Estate Planning

Dan Mckenzie • May 17, 2023

WHAT IS ESTATE PLANNING?

You’ve spent your entire life working hard to accumulate your wealth and assets. Estate planning is the next step to ensuring your assets are protected and your final wishes are recognized upon death or incapacity. Estate planning means drafting a plan in advance, naming whom you want to make decisions for you in the event of incapacity, and stating who will receive the things you own after you pass away. Estate planning includes deciding how an individual’s assets will be preserved, managed, and distributed after death. Estate planning should also factor in your needs as you age, such as costs, preferences, and medical care decisions. In many cases, estate planning considerations include protecting more vulnerable beneficiaries such as minor children or persons with special needs. It is best to think of estate planning as an ongoing process that can pave the way to an orderly transition as we age and face the everyday uncertainties of life.


A comprehensive Revocable Living Trust Plan will generally include the following documents. Below, we will explain the purpose of these documents and essential information about each.


  • Revocable Living Trust
  • Last Will and Testament
  • Certificate of Trust
  • Assignment of Personal Property to Trust
  • Beneficiary Deed
  • Financial Power of Attorney
  • Medical Power of Attorney
  • HIPAA Release
  • Living Will
  • Family Guidance Letter


LAST WILL AND TESTAMENT

While we often hear of the importance of estate planning, the first thing that might come to mind when hearing that term is the last will. This document states how property should be distributed at death. If you die without a last will, the default laws of the state you live in at the time of your passing will govern the distribution of your property. For some, these default laws may reflect their wishes; for many, these laws do not reflect their desires, so it is essential to have a proper succession plan in place.


While the last will is a crucial document most people should have, there are many essential issues a Will cannot even begin to address. Only a Probate court can administer a Will, which is why we recommend many clients use a Revocable Trust instead of a Will to pass their property. Probate is the court process for distributing property at death. All interested parties and creditors must be notified and given an opportunity to object to the planned distribution of your estate. In many cases, probate can be a costly, time-consuming, and public process.


REVOCABLE LIVING TRUSTS

Most people will benefit from having a Revocable Living Trust in place, individually or jointly, as a couple. Like your last will, a Revocable Trust is a written declaration of who you would like to receive your property at your passing. However, unlike a Will, a Revocable Trust is a private document that allows you to pass property without the delays, cost, and publicity of going through the probate courts. A Trust can also accomplish much more, such as protecting your family’s privacy, providing for your children, grandchildren, and pets, helping plan for your incapacity, and safeguarding your property from lawsuits. A revocable trust benefits someone not concerned about a potential estate tax liability, wants to plan for succession, wants flexibility and control over their assets, and wants to protect the beneficiaries’ inheritance from creditors, lawsuits, or other legal threats. A Revocable Living Trust can be a powerful tool for succession planning and avoiding probate. On the other hand, asset protection trusts are irrevocable and can still work for succession planning and provide protection from lawsuits and creditors. The McKenzie Law Firm offers multiple asset protection options, including domestic and international trusts, making it almost impossible for a plaintiff or creditor to access the trust assets. Asset protection can be essential to estate planning and ensuring your wealth is shielded from potential legal threats.


PLANNING FOR MINOR CHILDREN

Suppose you have children under the age of eighteen. In that case, the main priority when considering your estate plan is probably who will take care of your children if you become incapacitated or were to pass away unexpectedly—a last will to nominate guardians for your minor children. Without any estate plan in place ahead of time, the courts could end up selecting who looks after your children without being able to consider your thoughts. While courts often appoint close family members as guardians, they may not necessarily appoint who you would want. In our experience, most parents want to prevent the courts from interfering with and determining how their children are raised. We believe no one is better suited to decide how children are raised than their parents. A comprehensive estate plan can ensure the right people are called in to care for minor children and that your specific wishes and expectations are known and respected.


PROTECT YOUR CHILDREN’S INHERITANCE WITH A TRUST

Using a revocable living trust for your minor children can be incredibly beneficial. A trust can protect your children’s inheritance by having a third party manage the funds according to your instructions. A trust can be amended over the years as your children grow, and your needs change. Assets can be added and removed from the trust, and changes regarding the management, distributions, and beneficiaries can also be made. A trust can nominate a successor trustee who will administer the funds on your behalf in the event of your incapacity or passing until your children reach a particular age (of your choosing). Predicting how a child’s life can change is difficult, but a well-drafted trust can address even some of the remotest possibilities. Unlike a traditional bequest or gift, a trust can protect a child’s inheritance from unfortunate life events they may experience in the future, such as bankruptcy, lawsuits, or divorce.


