Our Practice Areas
Estate Planning
While nobody wants to think about death or incapacity, creating your estate plan is one of the most important steps you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances and your care, but it also creates clarity and facilitates a smooth transition for your loved ones when you become incapacitated or pass away. Your comprehensive estate plan becomes a source of stability and peace for your loved ones when something happens to you. Your loved ones can focus on honoring your wishes, as they navigate some of the most harrowing life experiences.
Providing for Incapacity – MORE CONCERNING THAN PROBATE
If you become incapacitated, you will be unable to manage your own financial affairs. Many people are under the mistaken impression that their spouse or adult children can automatically take over for them if they become incapacitated. The truth is, for others to be able to manage your finances, they must petition a Court to declare you legally incompetent. This process is lengthy, costly, and stressful. There is a chance the Court will appoint an individual that you would not have chosen to act in the role of your legal and financial decision making. Even if the Court does appoint the person you would have chosen, the process for appointment and the ongoing Court requirements are cumbersome, public, and expensive. For the person (or people) that you trust to immediately act on your behalf, you must execute proper legal documents. Comprehensive estate planning documents will allow the person you trust to make decisions on your behalf, without the involvement of a Court.
Click here for more information about incapacity.
Avoiding Death Probate
If you leave your estate to your loved ones using a Will, all your assets must pass through probate Court. Even in the best-case scenario, the probate process is expensive, time-consuming, and open to the public. The probate Court is in control until the estate has been distributed and closed, which can take years.
It is not unusual for the probate Courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate. Your surviving spouse may be forced to apply to the probate court for needed cash to pay current living expenses. You can imagine how stressful this process can be. Probate is unnecessary and avoidable. With proper planning, you can pass assets on to your loved ones without the probate process. The alternative result that proper planning creates is efficient, minimizes expenses, and keeps your affairs and wishes private.
Click here for more information about the alternatives to probate.
Planning for Death Taxes
The IRS may intend to collect one final tax after your death: the federal estate tax. In addition, many states have their own separate estate and inheritance taxes. Whether there will be any taxes due depends on the size of your estate, constantly changing laws, and the construction and implementation of your estate plan. There are various strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early.
Charitable Bequests – Planned Giving
Charitable giving through Estate Planning can be a meaningful part of your legacy.
Do you want to benefit a charitable organization or cause? Your estate plan can provide for such organizations in a variety of ways, either during your lifetime or at your death. Depending on how you incorporate planned giving into your estate plan, it may also allow you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.
A comprehensive estate plan addresses incapacity in two parts. In addition to planning for your financial affairs, it is important to plan for your medical care. The law allows you to appoint someone you trust – for example, a family member or close friend, to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a durable power of attorney for health care where you designate the person to make such decisions. In addition to a power of attorney for heath care, you should also have a living will, which informs others of your preferred medical treatments, such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
Estate planning for blended families is especially important because of their unique dynamics and needs. It is important to work with an experienced estate planning attorney who will spend the time to get to know your family’s unique situation and help you determine how to accomplish your goals. While all blended families are different, a personalized approach with careful planning can help protect your family and reduce potential problems. The nature of estate planning is proactive, both in protecting individuals and in minimizing potential animosity and confusion within families.
Many parents put off estate planning because they do not think they have substantial assets to protect. This outlook is common among young adults who think they have plenty of time to accumulate wealth and plan for it at a later date. However, in failing to create a proper estate plan, many parents cannot adequately protect their children. All parents, with or without a great deal of assets, should have an estate plan in place to set forth their wishes for their children in case something happens to one or both parents. A comprehensive estate plan includes, among other things, nomination of a guardian in the event that both parents become incapacitated and/or pass away while the child is still a minor.
In your estate plan, you can appoint a guardian (also known as a conservator) for your children if you are unable to care for them. If there is no plan in place when you become incapacitated or pass away, the court will appoint a guardian to raise your children based on what it deems to be in the best interest of your children. Unfortunately, the court appointed guardian may not be the same person you would have chosen and, in some cases, he or she may actually be your last choice. From just a few brief hearings, it is often impossible for the courts to determine who is best suited to care for your children in your absence. Expand on this? – explain that is why the wrong person might be chosen?
