Douglas A. Turner, P.C.

Welcome to 2008! To start the New Year off right, here are ten important Colorado probate and estate planning tips for the New Year.

1. If you don’t have a Will, get one.

The first Colorado probate and estate planning tip is a Will. If you don’t have a Will, get one. In particular, married couples with children from prior relationships should always have a Will. Otherwise, the couple may be very surprised at who gets the money at death.

2. Get a Medical Power of Attorney and Advanced Medical Directive.

Colorado probate and estate planning tip #2: Along with a Will, everybody should have a medical power of attorney and an advanced medical directive. A medical power of attorney designates an individual to make health care decisions for you should you be unable to do so, yourself. An advanced medical directive, commonly called a living will, states in advance what you want in the way of life sustaining treatment when death is imminent or when you are in a persistent vegetative state.

3. Review all beneficiary designations on life insurance, retirement accounts, and other financial instruments and accounts.

Colorado probate and estate planning tip #3: Review all beneficiary designations on life insurance, retirement accounts and other financial instruments and accounts. You may be surprised at what you find. Do not settle for a verbal confirmation. Lay your pretty eyes on the hard copy.

4. Get a permanent life insurance policy.

Colorado probate and estate planning tip #4: Get some permanent life insurance. Liquidity is important in life and at death. The lack of liquidity at death can increase legal fees and cause property to be sold for less than its actual value – far less. Even a small amount of life insurance is better than none.

5. Put your permanent life insurance in a life insurance trust.

Colorado probate and estate planning tip #5: If you have substantial, permanent life insurance, consider putting the life insurance in a life insurance trust. Moving your life insurance into a life insurance trust removes the insurance from your gross taxable estate for federal estate tax purposes and protects the insurance policy from creditors.

1. Put your inheritance in an irrevocable trust for asset protection.

Colorado probate and estate planning tip #6: Get it and give it in trust. When you give an inheritance in an irrevocable trust, you also give some level of asset protection. If you are the potential recipient of an inheritance and if you have the ability to speak openly with the person making the gift, consider suggesting that the gift be made in some form of irrevocable trust. There is some cost to a gift in trust. However, the asset protection benefits typically outweigh the cost.

1. Put all your estate planning documents in a safe deposit box.

Colorado probate and estate planning tip #7: Obtain a safe deposit box and put your original Colorado estate planning and other important documents in the box. Fire safes and file cabinets are certainly better than nothing if you let somebody know where to look. However, many Wills vanish or are lost shortly before death. If the original cannot be found and the original was last seen in your possession, the court may presume that you destroyed or revoked the Will. While a copy of a Colorado Will can sometimes be probated in a Colorado probate, it can be expensive and not always successful.

8. Protect your heirs against local expensive probate proceedings.

Colorado probate and estate planning tip #8: If you own real estate outside of the state where your Will is to be probated, make sure that transferring the real estate to your heirs will not require a local, expensive probate proceeding. This can be accomplished several ways. Some states have a simplified probate procedure for making the transfer without opening a local probate proceeding. Other states allow for beneficiary designations through something called beneficiary deeds. In most states, the probate process can be avoided by transferring the real estate into a revocable (living) trust. Otherwise, be prepared to spend several thousand dollars to make the transfer after the death of the owner. Special Note: If you own property in a foreign country pay special attention to this issue. Transferring real estate at death in a foreign country can be very expensive. Also pay attention to foreign estate tax. Unlike the United States, the estate tax can vary greatly based upon whom you give the property to at death.

9. Leave property to your husband or wife in trust.

Colorado probate and estate planning tip #9: Consider leaving property to your spouse in trust instead of outright. The trust accomplishes three goals. The first goal is avoiding estate tax. The second goal is protecting the assets from the surviving spouse’s creditors. The third goal is to give any funds remaining at the surviving spouse’s death to the person you choose. Many a family estate has been lost when the surviving spouse remarries and leaves the family assets to the new spouse or his/her family. We see more money lost to shifting bloodlines than we have ever seen paid in federal estate tax.

10. Know if your state has state or estate/inheritance taxes.

Colorado probate and estate planning tip #10: If you have a tax planning estate plan, be aware of whether there is a state, estate/inheritance tax. Many tax planning Wills assume no state estate tax. The result can be state estate tax paid at the death of the first spouse. In Colorado, this is not currently an issue. There is no Colorado estate tax. However, many states are implementing estate or inheritance taxes. This is called decoupling from the federal estate tax system.