trust’s assets for a predetermined period of time.
There are many benefits to creating a trust. It “avoids probate” because the property of the person who has passed away (the “Decedent”) is usually not administered through the Probate Court. It also allows the information of the Decedent and his assets to remain private because his estate is not being administered through the public setting of the Probate Court. Lastly, it can lend tax saving benefits. However, you should also be aware that Colorado has streamlined its probate process, and the time and expense to administer an estate in Colorado is generally less than in states like New York and California. Also, a trust does not magically administer itself after a person’s death, and as with a will, you will need a trusted individual or bank to carry out all the details of the document. It is a good idea to speak with an estate planning attorney to determine if a trust is appropriate for your specific situation.
Trusts can do many things. A trust can let you make a gift over time to beneficiaries or help to manage assets that you may own in different states. Trusts are not public records. If your assets are held in trust it can create privacy that you do not have with a will. A will gets lodged with the court after a person’s death and the administration of which is approved by the probate court or registrar. Like a will, a trust needs to be administered after a person’s death however this is a process that is not supervised, guided or approved by the court. Trusts cost more to create and take more effort to manage appropriately. If a trust is not managed appropriately, it can do more harm than good and create unnecessary expense when the time comes to administer the trust. If all assets are not owned by the trust, there may be a need to file a probate case to administer the assets owned outside the trust as well as the time it will take to administer the trust. Some advisors think that everyone needs a trust and they encourage people to purchase expensive trust packages that are often more than what a person needs. If you need a trust and you are able to manage it appropriately, then it might be the estate plan to best fit your needs. At Werth Law, we do not come in to the client meeting with the assumption that a trust is the proper plan. Most people that come in with the belief a trust is the most appropriate plan. In fact, most clients end up deciding that a will-based estate plan is more than enough to fit their need
A trust can help you avoid probate if it has been managed correctly and all assets that are owned or have been acquired were properly titled in the name of the trust. However, in Colorado the probate process is fairly simple and very inexpensive. There usually isn’t a reason to try to avoid probate in Colorado although some advertisements use the fear of probate to urge people to purchase expensive trust packages. In Colorado the courts charge a small filing fee to open an estate or file documents with the court but neither the court or government takes a portion of a person’s estate through probate. Some states have high fees associated with probate and they will take a percentage of the deceased’s estate. In these states a trust is necessary to avoid this charge and avoid probate. In Colorado, that should not be a concern.
It is a good idea to review your estate planning documents every year. Make sure they still reflect what you want and nominate the individuals that you want as your personal representative or trustee and agents under power of attorney. With births, deaths, marriages, divorces and changes to your financial situation and assets or when the people you’ve chosen as your personal representative, trustee or agent are no longer appropriate for those roles, you should contact an attorney to make the revisions needed.
If you have a trust that previously held property which has now been sold, and the trust doesn’t have any assets, the trust needs to be properly dissolved. Often when a trust is created, there is also a Pour-Over Will which says that when you die, any property you have that did not get titled in the name of the trust is to be transferred in to the trust. If you do not revoke the will, when you die, when the will is administered it will cause your property to go into the trust and then your family will have to administer the trust to distribute the property. This will cause unnecessary time and expense. If you no longer need the trust you should contact an attorney to properly dissolve it and make sure that your estate plan is up to date and will fit your current needs.
A durable power of attorney has specific language stating that it remains valid after you become incapacitated.
A medical durable power of attorney allows you to make sure someone you trust can make important medical decisions on your behalf should you become incapacitated. It allows your agent to act and communicate with your doctors and other medical personnel, retrieve medical records, and make medical decisions for you should you become unable to or become incapacitated.
A Living Will, also called an Advanced Directive for Medical and Surgical Treatment, is a document that is important immediately prior to death. A living will allows you to state what your wishes are if you are terminal and on a respirator or other artificial life support or receiving artificial nutrition which only serves to postpone the moment of your death, or if you are in a persistent vegetative state. It allows you to direct your doctors and your agent under a Medical Power of Attorney to follow your wishes about whether you want artificial life support and hydration discontinued, continued for a limited number of days or continued indefinitely.
