Why do I need a Will? A Will is a tool which coordinates your estate assets and determines how they will be distributed upon your death. Aside from being an overarching organizational tool, a Will ensures that your assets are distributed according to your wishes (rather than according to the statute, which is the default if no will is in place). If you have children, it ensures that they are provided for as you had planned. Although your Will is a coordinating and distributing vehicle, please remember that how your assets are titled (or the beneficiary designation on an insurance policy or an investment account) takes precedence over how the Will distributes them. Therefore, it's imperative that your Will designation be consistent with how your assets are titled.
Why do you recommend a Will over a Living Trust in Colorado? The probate system, which varies from state to state, is the single most important determining factor. In most states, probate is a time, money, and labor-intensive process. It typically ties up the assets indefinitely, requires a tedious accounting of receipts and disbursements, mandates that an estate inventory be filed, and involves a court hearing. Additionally, it is often expensive, for in most states an attorney is required to oversee the estate settlement and he or she usually charges a percentage of the estate to settle it. In other words, it's a long and painful ordeal.
In states where the aforementioned probate process applies, Living Trusts are a means of avoiding probate and its associated expenses and complications. All assets are transferred to the Living Trust and held there until the termination of the trust, at which point it is dismantled and assets are distributed. Living Trusts cost anywhere from $1200 to $4000 to set up, and just as much to dismantle. But even then, there is a 50% chance that you will still have to probate the estate because often times not all of the assets were transferred into the trust, or the trust was not properly maintained (thus earning Living Trusts the nickname "double probate").
However, in Colorado, the probate system is structured differently, so a Living Trust confers little advantage. The average cost of probate in Colorado is $2200-$2500. An attorney is not required; once the estate has begun probate, bills are paid and assets are distributed immediately; no court hearings are required; and a simple one-page "Verified Statement" is all that is needed to close the estate. The one requirement Colorado has is that the estate remain open at least 6 months to allow the "Notice to Creditors" to run in the newspaper. In other words, in Colorado, probate is a much simpler, more straightforward procedure and a Will sufficiently covers all the bases.
It is worth noting that there are a couple of situations where a Living Trust is a good idea: (1) if you are moving to a different state in the foreseeable future, a state in which probate is a complicated procedure, or (2) if you own real estate that is located in another state with different probate laws. In these two situations a Living Trust may be warranted. Otherwise, it is an unnecessary expense.
What types of Wills do you offer? I offer three different types of Wills, which include: a Standard Will, a Testamentary Trust Will, and a Marital Deduction Tax Will. The Standard Will is the most basic and universal. The Testamentary Trust Will, which has an embedded trust, best suits those persons providing for a minor(s) or a dependent with special needs. The Marital Deduction Tax Will is for a couple (it offers no tax benefits if you are single) whose assets are currently (2004) valued at or above $1,500,000 (or whose assets will be valued at or above $675,000 in 2011 AND it's probable that you or your spouse will still be living then). This Will confers a tax break by allowing the first spouse to pass the entire amount of the estate to the surviving spouse tax-free. Then, upon the death of the surviving spouse, $1,500,000 (or whatever the exemption amount is the year of the surviving spouse's death) is passed on tax-free, and the balance is taxed (usually at a rate of about 42%, but it can be as high as 60%, depending on your situation). This is in contrast to having the full amount of the estate taxed on the death of the surviving spouse, so it offers quite an advantage.
What do I need to prepare or bring to have a Will drawn up? If you have any sort of Will, no matter how outdated, bring it or a copy of it. It is a helpful reference when verifying name spellings, birth dates, etc. Additionally, providing a rough estimate of your net worth is invaluable in determining which type of Will best suits your situation. In estimating net worth, consider: investments, bank accounts, life insurance policies, and real property.
What is the difference between "Joint Tenancy" and "Tenants in Common" in property titling? Joint Tenancy with right of survivorship means that if one of the owners dies, then title is automatically transferred to the surviving owner(s). Tenants in Common, which is the default in Colorado (if nothing is stated on a deed or title), means that if one of the owners dies, title is transferred to the descendants of the deceased owner, rather than to the other owner(s) listed on the deed or title.
My spouse died and I'm the personal representative. How do I proceed with probate? Probate is simply the process of settling an estate, but it is an overwhelming prospect. To make the process less daunting, follow these guidelines: Gather together any and all pertinent documents (Will, Codicils, Power of Attorney, Titles/Deeds to property and/or cars, stock certificates, investment account information, life insurance policies, etc.); Order ten (10) death certificates from the mortuary or funeral home; Leave all the deceased's bank accounts open initially so that incoming bills can continue to be paid; and Allow any Social Security or pension payments to collect and do not return them yet. Then contact an attorney to guide you through and oversee the process.
What purpose does a Power of Attorney serve? A Power of Attorney (POA) ensures that your affairs will be looked after by someone you trust if you are unable to look after them yourself. Without one, the Court would be obligated to intervene and set up a conservatorship if you become incapacitated. A POA becomes especially important as you get older. Most people do not realize that marriage does not grant the spouse the legal authority to bind the other. There are many types of Powers of Attorney, and they can be as general or specific (i.e., restricted to simply writing checks, but not making any medical decisions on your behalf) as you want. But, there is an important distinction between a general power of attorney and a durable power of attorney. In the absense of termination conditions that are inserted in the document, a general power of attorney ends if someone dies, revokes it, or becomes incapacitated. Thus, it becomes null and void at the moment it is needed most. A durable power of attorney, on the other hand, survives incapacity, so it offers greater protection.