Boulder Estate Planning Legal Blog

Can Colorado Trust Beneficiaries Remove a Trustee?

March 10, 2023 | by Braverman Law Group

Family trusts can offer a lot of advantages, including tax advantages and benefits from long-term care planning. However, it is not uncommon for there to be disputes and conflicts between trustees and beneficiaries. When such disputes arise, there may be a time when you consider whether a trustee needs to be removed and you may be wondering what this entails.

Understanding the Terms

As a quick review of some essential terms, the person who creates a trust is called a trustor, grantor, or settlor. A family trust is created when the trustor and the beneficiaries of a trust are members of the same family. A trust agreement is the legal document that sets up a family trust, and the agreement typically designates an initial trustee or two or more initial co-trustees. The trust agreement also designates one or more successor trustees in the event that the initial trustees are no longer able to serve (i.e. in cases of death, removal, or resignation). The trust agreement should include the circumstances under which a trustee may be removed by the trustor.

Understanding How Removal Works in a Revocable Trust

It is important to note that the removal of a trustee is governed both by the trust agreement and by state law. When looking at a trust agreement, in a revocable trust, the trustor may amend the trust agreement in order to remove a trustee. Trust agreements typically allow the trustor to have the ability to remove a trustee, and this may be done at any time and also may be done without the trustee giving a reason. However, in an irrevocable trust, the trustor cannot remove a trustee.

Should “Swedish Death Cleaning” be a Part of Your Estate Plan?

February 21, 2023 | by Braverman Law Group

All cultures worldwide have different rituals and traditions pertaining to the end of one’s life. As the radius of influence between cultures is shortened by technology and migration, some of the death traditions of all cultures become available for discovery and possible adoption. The Swedish practice of döstädning, or “death cleaning,” could help American and Colorado families to ease the burden on loved ones when someone passes away.

Death cleaning, while it may have a morbid-sounding name, is truly a service that is done by someone approaching the end of their life to help ease their heir’s difficulties in managing the estate. Swedish author Margareta Magnusson, author of the popular book, “The Gentle Art of Swedish Death Cleaning: How to Make Your Loved Ones’ Lives Easier and Your Own Life More Pleasant,” explained that the practice stems from the Scandinavian values of simplicity and minimalism. Death cleaning involves going through one’s personal effects and belongings and handling their disbursement or disposal before one’s death.

Death cleaning can benefit both the aging person as well as their heirs and beneficiaries. The work of managing a deceased loved one’s estate can be physically and emotionally taxing. Grieving family members are often forced, while under emotional distress, to decide what items are important and what can be disposed of or donated. Through the practice of death cleaning, an aging person can make some of these decisions themselves, helping their heirs make remaining decisions after their death. Studies have shown that minimalist practices, including death cleaning, can also have a positive effect on the mental health of the person going through their belongings. The act of organizing and cleaning in anticipation of death can be both sentimental and cathartic, possibly improving the cleaner’s quality of life for the last few years and months.

How to Take Advantage of the 20% Pass-Through Tax Deduction for Rental Properties

February 10, 2023 | by Braverman Law Group

In 2017, the US Congress passed a bill known as the Tax Cuts and Jobs Act, which was signed by the President and has since become law. The Act modifies the tax code in various ways, generally reducing the amount of taxes that American business owners are required to pay annually. Part of the Act includes a 20% pass-through tax deduction on rental property business income. This deduction could make a significant difference in the tax burden for landlords who operate their rental properties as a business.

According to an article recently published by a financial advising trade publication, taking advantage of the deduction may not be simple for all Colorado landlords. The deduction requires landlords to own the property personally or through a business entity such as an LLC. Additionally, the properties must be managed as a “business” and not as an investment. Although the exact requirements for a property to be managed as a business are not clearly laid out, landlords who meet certain requirements laid out by the IRS can ensure that they are able to use the pass-through deduction.

The IRS has established a “safe harbor” rule that allows Colorado residents and other Americans to utilize the pass-through deduction if they keep separate books for their rental properties and can show that at least 250 hours of real estate rental services are performed on the properties each year. The 250 hours do not need to be performed personally by the taxpayer and can include services such as maintenance, cleaning, lease preparation and negotiation, advertisement, collecting and processing rent, as well as other work performed on the business.

SECURE Act 2.0 Changes for Federal Retirees

February 8, 2023 | by Braverman Law Group

On December 29, 2022, the SECURE 2.0 Act was passed in an effort to make retirement planning easier for federal retirees. The Act, however, contains myriad provisions and may be difficult to comb through for someone looking to adapt their retirement plans to take advantage of the more lenient new rules. Staying abreast of legislative changes to retirement requirements and benefits can help ensure there are no surprises when the time comes to begin withdrawing retirement funds. And knowing how to plan around certain requirements during early retirement planning can ensure your nest egg is as large as it needs to be to meet your needs when your retirement day approaches.

Required Minimum Distributions Changes

Many of the SECURE 2.0 Act’s new provisions are around required minimum distributions or withdrawals that must be taken from certain retirement accounts, such as traditional IRAs or Thrift Savings Plans, when the account holder reaches a certain age. These rules stand to make sure retirement accounts are not used as wealth transfer vehicles but are instead used by a retiree during their lifetime.

The act now delays the start age from 72 to 73 starting in 2023, and it will increase again to 75 in 2033. Financial planners caution that this may not be beneficial for tax purposes, though on its face, it seems more lenient. And for individuals close to these minimum ages, more time to plan and strategize could be a benefit. Always conduct a financial planner and your attorney when planning these withdrawals.

Don’t Let Your Life Policy Expire! It’s Worth Money!

January 22, 2023 | by Braverman Law Group

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.

Avoiding Litigation Over Your Colorado Estate

January 11, 2023 | by Braverman Law Group

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.

Your Child May Need Medicare and Medicaid to Cover Psychiatric Services

December 21, 2022 | by Braverman Law Group

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.

Avoiding Litigation Over Your Estate

December 7, 2022 | by Braverman Law Group

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.

IRS Raises Estate Tax Exclusion

November 25, 2022 | by Braverman Law Group

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.

Do You Need a Trust to Avoid Probate in Colorado?

November 15, 2022 | by Braverman Law Group

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.