Frequently Asked Questions
ESTATE PLANNING
What is a will?
A will is a document which allows you to leave your property at death to the people or charities you wish. It also names guardians for your minor children, trustees for any trusts you create, and your personal representative. A will can be typed and signed by two witnesses and a notary or can be holographic (entirely handwritten).
What happens if I do not have a will?
If you do not have a will, your "probate property" (the assets in your own name) will be distributed according to intestate succession which is the pattern of distribution found in the Colorado statutes. The statutes have been changed to reflect the demographic reality of second marriages, step families, and longer living parents.
What is a Fiduciary?
Personal representatives, guardians, trustees, and conservators are all fiduciaries. They have many powers but are subject to certain duties as set forth in the Colorado statutes. A personal representative handles your affairs for the six to twelve months after your death. A guardian is the person with whom your minor children live. The guardian is responsible for the upbringing of your children or a disabled person. A trustee manages the assets in your trust. For example, if your will establishes a trust for your children, the trustee would invest and distribute these assets. A trustee may be the same person as the guardian or may be different. A conservator is a person appointed by the court to manage assets for a minor child or disabled person if you have not named a trustee.
Do all assets pass by my will?
No. Property which passes by a will is called "probate property." Probate property consists of the assets titled in your own name with no beneficiary designation. Property which does not pass by a will is called "non-probate property." The four major kinds of non-probate property are life insurance, retirement plan accounts, trusts, and property owned in joint tenancy. Life insurance proceeds are paid to a named beneficiary and generally do not pass by the terms of a will. Retirement plan benefits are paid to a named beneficiary or beneficiaries. Retirement plans include IRAs, 401(k) plans, SEP plans, profit-sharing plans, and pension plans. Property owned in joint tenancy passes automatically by operation of law to the surviving joint tenant. Both real property and personal property, such as a bank account, can be placed in joint tenancy. For example, if you own your fishing cabin in joint tenancy with your friend George, and your will states you leave your cabin to Beth, the cabin will pass to George. Joint tenancy is different than tenants in common. Property owned as tenants in common passes by a will. In this example, if the cabin is owned as tenants in common with George, and your will states you give the cabin to Beth, your one-half interest will pass to Beth. A trust is an entity in which a trustee holds title to certain assets and manages them for the benefit of another. When a trust is created, it states who will receive the property and when the trust will end.
What is a revocable trust?
There are three situations where the use of a revocable trust makes sense. First, to avoid probate. For example, if you own property outside Colorado, ancillary probate (probate in another state) can be avoided by holding the property in the name of a revocable trust. Second, if you think you may get to the point where you do not want to or cannot manage your assets, a revocable trust is a good idea. It can be a useful tool for managing assets in the event of dementia. Third, a revocable trust is used for privacy reasons. A revocable trust generally does not have to be filed with the court.
Additional estate planning documents
Complete estate planning includes documents that are used during your life. These include advance directives regarding your wishes for medical care and financial needs in the case of potential disability. 1. A financial power of attorney is a document in which you name another person to act on your behalf for legal and financial matters. By appointing an agent, you can avoid a court procedure to appoint a conservator. The power of attorney may be broad (that is to allow your agent to do all acts) or limited. 2. A medical power of attorney names another person to act on your behalf for medical decisions. It can be a simple appointment of an agent to make all decisions, or it can be customized. 3. A living will is a directive not to be kept alive by artificial life support systems if you are in a persistent vegetative state or have a terminal condition. In Colorado, a doctor is required to follow the directive. The Colorado statute regarding living wills addresses the withholding of both life support systems (respirator, heart machine, etc.) and food and water. 4. You may provide that any part of your body be used for transplant or research. This can be accomplished by signing the organ donor instructions on the back of your driver’s license. 5. You may wish to leave written instructions regarding your burial wishes.
Can I disinherit my spouse?
Not completely. If you do not give your surviving spouse adequate assets in your will, he or she has the right to "elect against the will." The amount the spouse will receive depends on the length of your marriage and the value of property that each of you owns. You can change these rights by a prenuptial or postnuptial agreement.
Can I disinherit a child?
Yes. If you have a will, a child can be disinherited, that is, left nothing in the will. In rare cases, a child may have a right to "elect against the will" (for example, if it appears that you did not know about a child or if the child was born after the will was signed).