PLANNING FOR INCAPACITY

Another essential part of your estate plan is your incapacity documents. These documents can help ensure that someone can make decisions for you if you cannot care for yourself permanently or temporarily. Most people focus on succession planning when thinking about their estate plan, and many overlook planning for incapacity. This is unfortunate since most people will be hindered at some point in their lives; not having the proper documents in place can result in a costly conservatorship and guardianship proceeding before the probate court. A comprehensive estate plan should address your financial and medical decisions in case you cannot make these decisions for yourself. This is handled using financial and medical powers of attorney. A power of attorney grants a trusted loved one of your choice the authority to make financial and medical decisions on your behalf in the event of incapacity. A financial power of attorney permits a trusted individual to access your accounts to pay for the goods and services you and your family may need while you are incapacitated. This means the utility bills, tuition, mortgage, etc., can all be paid even if you cannot pay these directly. Similarly, a medical power of attorney allows a loved one to make medical decisions on your behalf. This can ensure you receive the medical treatment you would prefer, even if you cannot express your wishes at the time.



As seniors age, they may not be as equipped to make serious financial decisions in a sound and prudent manner, so an agent may be needed to help them preserve their assets. A power of attorney can go into effect immediately, or it can be structured to become effective later based on the advice of medical professionals. The appointed agent will have control over as many aspects of handling financial matters as the power allows. This can mean investing money or even taking steps such as depositing social security checks. In turn, the agent will have a fiduciary responsibility to act in the best interests of all financial decisions. While the power of attorney can be general, it can also be limited to certain areas. One of these areas can involve the ability to direct and make decisions for the medical care of another. This is important if it is difficult for a family to agree collectively on specific choices. As people age and their faculties decline, they may not be in the best position to make decisions about their care since it requires understanding their condition and the risks they face. The medical power of attorney can apply in broad circumstances, even without terminal or critical illness. Finally, an Authorization for Release of Protected Health Information, a HIPAA release, allows medical professionals to share your protected medical information with your family. This means your family can get prompt access to your medical records in case of a medical emergency.


FAMILY GUIDANCE LETTER

Attorneys at The McKenzie Law Firm created the Family Guidance Letter to enhance your estate plan. The forms and letters in the Family Guidance Letter convey your final wishes to your personal representative, trustee, guardians, and heirs. The Family Guidance Letter also includes instructions for funding your trust and creating a certificate of trust. You may have instructions regarding your online profiles and accounts, who will care for your pet(s), and any special instructions regarding their care. The Family Guidance Letter can be updated as often as necessary at no cost.


WHY THE MCKENZIE LAW FIRM?

No matter your age or life stage, it is never too early to make your wishes known and put a plan in place for your family’s future. Working with an experienced estate planning attorney can help you be better informed about the consequences of these critical decisions and help you formulate your plans for many of these eventualities.


A trained and competent attorney can help you draft the appropriate documents to ensure your wishes are memorialized when implementing them becomes necessary. At The McKenzie Law Firm, we have worked with numerous clients to find estate planning solutions that fit their needs.


If you have any questions or would like to discuss the benefits of an estate plan, please call or email us today. We are always happy to meet for a no-obligation consultation at no cost to you. As your estate planning attorneys, we will walk you through the process, explain available options, and answer questions until we determine the right path forward together.

what next?

If you think it might be time to think through your estate plan, you can:


  1. Call us at 720-821-7604 to schedule an "Attorney Evaluation Session" to determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
  2. Visit our estate planning page to learn how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
  3. Learn more by reading our blog or watching our videos.


