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Articles Posted in Estate Planning

While taking out a life insurance policy always seems like a good idea at the time, your life circumstances can change such that continuing to pay premiums no longer makes sense. For example, if you do not have dependents, or if your dependents would not face financial hardship if you passed away without a life insurance payout, it may not be the best move to hang on to your life insurance policy. Assess if your family can keep up with payments such as a mortgage, student loans, and car payments without harming their standard of living. In addition, you may not be able to afford to pay your premium any longer. If you cannot afford to pay your premium, selling your policy may be an attractive alternative to simply letting it lapse, depending on the value of your policy.

But a life insurance policy that no longer makes sense for you and your family may not be worthless. Instead of letting the policy lapse or expire, consider selling your life insurance policy. In a life settlement, you can transact on the secondary market with investors to sell part of or all of your life insurance policy for cash. Payouts can vary significantly, so selling may not make sense in all circumstances. Speaking with a financial advisor can help you assess all of your options.

Do I Qualify to Sell My Policy?

If you are over the age of 65—and especially over the age of 70—or have had a recent unfortunate change in health diagnosis, you are more likely to find a buyer for your policy. High-value policies, such as those with a death benefit payout of at least $100,000, and policies issued by well-rated life insurance companies are also most attractive to investors. Policies with flexible or low premiums, to minimize payments the investor will have to make on the policy, are also preferred.

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Many people cannot imagine their families going to battle in court over the terms of their will after their passing. But it is an unfortunate reality that grief and probate can bring out the worst in people. Litigation over an estate is all too common. One significant source of this can be deathbed gifting or the practice of giving large gifts of assets and property to intended heirs in an individual’s final days. While many people think this might be a good idea because it helps the asset stay out of the probate process and out of the courts, that can be a mistaken belief.

Why Avoid Deathbed Gifting

One substantial reason to avoid deathbed gifting is that it can result in heated litigation. Last-minute and end-of-life gifts can raise a lot of questions. Taking the time to think through the worst-case scenario can help avoid a costly mistake later down the road.

For one, these assets are often already accounted for in an aging individual’s last will and testament. While gifts typically supersede the terms of a will, the circumstances surrounding a large gift can be murky. The person who received the gift may have a difficult time proving the existence of the gift or the intention of the gift giver. And if the original beneficiaries of the asset are not the ultimate gift recipient, tension can arise.

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Unfortunately, Colorado ranks only 42nd in the country for pediatric mental health. This indicates a lack of access to mental health care for children in Colorado and an unawareness of services available. If you have a child or teen with mental health needs, you know how important high-quality mental health treatment and care can be for your family. But if your income falls above a certain level, you may be worried that using Medicare or Medicaid to cover your child’s needs takes advantage of the system.

There are several benefits, however, to using these benefits that extend beyond employer-covered insurance. These programs are designed to improve access to care beyond what is generally accessible, and it is not taking advantage to make sure your children get the best care available.

Another common misconception is that Medicare and Medicaid are only for physical illnesses or conditions. But they both offer services to people in need of behavioral and psychiatric health care. Although there are limits, copays, and lifetime maximums, these resources can help bridge the gap between the care your child or teen needs and the care currently available without access to public benefits.

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Many people cannot imagine their families going to battle in court over the terms of their will after their passing. But it is an unfortunate reality that grief and probate can bring out the worst in people. Litigation over an estate is all too common. One significant source of this can be deathbed gifting or the practice of giving large gifts of assets and property to intended heirs in an individual’s final days. While many people think this might be a good idea because it helps the asset stay out of the probate process and out of the courts, that can be a mistaken belief.

Why Avoid Deathbed Gifting?

One substantial reason to avoid deathbed gifting is that it can result in heated litigation. Last-minute and end-of-life gifts can raise a lot of questions. Taking the time to think through the worst-case scenario can help avoid a costly mistake later down the road.

For one, these assets are often already accounted for in an aging individual’s last will and testament. While gifts typically supersede the terms of a will, the circumstances surrounding a large gift can be murky. The person who received the gift may have a difficult time proving the existence of the gift or the intention of the gift giver. And if the original beneficiaries of the asset are not the ultimate gift recipient, tension can arise.

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Every family should consider the impact of taxes on their assets when making important decisions. High net-worth individuals and families, however, know they should especially consider relevant tax laws before making big estate plan or asset management changes. But staying on top of the ever-changing task landscape can be tricky. Even small changes year over year can lay the foundation for tax-saving opportunities—or pitfalls. A skilled estate planning attorney can help clients with substantial estates plan for these changes and nuances while considering the potential impact of laws on the value of the estate.

For example, the IRS announced it will raise the estate and gift tax exclusion limit in 2023. Individuals can gift up to $12.92 million to their heirs and beneficiaries, an increase from $12.06 million in 2022. Combined limits for married couples will be nearly $26 million in 2023.

Tax-free gifts also see a higher annual limit for 2023. Individuals can give away $17,000 per recipient without reducing the lifetime exclusion, a $1,000 increase from $16,000 in 2022. These adjustments are a routine part of the IRS’s annual inflation adjustments.

Many people hear “probate” and immediately think of hassle, expense, and delays. While many estate planning fears are unfounded, probate proceedings can be just as daunting as they seem. Individuals may seek to avoid probate and make the process easier on their families and loved ones.

