Frequently Asked Questions
about Estate Planning in Colorado
What is Joint Tenancy with Rights of Survivorship?
This is the most common form of asset ownership between spouses. Joint tenancy has the advantage of avoiding probate at the death of the first spouse. However, the surviving spouse should not add the names of other relatives to their assets. Doing so may subject their assets to loss through the debts, bankruptcies, divorces and/or lawsuits of any additional joint tenants.
What is a Will?
The document a person signs to provide for the disposition of assets titled in one's name after death. Wills do not avoid probate. In fact, wills guarantee probate in most cases. Wills have no legal effect until the willmaker dies and the original will is delivered to the Probate or District Court. Wills are often not the best way to dispose of assets at death. In most cases, wills have no impact on certain assets, such as IRAs and other retirement plans.
What is a Living Will?
Sometimes called an Advance Medical Directive, a living will is not a will at all. It is a document which allows you to state your wishes in advance of your death regarding the life support measures you prefer to have, or have withheld/withdrawn if you are in a terminal condition which is irreversible and cannot express your wishes yourself at that time. Oftentimes a living will is executed along with a Durable Power of Attorney for Health Care, which gives your designated agent legal authority to make your health care decisions when you are unable to do so yourself.
What does Intestacy mean?
If you die without even a Will (intestate), the legislature of our state has already determined who will inherit your assets and when they will inherit them. You may not agree with their plan, but roughly 60 percent of Americans currently use it.
What are Beneficiary Designations?
You may avoid probate on the transfer of some assets at your death through the use of beneficiary designations. Laws regarding what assets may be transferred without probate (non-probate transfer laws) vary from state to state. Some common examples include life insurance death benefits and bank accounts.
What is a Durable Power of Attorney and when do I need one?
These allow you to appoint someone you know and trust to make your personal health care and financial decisions even when you cannot. If you are incapacitated without previously implementing these legal documents, then you and your family will be involved in an unnecessary probate proceedings known as a guardianship and conservatorship. These otherwise avoidable court proceedings allow a judge who does not know you or your wishes to determine who should make financial and health care decisions for you under the ongoing supervision of the court.
What is a Revocable Living Trust?
A revocable living trust is a substitute for a will that goes much further than the impact of a will. There are four primary benefits provided by a revocable living trust as compared with a will:
- The avoidance of the court probate process after death.
- Maintenance of privacy of one's financial affairs.
- Time savings in the administration and settlement of the trust.
- Cost savings in the administration and settlement of the trust.
In addition, a well-drafted revocable living trust enables a selected trustee to manage the assets in the trust in the event of incapacity of the maker of the trust. It is also more difficult to initiate proceedings to contest the trust as opposed to filing a caveat in an existing proceedings.
When utilizing a revocable living trust as the centerpiece of an integrated, comprehensive estate plan in Colorado with proper funding of the trust, an astute individual can provide for the management of all of his or her assets during their lifetime, dispose of all assets in a coordinated fashion after death of the trust maker, and select trustworthy persons to implement his or her wishes under all circumstances.
Who Should Have a Revocable Living Trust?
An individual or a couple with more than nominal assets should seriously consider the use of a revocable living trust as the centerpiece of their estate plan. Not only does a revocable living trust avoid probate, it also maintains your financial privacy and minimizes the cost of time involved in administering one's assets after death.
In situations where real estate is owned in multiple states, a revocable living trust is virtually a necessity, as probate proceedings can be avoided in multiple states. Those who wish to implement a comprehensive estate plan through the use of a revocable living trust, coupled with ancillary documents, such as financial and health care powers of attorney, generally do themselves and their loved ones a great service.