Estate Planning Guidelines

You might need estate planning if:

Either you or your spouse have children from a previous marriage. When spouses have children by a previous marriage, one spouse’s children may get left out, or conflict may arise between the step spouse and the step children, between the children or between the parent. Do you have a current plan in place to prevent this and promote peace in your family?

You are self employed or own rental property. If you are self employed or have rental property, keep in mind that there is a significant time delay before a personal representative is appointed to care for rental property or your business in your absence. Essentially, there will be a period of time where your rental property and/or business have to go on “auto pilot”. Are you ready for this?

You have minor children. If anyone whom you wish to leave money is under the age of 21, they will be unable to inherit your money in Colorado without the Court appointing a Conservator to make decisions for the minor. If this occurs, Court costs can eat up a lot of a child’s inheritance. There is also the issue that money the minor may need to live on will be tied up for a lengthy period of time. Have you properly planned for your minors?

You or a close family member are terminally ill, have failing health or may become incapacitated. If you or a close family member are terminally ill or incapacitated, you will not be able to make decisions on behalf of yourself or the family member unless you plan ahead. If you have not dictated who can make decisions for you and when they can make the decisions for you, you are again doomed to the Court making that decision for you. Proper planning will avoid unnecessary spending on Court costs and you will be ensuring that the person you trust the most will be able to make decisions for you in the event that you are not able.

You have a taxable estate. The amount you can inherit free of taxes is currently scheduled to increase gradually until 2010, when ultimately, if there is no change in the current law, there will be no estate tax. Estate tax rates vary from 37% to 55%. They apply to both single and married individuals. With proper planning, you can easily avoid unnecessary estate taxes. Does your current plan allow you to do this?

You or a family member has a substance abuse problem. If you have a family member who is an abuser of drugs or alcohol, it is up to you to prevent your money, more commonly known as their inheritance, from being contributed to the local bar, liquor store or drug dealer. Does your current plan ensure that you will not be contributing to the problems of your loved ones?

You have a child who may not be responsible or is married to someone who may not be responsible. Do you have inheritance protection for a child who may be subjected to a spendthrift spouse, divorce, lawsuits, creditors or bankruptcy? Do you have a child who has a problem with shopping impulse control? If so, there is a way that you can control and minimize this risk through proper planning. Keep in mind that the average inheritance, regardless of the size, is completely spent within 18 months of receipt. Proper planning on your part can help to preserve your wealth for future generations and ensure that your hard earned assets are not blown unnecessarily.

You have an IRA or a 401(k) account. Retirement accounts are almost never coordinated with an individual’s estate plan, which could result in a tax problem. It is important to put the planning in place to ensure that these plans can continue to grow tax deferred for future generations to come.

You own joint tenancy property. If one joint tenant owner becomes mentally disabled, the property may become frozen. Property may also pass to unintended persons at death. Any person who ends up with the property after the passing of a joint owner may also find themselves inheriting a huge tax liability. You may also be exposing your property interest to unintended creditors. Proper planning will prevent this from happening.

You have a disabled child or are responsible for a dependent adult. Disabled children and dependent adults require special planning to ensure that they are not going to lose any public assistance or benefits that they are currently receiving. Are you putting someone’s government benefits at jeopardy?

You have a simple will in place now. Simple wills are not appropriate for everyone. Used improperly, a simple will can lead to major problems, including subjecting someone to unnecessary estate tax. Even a simple will may fail if you have not properly titled your property. Joint ownership may cause a will to fail. Are you sure that a simple will is right for you?

You have no planning in place. If you don’t have a will or a trust, the state of Colorado has written a will for you. Will your property pass to those whom you want to share it with? Will your estate be subject to litigation to decide who gets your property?

You have an old estate plan in place. The average estate plan has not been updated in 19.6 years. Consider all the changes in your life and in the law that have occurred over that period of time. Will you miss out on a planning opportunity by not keeping your estate plan up to date?