Estate planning is how you can take care of your loved ones even after you are no longer able to do so. The three purposes of estate planning are: 1) Control your property while you are alive and well; 2) Provide for yourself and your loved ones if you become incapacitated/disabled; 3) Give what you have to whom you want, the way you want, when you want.
Estate planning addresses the consistent and hardest parts of life, which is when someone passes away. In my opinion, estate planning’s purpose is to help a family’s transition as they cope during such a difficult period in their lives. It is a gratifying and purpose-filled legal service.
Comprehensive estate planning takes the whole person into account. It involves selecting trusted individuals to carry out one’s wishes and drafting documents that carefully guide and protect future generations. Estate planning also goes beyond taxes, wealth, and medical decision making: Many people choose to include things like recorded oral histories and precious heirlooms in their plans. This makes estate planning not just about property, but about the legacy, values, and vision you want to pass along to future generations.
Every individual has different needs, and to receive a full appraisal of your needs for estate planning, I would advise you to schedule a complimentary initial meeting to discuss your situation.
To provide a simple answer, family is incredibly important to me, and I believe that estate planning provides me with an opportunity to help and serve families. Families are central to so many people’s lives and society in general, and so estate planning is a fantastic opportunity for me to help those individuals who want to take care of their loved ones.
For additional thoughts, please read my bio.
A will is a document that is filed with a court after an individual has passed away. The will tells the court what the deceased person wants to have happen with their property. The court then supervises the deceased person’s Personal Representative as the Personal Representative distributes the deceased person’s property to its heirs.
There is no cut-and-dry rule for what you should and shouldn’t tell your children about your estate planning, but it’s usually a good idea to err on the side of more information rather than less. It’s a good idea to tell your children the reasons behind your decisions, so they understand how your values translate into your plan. Sharing your perspective far in advance using important documents like your health care directives can also reduce stress on your family in a difficult moment down the road. It is also an excellent way to reduce (or even eliminate) family infighting that sometimes occurs after death if your children have heard directly from you about the reasons for your decisions.
One great advantage of the will is that it is so well known. When most people think of estate planning, they think of a will.
A will is also generally the most affordable estate planning strategy, and so it allows some individuals to have an estate plan when they otherwise would not be able to afford one.
In Colorado, the process to administer a will (or to distribute a person’s property to their heirs) is one of the most advanced and efficient in the United States. It is therefore relatively quick and cheap to administer a will in Colorado.
A will does not help protect you if you ever become incapacitated.
The administration of a will is public, so anyone can read what the will says. While this is not a true concern for most individuals, it is a factor to consider when deciding which estate planning strategy to adopt.
Probate is the process by which the court validates the authenticity of a will; appoints a personal representative); and supervises the settlement of an estate, including the payment of bills, filing of tax returns, and transfer of assets to beneficiaries. If no will is presented, the court will appoint an estate representative, called an “administrator.” The administrator carries out the same duties as a personal representative; but when a person dies without a will the court must determine the heirs of the deceased. The complexity and duration of this heirship determination process varies from state to state, but typically the remainder of the probate process, such as the payment of taxes and bills, remains the same whether there was a will or not. Estate assets are distributed to heirs at law as determined by the state’s intestacy laws, not beneficiaries chosen by the deceased who created the will.
In Colorado, probate is a pretty efficient and cheap process. However, it is a public process. The probate court supervises the probate process, and all the funds are distributed in “lump sums” to the heirs named in the will (assuming the will does not create a testamentary trust). Any creditors that you have will also have a voice in the probate process. Once the will has been probated, the will ceases to function, as your estate no longer holds any property.
The Personal Representative is also known as an Executor. This is the individual or institution named in a will who becomes responsible for carrying out the instructions provided in your will during the probate process and distributes that property to the heirs. The Personal Representative works under the supervision of a judge and has to report back to the judge on what the Personal Representative has done.
A trust is an estate planning strategy. It offers you protection in the event of incapacity and allows for great flexibility with how your property is distributed after the person has passed away.
A trust is a private document that is not available for non-interested people to access and read. A trust being to protect an individual as soon as the individual signs the trust, not just when the individual passes away.
A trust allows you to have provisions that govern how and when your property is distributed to your descendants. This allows for a continuation of parenting influence and can help descendants continue to reach their potential as they continue through life.
A trust is generally more expensive than a will. While it is an effective tool, it is less affordable for many people than a will.
A trust is also more “high maintenance than a will.” For a trust to work best, you have to actively manage ownership of your property for the trust to continually control your property. This process is called “funding.” It is best to counsel with an estate planning attorney to determine the best options to fund your trust.
A trust grants you control over time, which means that while a will effectively distributes your property all at once, you can spread out distributions over time or place pre-requisites that your descendants have to fulfill before they can access your property. A trust can mirror your parenting style and personalize distributions to your descendants according to their unique situations.
Even an 18-year-old has property, and that 18-year old probably cares who would get their property if they pass. Also, a good estate plan also has incapacity planning, which protects the 18-year-old in case of incapacity.
The decision to have a will or trust is an incredibly personal and unique decision. I advise that you meet with an estate planning attorney to help you understand your options and to help you make the best decision for yourself and your family.
A Trustee is the person who administers your trust. In this sense, a Trustee is similar to the Personal Representative of a will. However, a trust is private, while a will is public.
A Trustee also has duties to the trust’s beneficiaries, called fiduciary duties. This means that a Trustee could be found legally liable if the Trustee inadequately administers a trust. I would suggest that a Trustee contact an attorney specializing in Trust Administration for help.