One way to avoid probate is through trusts, which are similar to wills but take effect while the benefactor or trustee is still alive. A living trust can avoid probate through the following steps: an individual makes a trust document and names a trustee that will take effect after the individual’s death. Before death, the individual creating the trust is the trustee, and will transfer ownership of the property in question to the trust. Upon your passing, the trustee you’ve named will be able to transfer the property to the trust’s beneficiaries and avoid probate.

But trusts are not the only way to avoid probate in Colorado. Read on for other mechanisms you can use to avoid probate. An experienced estate planning attorney can help determine whether any of these tools will be useful to you and your family to fit your unique needs.

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Contemplating post-life options is an essential part of any Colorado estate plan. While addressing these issues can elicit discomfort, establishing a solid and legally sound plan also provides peace and comfort to the planner and their loved ones. Individuals planning for the disposition and transfer of their assets must address their funeral and burial arrangements.

Generally, burials or cremation are the two leading options for the disposition of remains. In many situations, religion, family history, and finances are some of the foremost considerations in selecting one’s final resting place.

In many states, the only options are burial, cremation, and donation. However, Colorado is one of the first states to permit a third environmentally conscious option: human composting.

What is Human Composting?

Human composting, sometimes known as natural organic reduction, refers to the accelerated decomposition of human remains by organic processes. In essence, human composting converts the human body into soil with the intent of fertilizing the environment.

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The probate process in many states can be complicated and stressful for the families of individuals who have recently passed. Thankfully, a skilled estate planning attorney can do much to help individuals and families avoid these headaches, including setting up trusts to keep some assets out of probate and drafting clear wills and other beneficiary designations. Still, many individuals do not have an estate plan or fail to have an updated and comprehensive estate plan. Unfortunately, this lack of foresight can enable disputes, even if you believe your assets to be clearly designated. Even families that get along harmoniously can act out of character in the presence of grief and finances.

According to a recent article, these family disputes are unfortunately all too common. An adult child of divorced parents recently posted to a message board that their father is ill and would likely pass soon. The adult child’s mother, who divorced from the child’s father over 20 years ago, when the child was just a teenager, has told the child she believes she is owed a stake in her ex-husband’s assets. The child stands to inherit enough money to help purchase a home, but the mother is asking for a piece of the inheritance because she asserts she did not receive enough money in the separation agreement.

Fortunately, divorce settlements are difficult to reopen in the United Kingdom, where the writer is located. And if their father has a well-drafted and clear last will and testament and estate plan, it is unlikely the mother’s claim holds water. This story, however, goes to show one of many ways families can squabble over inheritances when the time comes.

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Many clients, including high-net-worth individuals, often worry about the impact of taxes on their estates. Tax laws change regularly with the political landscape, and frequent updates to tax shield strategies should be considered. The 2017 Tax Cuts and Jobs Act protected estates with a number of tools to shield and exempt against taxation. However, this law sunsets, or expires, at the end of 2025. One tool enabled by the law is the creation of a Spousal Lifetime Access Trust, or SLAT, designed to transfer assets between spouses in a way that protects against tax liability. Read on for more on SLATs and how you can take advantage of these estate planning tools now.

What is a Spousal Lifetime Access Trust?

A Spousal Lifetime Access Trust (SLAT) is an irrevocable trust, which means the grantor or creator of the trust cannot change or end the trust after creating it. In a SLAT, one spouse—the “donor spouse”—creates the trust for the benefit of the other spouse, or “beneficiary spouse.” The spouse does this by using their gift tax exemption, which is an amount that varies each year, to fund the trust with a gift. The property or assets placed in the trust are then accessible by the beneficiary, though multiple structures exist that can allow children or grandchildren to benefit. The funding of the trust up to the gift tax exemption cap allows the trust to avoid probate and estate taxes, preserving value for the grantor’s family and beneficiary.

Protecting Your SLAT

In 2022, the maximum possible gift tax exemption is $12,060,000. This means a spouse could fund a SLAT in this amount without that portion of their estate is taxable. The assets should not be jointly owned by both spouses. If the assets appreciate in value, that appreciation is also considered outside of your taxable estate. The SLAT assets could also continue to grow tax-free if not distributed or withdrawn by the beneficiary spouse, which could then go to the next generation if also named as current or remainder beneficiaries.

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Less than 46% of Americans surveyed by Gallup in 2021 had a will. This number is shocking—not having estate planning documents can cost your loved ones thousands in legal fees, not to mention family strife and arguments. Or, if you and your family are some of the 54% with plans in place for the future, when was the last time you revisited and updated your estate planning documents? Outdated documents may also cost your family in time and money.

A person without—or with outdated—estate planning documents may not be fully protected. Tax season is a great time to revisit existing estate plans or think about establishing new ones. Why? Tax season serves as a natural (and government-imposed) check on your assets and liabilities. Changes in yearly earnings or the sale and acquisition of significant assets can have big tax implications and big implications on what you may want to reflect in your estate planning documents.

Changes to Watch Out For

In 2022, many individuals are finding that investing as a hobby is easier than ever. Investments can fluctuate in value, and estate planning documents should account for big windfalls or substantial losses. In the same vein, cryptocurrencies are beginning to become a more mainstream investment for many individuals. However, cryptocurrencies require private keys to access. Estate plans should include instructions for accessing cryptocurrency portfolios to avoid losing assets to a misplaced password.

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