In some cases, where no clear-cut guardian is named, children may be sent to Child Protective Services to remain with a foster family until the court decides on a suitable guardian to take responsibility for the care of the children. For many parents, this possible scenario is reason enough to create an estate plan to protect their children.
Nominating a guardian can be a very difficult decision and one that should not be made without serious consideration. The individual(s) selected should provide stability for your children in the difficult transition, while also continuing to care for them in a long-term way with which you are comfortable. You should consider the following traits and circumstances when determining who is best suited to raise your children:
- Age: You will want to make sure they are old enough to provide proper care (legally, at least 18 years of age in most states) but young [and/or healthy] enough to remain in good health until your children reach adulthood.
- Commitment: Ensure that the guardian does in fact want to take on this responsibility [and is committed to the possible longevity of it].
- Temperaments: Carefully consider what kind of person will mesh well with your children. If you have young or energetic children, you may want to make sure the guardian exhibits patience.
- Religious and moral beliefs: Do they share the same values as you and your spouse? Would they instill these in your children?
- Nature of existing relationship with children: You will want to make sure that this person has a good bond with your children and that there is a mutual comfort level.
- Location: If you prefer that your children not move out of their current home and/or school district, you will want to make sure that the appointed guardian resides close to you [or would be willing to relocate] and intends to stay there until your child reaches the age of majority.
- Does the proposed guardian have other children? If so, does the guardian have enough time and resources to devote to his/her own children in addition to yours?
- Finances: Can the candidate financially provide for your child if there are not enough funds available from your estate?
In the event that the guardian you have selected in your estate plan is unable to raise your children upon your passing, you should have at least two alternates who also meet the aforementioned criteria. This will ensure that your children are left in the hands of trusted relatives or friends and not in the court system.
If you have multiple children and would like to appoint different guardians to raise them separately, you may also outline multiple guardian appointments in your estate plan, however, this situation is generally not regarded as ideal for close siblings.
All appointed guardians must ultimately be approved by the court at the time of the parents’ incapacity or passing. If a biological parent is still living, they will usually be named the guardian of the children, unless evidence is presented that this individual is unfit to provide care to the children in question.
Trusts for Minors
In general, if an individual dies without an estate plan, his or her assets are distributed according to a formula determined by the state. A properly crafted estate plan gives you control over this distribution, allowing you to provide for specific people you designate and at the right time. State laws dictate at what age a child may gain access and control over their inheritance. This means that someone else has to petition the Court, in order to serve as conservator to manage the inheritance . It is recommended that all parents of minor children create a trust that is designed to safeguard the inheritance for their children. Such a trust gives you the ability to outline how much money your children will receive, the age at which they will receive the inheritance and, to an extent, how they are to spend this money. This allows you to designate funds for their college educations and give them their inheritance at a certain age, ensuring that they don’t waste their inheritance on fancy cars as soon as they turn eighteen years old. The trust can also protect your kids in the future against potential creditors or even divorce.
The money held in trust can be used to provide support to your children until they reach the age at which they may receive their inheritance. In your estate plan, you must also name a trustee who can ensure this money is handled properly. It is important to note that the trustee may be different from the guardian selected in your estate plan. In many cases, the best person to raise and care for your children may not be the same person who will be the best choice for managing your financial affairs. In many situations, it is recommended to designate different persons to maintain a system of checks and balances. If you fail to create a comprehensive estate plan, the decision as to who will manage your finances and raise your children will be left to a court of law. Even if you are lucky enough to have the person or persons you would have chosen selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.
Trusts are beneficial because they allow you to retain control over your wealth after your death, in effect, giving you greater control of your children’s futures. A trust allows you to outline how the trustee is to budget funds for each child. If you have one child who has a special need or requires additional training to develop a talent, your trust may outline these appropriations. This is particularly important if you have a child with physical or mental disabilities who may require significant care beyond his or her 18th birthday. If you do have a child that has special physical or mental needs, you should talk to your attorney about whether you should incorporate special needs planning into your trust.