28 Feb, 2024
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By Dan McKenzie 04 Feb, 2024
One of the most common questions we receive is whether or not to share the details of an estate plan with adult children. This decision is personal and can have far-reaching implications for the individual and their family. The Benefits of Sharing Your Estate Plan Sharing your estate plan with your adult children can be beneficial. Doing so allows the family to discuss the plan's details, including what needs to be done in the event of incapacity or death. This open communication can help set expectations and facilitate a smooth estate administration process. A discrepancy between the plan and what the family expected is one of the most significant sources of tension and difficulty during the estate administration. It can be helpful to identify and resolve the discrepancy while the person who can change the plan can either still do so or explain why they designed the plan the way they did. Our firm generally recommends communication with fiduciaries and beneficiaries about the plan. However, communication does not necessarily mean sharing the complete draft of the estate plan. The Risks of Sharing Your Estate Plan While there are benefits to sharing your estate plan, there are also potential drawbacks. One of the main concerns is that sharing the estate plan can create difficulties if the plan is changed after it has been shared. This can be particularly problematic if any of the beneficiaries of a previous plan will receive less from the new plan. Another risk is the possibility of inconsistent plan drafts circulating after death. This can lead to confusion and potential disputes among beneficiaries. Suggestions for Communicating Your Estate Plan Given these considerations, here are some suggestions on how to best communicate the details of your estate plan: Maintain a Record : Record what has been shared, who it has been shared with, and when it was shared. This can help ensure everyone is on the same page and minimize potential misunderstandings. Share Digital Copies : Consider sharing digital copies of your estate plan, accompanied by a cover letter or mark reminding everyone that the plan can change. This can help mitigate the risk of outdated drafts circulating. Provide a Summary : Instead of sharing the entire plan, consider providing a summary. This can give your family a general idea of your intentions without divulging all the specifics. Again, include a disclaimer that the plan can change. Remember, every situation is unique, and what works for one family may not work for another. It’s essential to weigh the benefits and risks before sharing your estate plan. As always, we’re here to help guide you through this process. Please note that this blog post is intended for informational purposes only and does not constitute legal advice. Always consult a qualified estate planning attorney for advice on your situation.
By Dan McKenzie 29 Dec, 2023
If you are unhappy with the terms of a will, you may have the right to challenge it in court. However, contesting a will is not easy and requires certain legal grounds and procedures. This blog post explains the basics of how to contest a will in Colorado, including who can do it, what reasons are valid, and what steps are involved.
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Explore the essential steps to take when a trustee is not fulfilling their duties effectively. This guide provides practical advice on identifying trustee shortcomings and the legal actions available to address them. Ensure your trust is managed properly with our expert insights on trustee responsibilities.
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By Dan McKenzie 24 Dec, 2023
Discover the straightforward steps to initiate an informal probate process in Colorado with our concise guide. Learn what information is required for the application, including personal details of the decedent and your connection to the estate. Understand the importance of meeting the time limits for filing and find out how to navigate the process without a court hearing, all explained in simple terms. Ensure a smooth probate journey with our expert insights on Section 15-12-301 of the Colorado Probate Code.
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What happens to the Will of someone who has passed away in Colorado? Learn about the custodian’s duty to deliver a will promptly and to the correct probate court, ensuring your loved one’s wishes are honored. Discover the importance of acting swiftly and accurately in the probate process to preserve legacies and avoid legal repercussions.
By Dan McKenzie 02 Dec, 2023
Although have a living trust often makes the administration of your estate easier, your successor trustee has many important tasks they might not know about. We offer seminars for successor trustees to help them learn what they need to do.
By Dan McKenzie 24 Nov, 2023
This blog post provides valuable advice for those tasked with administering an estate. It emphasizes the importance of establishing trust with beneficiaries, setting aside personal feelings, making conservative promises, and treating the estate like a business. The post offers practical tips and examples, making it a must-read for first-time executors and seasoned professionals alike.
By Dan McKenzie 22 Nov, 2023
As a trustee, your role is not just about managing assets but also about building trust and maintaining open lines of communication with beneficiaries. This is especially true in Colorado, where state law has specific trustee requirements. Understanding the Legal Requirements In Colorado, the law requires trustees to provide beneficiaries with the parts of the trust agreement that affect them. You must share any sections of the trust document that mention the beneficiary or impact their rights. It is not always clear which parts of the trust agreement must be produced. A page giving a specific gift to a particular beneficiary would need to be shown to that beneficiary. But about the "Definitions" section often included in trust agreements, where are specific terms defined? Additionally, trustees must provide an accounting at least annually or upon reasonable request from a beneficiary. This accounting should detail the trust’s assets, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation. Going Above and Beyond While these are the bare minimum requirements, effective communication often involves going above and beyond what is legally required. Regular and transparent communication can help reassure beneficiaries that you are working diligently to represent their interests. For example, you might consider providing quarterly updates on the trust’s investments and performance, even if only an annual report is required. Or, you could offer to meet with beneficiaries individually to discuss their questions or concerns. Remember, it can be easy to raise suspicions by communicating too little, but you are unlikely to get into trouble by sharing more than required. Over-communication can often prevent misunderstandings and disputes before they arise. Co-Trustees: The Importance of Teamwork If you are serving as a co-trustee, communication becomes even more critical. You and your co-trustee must work together to manage the trust’s assets, which requires regular, open, and honest communication. Without effective communication, co-trustees run the risk of taking actions that are inconsistent or contradictory. This can confuse beneficiaries and potentially harm the trust’s assets. So, when in doubt, err on the side of over-communication. Conclusion Being a trustee is a significant responsibility, and effective communication is a vital part of the role. By understanding your legal obligations and striving to exceed them, you can build trust with beneficiaries and ensure the smooth administration of the trust. Remember, when it comes to communication, more is often better. Don’t hesitate to contact a legal professional if you have any questions or concerns about your duties as a trustee.
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