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October 9, 2001: Estate Planning Checklist

Q: (Composite of a large number of questions in recent weeks) In the last issue of Senior Voice you gave a checklist of what to do if some one dies. Could you give a checklist of someone's estate plan?

A: You need a Will and you need to look at the Will every few years, even if you do not expect to make changes. Often, after the passage of even a short period of time, it is surprising to a good many folks what their Wills say and who they have appointed. If you have a Living Trust, the document needs to be reviewed every year and, just as important, the title to assets must be constantly monitored to ensure that ALL assets are titled in the name of the trust.

Look at your Durable Power of Attorney to verify that your agents and guardians are still acceptable. Be sure you possess or know where all signed copies are located (remember that the recommended number of signed originals is four) and that your fiduciary has access to them. It does no one any good if the Durable Powers of Attorney are kept in a safety deposit box if only you have access or in a safe if no one can get into it except you. You should keep your original Living Will in your possessions instead of giving it to the hospital or your doctor. People quickly forget where or with whom the Living Will was left. Also, remember a different doctor or a different hospital might be involved.

And it goes without saying to let everyone know where your estate documents are located and how they may be accessed. In order to avoid the very painful and frustrating game of "hide and seek" keep your list of assets, including named key people, with your documents.

Take another look at how your assets are titled and who you have as beneficiaries. If there is more than one person, it is recommended NOT to hold title in joint tenancy but permit your Will to control the distribution of the asset. In like manner, beneficiary designations are usually all jumbled up and often fail to allocate proceeds to the desired individual, especially if a beneficiary predeceases. It does not significantly increase the cost of settling an estate nor increase the tax exposure to just have the estate as the beneficiary, at least in Colorado. That way the Will can funnel all assets the way you wish them to go in a coordinated way.

"Avoiding probate" has been the war cry of countless living trust salespeople and financial planners but do not let this bugaboo stampede you into a costly and frustrating dilemma. Remember once you are in and then decide to get out, most folks find it to be a costly and frustrating effort. Living Trusts are a choice in Colorado but not the only tool as some may try to have you believe.

If you make a choice, then do it. Do not just go half way. If you select a Living Trust, fund it and review the documents and asset ownership at least yearly.

If you try to set up everything in joint tenancy (remember gift taxes) or with a beneficiary designation, then make sure you follow through with all the details. Everything must be set up in a coordinated fashion. Any loose ends means that you would still need to probate these assets. Double check often and if a beneficiary dies or you change your mind, hope that you still have the legal right to alter what you did easily, inexpensively, and with ho tax consequences. Finally all this may sound complicated and expensive but it does not have to be. Just have a Will, a Durable Power of Attorney and, if desired, a Living Will, along with your asset list and legal documents. Keep estate documents and evidence of assets together. Keep your assets in your name and the beneficiary designation open so that your Will can act as a clearing house to ensure that the property flows as you direct.

After doing your checklist, I would suggest that as in life, simplicity and flexibility should be the goals in planning and reviewing your estate.

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