Check out the “Adult Dependent Children” section below for more information about planning for special needs beneficiaries.
Children are one of the most important parts of a parent’s life and an integral part of the estate planning process. Your children’s well-being is only ensured with proper planning. Although most parents hate to think about leaving their children before they are adults, it is essential that this possibility be considered and an effective plan formulated. Even if you are not sure who to name as guardian for your children, you have a better idea about who is suited to raise your children than a judge would. Do not let indecision make you wait to take this important step for protecting your children. If you have not yet created a plan that adequately provides for your children, we encourage you to contact our office today.
If you currently provide care for a child or loved one with special needs (such as mental or physical disabilities), it is likely that you have thought about what may happen to them when you are no longer able to provide and care for them.
While you can provide that they receive money and assets, if done incorrectly, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs.
However, public benefits often provide only for the bare necessities such as food, housing, and clothing. As you can imagine, these limited benefits will not provide those loved ones with the resources that would allow them to enjoy a richer quality of life. But if you leave assets directly to someone who is receiving public benefits, there is a risk that the inheritance will disqualify that person from receiving the benefits. Fortunately, the government has established rules allowing assets to be held in trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid, as long as certain requirements are met.
Our law firm can help you set up a Special Needs Trust so that government benefit eligibility is preserved, while at the same time providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the special needs beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the special needs beneficiary.
The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones’ eligibility, such as:
- Annual check-ups at an independent medical facility
- Attendance of religious services
- Supplemental education and tutoring
- Out-of-pocket medical and dental expenses
- Transportation (including purchase of a vehicle)
- Maintenance of vehicles
- Purchase materials for a hobby or recreation activity
- Funds for trips or vacations
- Funds for entertainment such as movies, shows, or ballgames.
- Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
- Athletic training or competitions
- Special dietary needs
- Personal care attendant or escort
Special Needs Trusts are a critical component of your estate planning if you have beneficiaries with special needs for whom you wish to provide after your passing or during your incapacity.
Have You Considered Including Provisions
for Pets in Your Estate Plan?
What would happen to your pets if something happened to you? For your pet’s sake, it’s a question you ought to be asking now.
As an estate planning attorney, I am in the business of helping people think about a lot of things they would probably rather not think about. Too often people forget to include their pets in their estate plan, and it is seldom that the attorney preparing the estate plans ever raise the issue. However, even those who do make some arrangements often handle the situation in ways that aren’t legal or don’t work well, such as leaving money to a pet (you can’t), or making an inheritance conditional on the death of a pet (which too often speeds up the process, sometimes by years).
So, what works? No two people are the same and neither are their estate plans. However, the following should give you a general idea about what you should discuss with your estate planning attorney when providing for your pets.
Power of Attorney
At a minimum, every pet owner should have some form of “durable power of attorney” ready; designating someone to make immediate decisions for your pet should you become incapacitated by illness or accident.
Pet Trusts
Colorado is one of several states that recognize pet trusts through its statutes. This allows the pet to be given to a person and permits funds for the animal’s care to be held by Trustee. The trust should have provisions for the care and maintenance of one or more companion animals if the owner becomes incapacitated or dies.
A comprehensive plan should include the provision of a Pet Guardian (a caregiver for your pet during your disability or upon your death) and a Pet Trustee (the person who ensures that the financial needs of your pet are met). The selection of the Pet Guardian and Pet Trustee is perhaps the most important responsibility of the pet owner. That person can be a friend, relative, sanctuary, or other reliable person you feel confident will put the well-being of your pet first.
It is also important to consider the costs that will be involved for the care of your pet. Those costs include food, veterinary expenses, medications, emergency care, and burial or cremation fees. The residual of any such fund be left to charity to remove any financial temptation from the arrangement.
Your best bet is to talk about this subject beforehand with friends and family, make arrangements in advance and keep them current. Never assume your family will take your pet. Make sure you have found a willing adopter and that the details you have arranged are known. Talk to your attorney about how to structure any money you leave for the care of your pet along with how to ensure your pet continues to get the level of care it is accustom to.
