Estate Planning | The McKenzie Law Firm, LLC

No Kids? You Still Need an Estate Plan — Here’s Why

Mon, 27 Apr 2026 04:00:29 GMT

Most people assume estate planning is something you do after you have kids. But if you’ve made it to this article, you probably already suspect that’s not the whole story.

Here’s the truth: if you have assets, opinions about your medical care, or people you care about — and you don’t have a current estate plan — Colorado law will make your most important decisions for you. Not your partner. Not your closest friend. Not the charity you’ve supported for years. The state.

At The McKenzie Law Firm, we’ve worked with many clients who don’t have children and initially wonder whether they really need a formal plan. They do. In many ways, the need is even more urgent — because without children as a default safety net, there’s less structure to catch you if you haven’t created it yourself.

What Happens If You Don’t Have a Plan in Colorado?

Colorado has a default set of rules — called intestacy laws — that determine who gets your property if you die without a will. If you have no spouse and no children, those assets typically pass to your parents, then to your siblings, and then to more distant relatives. If no eligible relatives can be located, your estate could eventually be distributed entirely to the State of Colorado.

That may not reflect what you want at all. Maybe you’d prefer your assets to go to a close friend who’s been like family. Or a cause you’ve dedicated time to. Or a sibling — but only one of them. Without a plan, none of that nuance exists.

You Get to Choose Who Matters

One of the most meaningful parts of estate planning for individuals without children is the freedom to define your own legacy. Your beneficiaries can be:

Close friends or chosen family
Extended family members who are important to you
Charitable organizations you believe in
Religious or educational institutions
Caregivers who have made a difference in your life

A properly drafted estate plan gives you the legal tools to divide assets however you choose — and to make sure those choices are honored.

Estate Planning Isn’t Just About Death

This is where many people — especially those without children — get blindsided. A significant part of estate planning deals with what happens if you’re alive but unable to make decisions for yourself.

If you became incapacitated tomorrow, who would manage your finances? Who would make your medical decisions? Who would know what kind of care you’d want — or wouldn’t want?

Without the right documents in place, the answer might be “no one you’d have chosen,” and a court will decide. Three key documents address this:

Financial Power of Attorney — designates someone to manage your accounts, bills, and financial affairs
Medical Power of Attorney — names a trusted person to make healthcare decisions on your behalf
Living Will (Advance Directive) — documents your wishes about end-of-life care so those decisions don’t fall entirely to someone else

Without children who might naturally step in, these appointments matter even more. The person best positioned to advocate for you is whoever you’ve designated in advance — not whoever shows up first.

Charitable Giving Can Be a Centerpiece of Your Plan

For many people without heirs, leaving a meaningful gift to a cause they care about is a central motivation for planning. The good news: your estate plan can be structured to make charitable giving intentional, tax-efficient, and lasting.

Options include specific bequests in a will, naming a charity as a beneficiary on retirement accounts or life insurance, establishing a charitable trust, or setting up a donor-advised fund. Each approach has different implications for timing, taxes, and flexibility — which is why it’s worth having a conversation with an attorney and your financial advisor together.

A Clear Plan Prevents Conflict

When there are no obvious heirs, ambiguity can invite conflict. Extended relatives who barely knew you may suddenly have strong opinions. A clear, legally valid estate plan removes the guesswork and reduces the likelihood of disputes — leaving the people handling your estate with straightforward instructions rather than difficult conversations.

Your Plan Should Evolve With Your Life

Relationships change. Financial situations shift. What made sense five years ago may not reflect who you are today or what you want your legacy to be. We recommend reviewing your estate plan every 3 to 5 years, or whenever you experience a significant life change.

Ready to Build a Plan That Reflects Your Life?

At The McKenzie Law Firm, we work with Colorado residents at every stage of life — including those without children — to create estate plans that are thoughtful, personalized, and built to hold up when it matters most.

Our flat-fee pricing means you’ll know exactly what you’re paying before we start. Our process is designed to be straightforward, not overwhelming. And our team is here to answer your questions every step of the way.

Schedule your initial evaluation today and find out what a plan built around your life — not a template — looks like.

Call us at (720) 821-7604 or schedule a meeting here .

The McKenzie Law Firm, LLC practices law exclusively in Colorado. This post is for general informational purposes only and does not constitute legal advice. Please consult a qualified attorney regarding your specific situation.

Can My Adult Kids Claim Ownership of My Denver Home?

Sun, 26 Apr 2026 14:30:03 GMT

As parents, we always want to support our children. In today’s world, that often means welcoming them back home after college or during career transitions. Whether they are moving back to save on rising living costs or to help you age in place, it is a generous arrangement. However, many parents in the Denver metro area are starting to wonder: Does living in the house give my child a legal claim to it?

Living at Home Does Not Mean Ownership

It is a common misconception that residency equals ownership. Just because your adult child has a key and a bedroom doesn't mean they own the property. Legally, ownership is determined by the deed —the official document that lists the owner of the real estate. If your child’s name is not on that deed, they have no legal ownership interest in the home, regardless of how long they have lived there or how much they help with the "honey-do" list.

The Risk to Your Estate Plan

The real trouble starts when expectations don't match reality. An adult child might assume, "I've lived here for years, so this will be my house when my parents pass away." Without a clear plan, this can ruin your estate plan —the collection of legal documents that explains how you want your property handled after you're gone. If you have other children who don't live at home, this confusion can lead to family arguments or even legal battles that could have been avoided with a clear will or trust .