Both medical and financial powers of attorney give your agent and your family the authority and the directions to make decisions for you if you are not able. It takes the pressure off those close to you to try to determine what you would want and how to go about accomplishing it. It gives your agent the authority to act on your behalf. If you have not executed these documents, then your family or those close to you will have to go to court seek a guardianship or conservatorship to manage your affairs. If a property or asset is owned by a husband and wife as joint tenants and one of them becomes incapacitated, then the asset cannot be sold or transferred without having the court appoint a conservator for the incapacitated person and seek permission from the court to approve the sale. If assets need to be liquidated to provide for care or to move into a home that better fits the needs of the individuals, this cannot be done if they have not appointed an agent to make decisions act on his or her behalf through a power of attorney.
Estate planning documents are meant to be valid in all states. However, we generally recommend that if you move you should consider getting new documents that are certain to comply with the laws of the state where you have moved. Banks, hospitals and other institutions may be used to seeing specific language in powers of attorney documents and they would be more likely to honor them if they were created according to Colorado law.
A general durable power of attorney allows you to appoint an agent to manage your property and financial affairs on your behalf. Your agent can only act upon your direction. A durable power of attorney allows the agent to continue to act on your behalf if you become incapacitated. This document is useful should an emergency occur that would render you unable to manage your assets.
Probate and Estate Administration
The Probate Court handles all matters to do with estate administration, guardianships, and conservatorships. The Probate Court appoints a personal representative for an estate, and the court can oversee the actions of the personal representative. In cases with disagreements or controversies, the Court will determine the outcome.
Formal probate requires more court oversight than informal probate does. Informal probate does not require that interested persons, such as family members and other beneficiaries of the Decedent’s estate, be given notice of the appointment of the personal representative until after appointment. Formal probate requires notice to interested parties before appointment. If someone objects to the appointment, the court will hold a hearing.
A personal representative, in some states called an executor, is generally responsible for making the funeral and burial arrangements of the deceased, gathering and inventorying the assets, paying or resolving debts and taxes, and distributing the property of the estate. The personal representative must file paperwork with the court to demonstrate that the estate was administered properly.
A person may be nominated in a will to be the personal representative for the estate but naming someone in the will is only a nomination. The person nominated is not automatically the personal representative. A court must approve of the appointment of the personal representative after paperwork is filed with the court. If someone dies without a will, a person can apply to the court to be appointed personal representative. If others interested parties that have priority for appointment do not object, usually the person who applies will be appointed personal representative.
Probate assets are assets that are controlled by a person’s will. It can include real and personal property, money, and investments in accounts that do not have beneficiaries or someone named to receive the money upon death. Non-probate assets transfer to another person without regards to the will. This can include financial accounts, life insurance, or bank accounts that name a beneficiary or name a person to receive the asset as a payable on death or transfer on death. It also includes property held in joint tenancy.
Joint tenancy with right of survivorship means that when two or more people own an asset the person that lives the longest gets full ownership and title to that asset.
Tenants in common is when two or more people own an asset and each owns their share individually and can pass his or her share of ownership to his or her heirs.
Many estates can be administered in around six months if there aren’t issues with creditors or controversies among the beneficiaries. Formal probate can take longer because there are hearings involved. The length of time depends on whether parts of the probate are contested and how quickly the personal representative performs his/her duty. Notice must be provided to creditors and there is a period in which creditors may file claims against the estate.
Guardianships and Conservatorships
A guardian is a person who has been appointed by a court who is responsible for the well-being of another. The Guardian will make health care and placement decisions for another person, called the ward, when the ward cannot do so themselves.
A conservator is a person who has been appointed by a court to manage the financial affairs and property of another person, who is called the Protected Person, when the protected person cannot do so themselves. A conservator may be appointed for a minor child who is receiving money through a lawsuit or inheritance, or for an adult who is incapacitated, missing, detained or unable to return to the United States.
A court visitor is appointed by the court to be the eyes and ears of the court when a petition is filed seeking the appointment of a guardian or a conservator. The court visitor will talk with the individual who is the subject of the proceeding. The court visitor inform the person about the proceedings and their rights, interview the person, and submit a written report to the court. If the person that is the subject of the proceeding, called the Respondent, requests an attorney, the court is obligated to appoint one.
Powers of attorney are important documents that can save the expense and hassle of having to go through a guardianship or conservatorship if someone becomes incapacitated or needs assistance. However, sometimes powers of attorney don’t work as well as planned if a bank or agency refuses to honor them or an elderly individual is prone to exploitation by others. However, for most people powers of attorney are very effective for avoiding the appointment of a guardian or a conservator.