Each year, between 5 and 7 million companion animals are surrendered to animal shelters because their owner has passed away. Sadly, approximately 3 to 4 million of these animals are euthanized after they are not placed into new homes.
Have you seriously considered what will become of your faithful companion – your beloved pet – upon your death or incapacity? If not, now is the time. If you don’t have a plan that quickly and easily provides for your pet’s food, shelter, and care, please keep reading.
One of the main goals of estate planning is to provide for your loved ones, and for many of us, “loved ones” includes our pets. While you can always ask a friend or relative to look out for your pet, they aren’t legally obligated to unless you set up your estate plan to include this.
The specific estate planning method you use will depend on your pet’s needs, your goals, and your financial resources. Working together, you and your attorney can plan for the best method to ensure that your pet is taken care of and will continue to have a good quality life.
Consider these frequently asked questions and be sure to ask your attorney for more details. Don’t wait until it’s too late …
Can I provide for my pet in my estate plan?
Yes. However, even though you consider your pet as a companion and devoted friend, legally, your pet is ‘personal property’ – and is not given the status of a person. That makes it critical to choose the right planning method. There are ways to provide for your pet in your last will and testament or by creating a trust.
Isn’t my will the easiest place to plan for the care of my pet?
Even though it may seem ‘easy’ to include a bequest for your pet within your will, it may not be the best approach. Why? Because your will must go through probate before it takes effect. This can be time consuming and uncertain, and your pet will need immediate attention. Your pet is not like your spouse, adult children, or your siblings, who can take care of themselves until the probate process is complete.
But since your pet needs food, water, shelter, and love every day, this may not be the best way to provide for your pet. During probate, your pet’s care, or even ownership, can be in jeopardy. So, while you may want to include provisions in your will for your pet, first consider other methods. Many people are now using a trust to provide funds and direction for the care of their pet.
How does setting up a trust help me provide for my pet?
Unlike a will that is subject to the probate process, a trust becomes effective immediately upon the terms outlined in your trust – usually death or incapacity. Your trust can specify your wishes concerning the care and control of your pet, as well as making funds available. Your trust can also give specific directions about the daily care, medical attention, physical control, and even burial of your pet.
What is a trust and how does it work to provide for the care of my pet?
A trust is a legal entity set up to accomplish a particular purpose. You and your attorney will outline the specifics that detail when and under what circumstances the trust will take effect. This includes how the trust will be funded, who will be the trustee, successor trustee, beneficiary, and caretaker, and how the trustee or caretaker will manage your pet and the funds for your pet.
You want your loving pet to be fed, cared for, and to receive medical attention. You may also want to designate funds for pet insurance, or even to enforce the trust. In your trust, you can also leave real property for housing your beloved companion.
What types of trusts are available to provide care for my pet?
The term ‘pet trust’ generally refers to a trust that has specific provisions for your pet(s). A pet cannot be a beneficiary of a traditional legal trust because one of the legal requirements for a trust is that there must be a beneficiary, and that beneficiary must be able to enforce the terms of the trust. Obviously, a pet cannot enforce a trust. So, the choice and structure of a trust must take this into account and be properly worded to accomplish your goals.
Most trusts for the care of pets include the following:
- Statutory Pet Trust – Many states have enacted statutes that allow for enforceable pet trusts. This generally means that the trust can designate a third party who will have the power to enforce the terms of the trust – to compel the caretaker or trustee to use the trust funds for your pet. Some issues that arise with these trusts include whether the amount of funds in the trust is ‘reasonable’ according to court standards, and who the designated third party to enforce the trust would be.
- Honorary Trust – This is a type of trust set up for a specific purpose (such as to provide for a pet) but without a definite beneficiary. The problem with an honorary trust is that without a statute specifically authorizing it as a pet trust, it is essentially unenforceable.
- Traditional Legal Trust – One of the best methods to ensure the care of your beloved pet is to set up a traditional legal trust. Your attorney can carefully add language to avoid problems. One method used is to actually place the pet and sufficient funds into the trust. The pet and the funds are the body of the trust. Your attorney then names the caretaker of your pet as the ‘beneficiary’ of the trust. You name a trustee – the party responsible for managing the funds and the caretaker.
