COVID-19 Update: You can do Your Planning From Home

It’s that time of year again: As the snow moves in, another year is on its way out. Although you may find yourself busy with holiday gatherings and the multitude of outdoor activities that Colorado has to offer each winter, it is also an important time to check in on your estate plan.

Here are some of the main areas of estate planning to review in 2021.

Tax Exclusions

The unified tax credit allows people to transfer portions of their estate without incurring federal gift or estate taxes.

Continue Reading

Recent surveys show that fewer than half of all U.S. adults have a will, let alone a complete estate plan. While those in the minority may rest easier at night, they may still forget an important piece of effective estate planning.

Put simply; it is not enough to draft a will and be done with it. Instead, it is essential to review and update your estate plan at least every few years, as well as whenever you experience a major change in life circumstances.

Whether you have a simple will in place or a more comprehensive estate plan, such as planning documents for end-of-life medical care and documents pertaining to the care of your children should they become orphaned, there are several reasons why you should consider reviewing and updating your plan on a regular basis.

It’s that time of year again: As the snow moves in, another year is on its way out. Although you may find yourself busy with holiday gatherings and the multitude of outdoor activities that Colorado has to offer each winter, it is also an important time to check in on your estate plan.

Here are some of the main areas of estate planning to review in 2021.

Tax Exclusions

Over the past several months, the U.S. Congress has been considering tax legislation that could drastically change the face of estate planning.

Versions of the Build Back Better bill have included provisions to trigger capital gains tax on a regular basis for assets held in trusts, upon death, and when making a gift. Congress also considered dramatically reducing the unified tax credit, which would have restricted the reach of grantor trusts as an estate-planning tool.

But the bill in its current form does not impact the estate tax system directly. Where does this leave Coloradans who have made changes to their estate plan in response to this legislation?

Digital assets have necessitated major changes to estate-planning techniques. Once just a small pocket of the market, the now trillion-dollar-plus crypto market has yielded significant wealth for many individuals and families. For these families, the need to safely secure, transfer, and gift this new type of asset is critically important. Evolving estate planning techniques can help families manage their digital assets effectively to ensure they are neither lost nor devalued as they pass to the next generation.

Protecting Crypto Assets from Loss and Theft

Estate planning can help crypto holders keep their digital assets safe and secure. Cryptocurrency can be purchased, sold, and used through the use of a private key, which is essentially a password known primarily to the owner of the digital currency. Because cryptocurrency can be accessed and manipulated through the use of a password, it is vulnerable to both loss and theft. A fiduciary can help crypto holders maintain their private key in a manner that is safer than storing it personally.

Continue Reading

As a homeowner, you undoubtedly work hard to take good care of your property. This includes things like regular maintenance and repairs. But an often overlooked part of being a responsible homeowner is planning for the future of your property after your death. This includes estate planning.

Fortunately, unlike home maintenance and repairs, planning for the future of your home after your death can often be accomplished in a one-and-done fashion. One legal instrument available to Colorado property owners is the transfer on death (TOD) deed. As its name suggests, the TOD deed is a tool that lets someone designate one or more beneficiaries—often a relative or close friend—to obtain the title to their property immediately upon their death.

Importantly, the TOD deed allows the future owner to skip the probate process entirely. In addition, the passing of title to the new homeowner is not considered a gift, meaning that the gift tax should not apply to the transaction.

Members of the U.S. Congress recently proposed a striking $3.5 trillion spending plan that, if passed, would be funded largely through a significant tax overhaul. Here is what Colorado residents need to know about the tax increase proposal as it currently stands.

Reduction in the Unified Credit Amount

Effective in 2022, the current proposal halves the estate and gift tax exclusion. This change essentially reverses the Tax Cuts and Jobs Act’s recent change to the exclusion and will affect Coloradans with large estates.

For many people, discussing end-of-life costs can be uncomfortable and emotionally daunting. However, despite the discomfort, it may elicit, having a secure and legally sound plan can provide individuals and their families with peace and security. Colorado estate planning attorneys can provide families prepare for the costs associated with dying.

There are many steps that individuals can take to ensure that their wishes are known and properly executed when the time comes. An attorney can assist people with creating and modifying wills and other estate documents to address any concerns and head off any potential issues. Many of the issues involve paying for probate proceedings, bank transfers, and funeral costs. Further, after a loved one’s death, there are many institutions and agencies that must be notified. For instance, families should contact an attorney to discuss how to address loose ends regarding insurance proceeds, Social Security, retirement accounts, car loans, mortgages, and credit card debt.

After one dies, a probate court works to validate their will and confirm the appointment of the deceased’s requested executor. The court can work with the parties’ attorneys to identify assets and liabilities and address any tax issues. Further, specific accounts, such as those held as joint tenants with the right of survivorship, may avoid probate proceedings. However, banking institutions may require substantiating documentation. In other situations retitling, accounts and assets may be more challenging and have specific tax implications.

Thoughtful estate planning can help prevent conflict among surviving family members. It can also save families the hassle of Colorado probate court, which can be a costly process involving significant delays in the distribution of assets.

Often, a lack of communication is at the root of familial estate-planning conflict. The following examples demonstrate this principle.

First, consider the case of siblings who, unbeknownst to them, will be tasked with determining the distribution of their parent’s estate. Although parents almost always have the best intentions when adding these types of provisions to their will, these provisions often come as unwelcome surprises because they require siblings to reconcile differing opinions, preferences, and financial situations. Instead, parents can consider identifying their children’s preferences ahead of time and working with a planning attorney to create a will that balances those preferences as much as possible.

Estate planning is a serious and complex area of the law, and hiring a Colorado estate planning attorney is essential to creating binding and legally sound documents. One misstep in drafting or executing these documents can completely change the intent of a will or trust. Colorado state laws are complex and require a thorough understanding of procedural and statutory laws. Further, while the Constitution explains that states should recognize legal documents, some states do not honor documents drafted in accordance with other states’ laws. An attorney can help individuals ensure that their documents meet the applicable state laws.

Generally, Colorado estate plans involve four primary documents, the will, power of attorney, health care directives, and a living trust. These documents affect various aspects of a person’s wishes, and individuals should review their circumstances and create these documents regardless of economic standing.

One of the most demanding parts of Colorado estate planning is gathering all vital documents. This includes vehicle titles, property records, insurance provider contact information, and original documents and certificates. An attorney can help parse out these documents, determine which documents are necessary, and provide guidance on retrieving missing documents. Further, estate planning lawyers can complete and execute a person’s last will and testament and living trust.

Justia Lawyer Rating
Super Lawyers
Colorado Bar Association
Wealth Counsel
Avvo
Avvo
NAELA
SCInstitute
Boulder County Bar Association
Contact Information