If a child who is under the age of 18, will receive money from an inheritance or a personal injury settlement, the Court requires there to be a conservatorship to ensure proper management of the child’s money or asset. A parent, grandparent or other person may file a petition with the court to be appointed conservator for the child and the court will authorize that person to manage the money or asset for the child’s best interest under court supervision. The conservator must get Court approval to use the child’s money for the child’s benefit.
Elder Law and Elder Abuse
Elder Law is an area of law that addresses issues related to aging, incapacity, and death, most often associated with senior clients and their families. It is an area that can combine many different areas of law as it relates to older adults and the issues surrounding them.
Medicaid is a financial need-based program. Individuals who receive Medicaid are generally only allowed to have a certain dollar amount in assets and in monthly income to qualify to receive Medicaid. Medicare is not a need-based program. It functions more like medical insurance.
When a person receives Medicaid benefits, Medicaid and the state of Colorado through the Department of Health Care Policy & Financing can try to recover the funds paid by the government on a person’s behalf from that person’s estate. Often a person who received Medicaid’s largest asset is his or her home. Medicaid will often put a lien on that individual’s home after they pass away to try to recover the costs of the person’s Medicaid care.
Medicare does not cover long-term care. Medicaid is the program that covers long-term care.
Elder abuse is the neglect, mistreatment or financial exploitation of an older adult. An individual 70 years of age or older is considered an at-risk adult in Colorado. At-risk adults are more vulnerable to, and disproportionately damaged, by crime. Older adults are more susceptible to abuse, exploitation and neglect. They are less able to protect themselves and many times the offenders may be those closest to them or someone in a position of trust.
“Caretaker neglect” is when adequate food, clothing, shelter, psychological care, physical care, medical care, habilitation, supervision, or any other treatment necessary for the health or safety of an at-risk person is not secured for an at-risk person or is not provided by a caretaker in a timely manner and with the degree of care that a reasonable person in the same situation would exercise, or a caretaker knowingly uses harassment, undue influence, or intimidation to create a hostile or fearful environment for an at-risk person. Caretaker neglect is a class 1 misdemeanor. C.R.S. §18-6.5-102(6)
When a person knowingly uses deception, harassment, intimidation, or undue influence to permanently or temporarily deprive an at-risk person of the use, benefit, or possession of any thing of value. Criminal exploitation is a class 3 or class 5 felony depending on the value involved. C.R.S. §18-6.5-103(7.5)
Undue influence means the use of influence to take advantage of an at-risk person’s vulnerable state of mind, neediness, pain, or emotional distress. C.R.S. §18-6.5-102(13). Undue influence is not a crime, but rather a method in which a person commits another crime such as theft or criminal exploitation.
Older adults are more vulnerable and less able to protect themselves from those that might abuse or exploit them. If you suspect elder abuse or exploitation has occurred, or is occurring, you should contact the police. Many police departments have officers and investigators specially trained to detect and investigate elder abuse. If you do not get the response you believe is appropriate, it may help to contact the department again and ask if there is someone that deals with elder abuse that you can speak with.
A person that is an agent for another hold a fiduciary duty towards that person. They must act in the person’s best interest and consistent with the estate plan of the person. They are unable to use the money for their own needs and expenses or to engage in self-dealing. To use the money contrary to the authorization in the power of attorney can be theft. If you know someone exploiting someone financially, you should contact the police to start an investigation. You can also contact an attorney to apply to the court to revoke the power of attorney and prevent further access to the finances of the older adult.
Technology and Security
All information received from a client is strictly confidential. Our firm takes every step possible to protect your privacy. Data submitted through online digital intake forms is encrypted and secured using industry-standard 128-bit SSL encryption.
How do I know my information is safe?
At Werth Law we take every effort to keep your information safe and secure. Data is encrypted through online transmission and we have the ability to send and receive secured email. If you ever have concerns about sending an email, a secured link can be sent to you to allow you to secure and encrypt the information you send back to Werth Law LLC.
Do you use any data encryption technology or programs to safely transmit information with clients?
Client intake and estate planning forms may be filled out through a digital application program that will allow you to enter information from a computer, tablet or smart phone. The information you enter is encrypted and secured using industry standard 128-bit SSL encryption.
All case management data transmitted is protected through SSL (Secure Sockets Layer) encryption, which protects data in-transit, is provided by Gandi and verified by Norton.
Some paperwork and documents such as legal services agreements are available to be transmitted and signed digitally through an encrypted service, however documents that must be signed and submitted to the court need to be signed by hand.