Q: This time of year I receive many questions concerning estate planning. So it seems appropriate to review basic estate concepts that Colorado residents should keep in mind getting their affairs in order.

A: There are three areas to focus uponÑdocuments, property ownership, and the preparation of an asset list.

Unlike in most states, Coloradoans can either spend lots of money and have complicated, expensive documents that are not fully understood by them, or have relatively simple, inexpensive documents that do the same job.

Contrary to what is generally found across the United States, in Colorado, with the availability of unsupervised administrative probate, having a Will is a viable alternative to a Living Trust. That does not mean that a Living Trust should never be used. It means we have choices in Colorado.

There are basically three kinds of WillsÑStandard, Testamentary Trust, and a Tax Trust Will. A Standard Will is for an individual whose net worth is under $1,000,000 and whose beneficiaries can inherit directly without the need to hold their distribution in a Trust. The cost for such a Will, which is all that most Coloradoans need, is usually less then $200 and contains between three to five pages. A Testamentary Trust Will costing less than $300 is needed by a person whose net worth is under $1,000,000 but has a beneficiary or beneficiaries that need financial help such as minor children, aged parents, or a "special needs recipient."

But why do I use the figure $1,000,000 as a factor to use in selecting one of the three Will types? Even though the estate tax exemption will increase from $1,500,000 to $2,000,000 at the beginning of 2006, and then increase to $ 3,500,000 in 2009, until finally there is no federal tax on an estate of any size in 2010, thereafter the tax exemption drops to $1,000,000 in 2011. Thus if a spouse dies between now and 2011 with a combined net worth with the surviving spouse of more than $1,000,000, the survivor will have tax liability. With a Tax Trust Will, some of the taxable amount can be shifted and held in a nontaxable manner, so the surviving spouseÕs tax exposure will end up to be less then $1,000,000.

Remember it is not true in Colorado that it is necessary to use a living trust if tax elimination is the goal. A $500 Tax Trust Will can be just as easily used. An equivalent living trust normally starts at $1,500 or more.

But what about expensive probates? If assets are held between a couple in joint tenancy or with each as the otherÕs beneficiary, then there is no probate at the first death. Probate will be needed only at the second death or if property is held in tenants in common.

If probate is necessary, the process is so easy that the family can do it themselves and the total cost to go through Court will be less than $300. If an attorney is used, even for very large taxable estates, the total cost will probably only be several thousand dollars. Those involved in a Colorado probate can expect the following: proceedings can be started within days after death; the ability to pay bills, transfer assets, handle legalities, etc., can be immediately done; no inventory is needed to be filed with the Court nor are court hearings needed or reports filed; and after six months (time to let the Notice to Creditors time period run) the estate can be closed any time by filing a two page document called the Verified Statements.

Besides selecting the proper kind of Will or living trust, asset ownership must fit the selected documents. For Standard Wills or Testamentary Trust Wills, assets should be held in joint tenancy thus avoiding probate at first death.

For the Tax Trust Wills, assets should be titled in tenants in common. When using Tax Trust Wills and for proceeds that are intended to be held in a Testamentary Trust, the general rule is that anything with a beneficiary listing or payable on death should be payable either to the estate or to the trust.

A listing of assets, advisors, and where documents are located can be very important because this gives your fiduciaries a starting point and a road map to help structure the estate settlement.

My goal in estate planning is to keep everything as simple and inexpensive as possible. Thus remember keep as possible choices Wills, joint tenancy, asset ownership, and unsupervised administrative probate.

A further column will deal with Durable Powers of Attorney and Living Wills.