How much should I leave for the care of my pet?
You and your attorney will work together to evaluate the factors that influence this decision. You need to consider your finances, your pet, and the amount of care that will likely be involved for the pet’s anticipated lifespan. Obviously, providing for the care of some pets will be more expensive than for others. If your pet is an elderly dog, you will not need to designate as much as you would for a young horse.
Trust and Estate Administration
When a loved one passes away, their estate often goes through a court-managed process called probate or estate administration where the assets of the deceased are managed and distributed. If your loved-one owned his or her assets through a well drafted and properly funded living trust, it is likely that no court-managed administration is necessary, though the successor trustee needs to administer the distribution of the deceased’s assets. The length of time needed to complete the probate of an estate depends on the size and complexity of the estate and the local rules and schedule of the probate court.
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Trust Administration
Trust Administration is the process of carrying out the wishes/plan of the creators of the trust when the creator of the trust has become incapacitated or passed away.
This is a more private and efficient (from a time and cost perspective) process than the court-supervised probate process. However, it is still a significant procedure that does require close collaboration between an estate planning attorney, financial advisor, CPA, and the trustee-client.
Most trustees are unacquainted with the procedures and usually combining these tasks with the grief that loved ones are still experiencing can be overwhelming, consequently it is critical to have the assistance of an experienced estate planning attorney during the trust administration process.
In a general sense, probate refers to the method by which your estate is administered and processed through the legal system after you die. During probate the assets in your estate are transferred either according to your will, or if you have no will, according to state law. Your estate must be dispersed in a certain manner (your debts and taxes paid before your beneficiaries receive their inheritance, for example).
Many people think that a will avoids probate. That is not true. Other people think that probate applies to you only if you have a will. Wrong! Your estate will be probated whether or not you have a will.
A court oversees the probate process. On a basic level probate typically includes swearing in your personal representative; notifying heirs, creditors, and the public that you are, indeed, dead; inventorying your property; and, distributing your estate (including paying bills and any taxes).
Generally, probate assets are those you own alone. Often assets you own jointly with others are considered non-probate assets (depending on title) and those assets pass on to the co-owner(s) automatically upon your death. Non-probate assets also include assets that pass to a named beneficiary: a life insurance policy, for example. Because these non-probate assets pass to someone automatically, there is no need for probate for those particular assets.
Probate involves paperwork that must be filed with the court and may require court appearances. In Colorado, even in a simple and straightforward case, the probate process usually lasts about a year.
If you own real estate in more than one state, your loved ones will have to go through a probate process in a different court in each state where you own real estate.
The cost and duration of probate can vary substantially depending on a number of factors such as the value and complexity of the estate, the existence of a Will and the location of real property owned by the estate. Will contests by heirs or others or disputes with alleged creditors over the debts of the estate can also add significant cost and delay. Common expenses of an estate include Personal Representative fees, attorneys’ fees, accounting fees, court fees, appraisal costs, taxes, and surety bonds.
If a person becomes incapacitated (is not able to make or communicate decisions) sometimes it may be necessary to pursue a conservatorship or guardianship. This is an expensive, intrusive, costly, and lengthy court process where an individual or corporation is appointed as a conservator (for financial decisions) or guardian (for medical decisions) to make decisions on behalf of the person being protected.
The appointed person or entity cannot be overridden by the incapacitated person. In a sense, in order to safeguard the incapacitated person or the community from harm, the incapacitated person’s freedom regarding the specific decisions being overseen by the court or legal document has been taken away.
Conservatorship has to do with the management of the things that the incapacitated person owns or has had control over. Guardianship has to do with the management and decisions of the life actions and needs of the incapacitated person.
A conservator is an individual or corporation appointed by a court to manage the finances, estate, property, and/or other business affairs of an individual whom the court has determined is unable to do so for himself or herself. The court supervises the conservator, and the conservatorship continues until the incapacitated person’s death.
Guardianship provides for court to appoint someone to make medical decisions and ensure the care of someone who is not able to care for himself or herself. The court may appoint a guardian if there is clear and convincing evidence that the person is incapacitated and that he or she requires continuing care or supervision.