Q & A
An estate plan is a set of legal documents that stipulate the management and disposition of property during life and upon death. Having an estate plan in place enables the people you trust to have immediate authority to step in and handle the situation. Some of the documents are used during your lifetime during different emergencies to ensure that your finances and medical care are handled by the individuals you trust; other documents ensure that your assets are distributed according to your wishes to the people who you specify. An estate plan typically includes the following documents:
- Living will
- General power of attorney-property and financial matters
- Medical durable power of attorney-health care decisions
- HIPAA release
- Burial instructions
- Guardianship documents relating to minor children
- A trust (in some, but not all, cases)
Without an estate plan, Colorado’s intestate succession laws will determine how your property will be distributed and court proceedings will determine who will be named guardian of any minor children. Who takes care of your children who are under age 18 will be determined by the Colorado courts. Other court processes, like guardianships or conservatorships, may occur during your lifetime to empower people to handle your affairs if you were unable to manage things for yourself. Probate processes vary by state. The Colorado costs time and money. Any time an impersonal bureaucratic body makes life-altering decisions regarding a family or a person’s estate it can create serious disruptions and lead to strained or severed relationships.
Your role is multifaceted and may feel overwhelming. Because every estate and trust administration and probate process is unique, it’s important that all circumstances be carefully reviewed. It’s also necessary that all legally-mandated duties and court and filing processes are adhered to in order to avoid risks associated with legal liability.
Generally, the executor (also known as a personal representative or administrator) is responsible for a wide range of responsibilities, including-but, perhaps, not limited to-locating original estate plan documents, making necessary court filings and appearances, notifying and making distributions to beneficiaries, and managing the deceased’s property, including making an inventory of all assets, paying debts, filing tax returns, and notifying all applicable government agencies, banks and financial representatives, insurance, credit card and utility companies.
A trustee has the additional duties of administering the trust estate, including collecting, preserving, protecting and investing, and allocating and distributing trust assets.
A will is a declaration of your wishes regarding the disposition of your property upon your death. A will may be revoked and amended during life.
A trust determines how your property is to be managed and distributed during your life and upon your death. There are numerous types of trusts and they may be set up to manage assets for your children upon your death. Revocable trusts may be revoked or amended during life.
What is a general durable (financial) power of attorney and medical durable power of attorney for health care decisions?
A general durable power of attorney allows you to name an agent to make financial decisions on your behalf, if you are unable to do so. Similarly, a medical durable power of attorney for health care allows you to name an agent to make health care decisions on your behalf, if you are unable to do so.
Although it is true that the federal government can assess a 40 percent estate tax on the portion of your estate that exceeds your unused federal estate tax exclusion amount, this has little impact on most estates because of the dramatic increase in the estate tax exemption over the past decade.
Effective as of January 1, 2018, the federal estate tax exemption, gift tax exemption and generation skipping transfer tax exemption amounts increased to $11,200,000 for individuals and $22,400,000 for married persons. This means that for a single person who dies in 2018, the total value of the estate must exceed $11,200,000 before being impacted by federal estate taxes; for a married person, the total combined value of the couple’s estate must exceed $22,400,000.
The exemption amounts are scheduled to increase annually, based upon inflation, until 2025. In the year 2026, the exemption amounts are scheduled to revert back to the exemption amounts in place in the year 2017 levels, subject to inflation adjustments. Effective as of January 1, 2018, the maximum federal estate and gift tax rates remained at 40%.
The annual gift tax exclusion amount increased from $14,000 to $15,000 for 2018.
We understand that cost can be a concern. In most cases, our estate planning services are priced at a flat fee-meaning that you’ll know all costs up front and they won’t change. Our fees are also competitive for Denver-area estate attorneys.
It’s most important that you partner with an attorney that you trust and connect well with. Contact us today for a free initial consultation and we’ll review everything, including estimated costs, together.