FAQ

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.