Incapacity planning means that you have the needed documents to continue to take care of yourself and your family if you ever lose the ability to make financial and medical decisions for yourself without passing away.
These documents include a Medical Power of Attorney, a General Durable Power of Attorney, a Living Will, and a HIPAA Waiver.
If you do not have Powers of Attorney and you become incapacitated, then someone who wants to be make decisions for you will have to apply to a court to be named your guardian or conservator. This process may take days or weeks, and multiple people may apply to be named guardian or conservator. This will make the process last longer and cost more.
Without a HIPAA Waiver, your medical providers will be under no obligation to provide your medical records or information about you to your loved ones. In fact, your medical providers may have the obligation to not provide any medical records or information.
Without a Living Will, then no decision may be made without a court order regarding end-of-life decisions, such as whether to “pull the plug” if there is not hope for your recovery.
A Financial Power of Attorney is an informal name for a General Durable Power of Attorney. This document grants authority to someone that you choose to make financial decisions for you if you are ever disabled. Your Agent immediately gains this authority once you are determined to be incapacitated.
A Medical Power of Attorney is a document that grants authority to someone that you choose to make medical decisions for you if you are ever disabled. Your Medical Agent immediately gains this authority once you are determined to be incapacitated.
A Living will is a document that governs “end-of-life” scenarios, such as when you are completely dependent upon artificial means to sustain life and there is no chance for recovery. A Living Will states, for your doctors to follow, whether you want these artificial means to be terminated.
A HIPAA Waiver is a document that states to your medical providers the names of individuals that you want to grant access to your medical records. This document allows your Medical Power of Attorney, family members, or whomever you desire to know your medical diagnosis and treatments.
A Standalone Retirement Trust (SRT) is a special type of trust. A standalone retirement trust, (SRT) for short, is a trust used to provide asset protection and maximized tax deferred growth for spouses, children, and other loved ones. This means more assets go to the people you care about.
The SRT is popular and can benefit you and your loved ones because it:
- Protects inherited retirement accounts from beneficiaries’ creditors as well as predators and lawsuits
- Ensures retirement accounts go to whom you designate – and nobody else
- Allows for experienced management and oversight of assets by a professional trustee
- Prevents beneficiaries from reckless spending or gambling
- Enables proper planning for a special needs beneficiary
- Permits you to name minor beneficiaries as immediate beneficiaries without court-supervised guardianship
- Facilitates generation-skipping transfer tax planning
An irrevocable trust is a type of trust in which assets are transferred out of the your estate into the name of the trust. You, as the person who established the trust, cannot alter, change, modify, or revoke this trust after execution. It’s irrevocable and you usually cannot be in control. Irrevocable trust assets have increased asset protection and are kept out of the reach of creditors. Taxes are often reduced because, in most cases, irrevocable trust assets are no longer part of your estate.
An LLC offers the liability protection of a corporation and the taxation structure of a partnership. Liability protection prevents you from being personally liable for any liability arising from your business and vice versa. Because an LLC is taxed as partnership, business income is taxed as personal income and not subject to the corporate double taxation.
To form an LLC in Colorado, you need to first file Articles of Organization with the Colorado Secretary of State, and then file for an Employer Identification Number with the IRS. While these are steps that can be done on your own, I would advise you to discuss starting your business with me beforehand to develop a comprehensive strategy.
A C-Corporation offers two major advantages: liability protection and scalability. A C-Corporation protects you from liability arising from your business so that creditors or judgment-holders do not easily reach into your personal assets. A C-Corporation is scalable in the sense that many large corporations are C-Corporations. They have very sophisticated governing procedures that are appropriate for large corporations.
An S-Corporation offers you an advantageous tax structure if you are working your business yourself and within a certain range of corporate income. For a more detailed conversation, I advise you to meet with me to discuss whether you want to form an S-Corporation.
The decision to create a partnership or any form of business entity is a multi-factored decision. Please contact me to schedule an appointment to determine if a partnership is the right structure for you.
Forming an LLC and Corporation are relatively similar. You need to file your business with the Colorado Secretary of State and also receive an Employer Identification Number with the IRS. You should also draft an Operating Agreement for an LLC or Bylaws for a Corporation and issue Membership Certificates for an LLC or stock for a Corporation. There are other documents that you should also develop, such as policies and procedures, contracts, employee manuals or Independent Contractor Agreements, and others.
You have two overarching considerations, that is are business and legal considerations. For the business considerations, you need to look objectively at your business idea, business development plans, investments, capital, management, and other factors. You must be able to objectively see a roadmap to profitability. For the legal consideration, you need to make sure that you have selected the best business entity properly filed your organizational documents and received an Employer Identification Number, and drafted the most appropriate management and ownership documents. As a business law attorney, I can help you with these considerations.
The first action that you need to take is discuss your plans with a business attorney and your accountant. There are multiple methods to sell your business, and each require different preparations and structures before you sell your business. Speaking with me and your accountant will help you know what you need to do to be best prepared to sell your business, make the most profit from the sale, and make the sale as smooth as possible.
Among other options, you can sell your business to a partner, a local competitor, an interested person that you do not know, your management team, and your employees. You can pass your business on to your children or other family members. You can also decide to take your company public or even simply let your business simply stop functioning. There are other options to transitioning out of ownership of your business, and I would invite you to meet with me to discuss what option is the best for you and your business.
That is certainly an option! First of all, you of course want to verify that your children are interested in running the business after you give it to them. You will then want to determine how you want to transition ownership to them, whether as a sale, a type of gift, or as part of your estate plan. Each of these options will look and function differently from each other.