Protecting Your Legacy in Colorado

If you want your child to stay in the home, or if you want the home sold and the money split among all your heirs, you must put it in writing. Using a trust (a legal arrangement where a person or company holds property for someone else) is often a great way to provide clear instructions and avoid the headaches of probate court. Whether you’re enjoying a weekend cheering on the Denver Broncos or hiking in the mountains, having a solid plan in place lets you focus on your family rather than worry about future "what-ifs."

Schedule a Consultation Today

Don't let unspoken expectations create stress for your family. If you have adult children living at home, now is the time to ensure your house—and your legacy—are protected. The McKenzie Law Firm, LLC serves the Denver metro area with professional, friendly legal guidance.

Contact The McKenzie Law Firm, LLC to schedule a consultation regarding your estate plan. You can reach our office at 720-821-7604 . We look forward to helping you protect what matters most.

Why Your Family Promises Won't Hold Up in Colorado Probate Court

Sat, 25 Apr 2026 14:30:04 GMT

Setting your family up for the future isn't just about what you say; it’s about what you sign. If you live in the Denver metro area , you know that life moves fast between work, family, and weekends in the mountains. But have you considered what would happen to your assets if you were no longer here? Many people assume that a verbal promise to a loved one is enough to ensure that person is taken care of. Unfortunately, in probate court, those promises often mean very little.

Why Verbal Promises Fail in Probate Court

It’s a common story: a mother tells her daughter she can have her jewelry, or a father promises a classic car to his son. However, if these wishes aren’t in a valid will, the court may not honor them. From a legal perspective, the court's primary job is to ensure that a deceased person’s wishes are clearly documented and verified. Without a formal document, the court will apply Colorado’s inheritance laws, which may result in your belongings going to someone you didn't intend.

The Importance of Formalizing Your Estate Plan

To ensure your wishes are carried out, you must have a validly executed will or trust. In Colorado , a will typically needs to be signed by the person making it and either witnessed by two people or notarized. These formalities provide the court with the proof it needs to be certain of your intentions. Relying on "private agreements" with family members can lead to confusion, conflict, and legal battles that could have been avoided with proper estate planning .

Protecting Your Legacy in Colorado and Beyond

Whether you are planning for your first child or preparing for retirement after years of working in Denver , having a professional estate plan is the only way to guarantee your family is protected. Don't leave your family’s future to chance or the complexities of the legal system. A clear, legally binding plan ensures that your "promises" are actually kept.

Schedule a Consultation Today

Is your estate plan up to date, or do you still need to start one? Contact The McKenzie Law Firm, LLC to ensure your family's future is secure. We serve the Denver metro area and are ready to help you create a plan that reflects your true wishes. Give us a call at 720-821-7604 or visit our contact page to schedule your consultation today.

Who Has Authority Over an Estate? Understanding the Probate Process in Colorado

Fri, 24 Apr 2026 14:30:02 GMT

When a loved one passes away, many families in the Denver metro area assume they can step in and manage the finances. Whether you are a spouse or an adult child, you might head to the bank or the DMV expecting things to be simple. However, you will likely be asked a tough question: What is your legal authority to handle these assets? Simply being the next of kin is often not enough to give you control over bank accounts or property. This is where the probate process becomes necessary.

Why Probate Isn’t Automatic

Probate is the legal process of proving a will is valid and appointing a personal representative to manage the estate. It doesn't just happen on its own. You typically realize you need it when a bank or a title company stops you from moving forward with a sale or a transfer. In Colorado, if your loved one owned real estate or had assets in their name that exceeded a certain dollar amount, the court must give someone the "green light" to act. This "green light" is what gives you the legal power to pay bills and protect what was left behind.

Navigating the Probate Process in Denver

Think of the probate process as a formal roadmap. It ensures that every asset is located, that all final bills and taxes are paid, and that the remaining property goes to the right people. It is about keeping clear records and making sure the family stays on the same page. While it can feel overwhelming—especially when you’d rather be hiking the Flatirons or spending time with family—having a clear process prevents legal headaches and disputes down the road.

Getting the Right Legal Authority

If you find yourself stuck at the DMV or a title company, don't worry. You just need the right legal paperwork to move forward. At The McKenzie Law Firm, LLC , we help families in Centennial and across the Denver area navigate these steps with confidence. We make sure you understand the probate process so you can focus on your family instead of paperwork.

Let Us Help You Through the Process

Dealing with an estate is a big responsibility, but you don’t have to do it alone. If you need help gaining the authority to manage a loved one's assets, reach out to our probate team today. We serve the entire Denver metro area and are ready to help you find the best path forward.

Contact The McKenzie Law Firm, LLC at 720-821-7604 to schedule your consultation .

Why Equal Isn't Always Fair: The Hidden Problem With Equal Inheritance

Thu, 23 Apr 2026 14:30:01 GMT

When it's time to create an estate plan, most parents in the Denver metro area naturally want to treat their children equally. You love your kids equally, so it feels right to divide everything "down the middle." However, as an estate planning attorney, I often see how this "equal" approach can lead to deep resentment and family conflict.

The problem usually arises during your later years. Often, one child steps up more than the others to provide hands-on care. They might handle "nursing" tasks, such as bathing or assisting with daily needs. In some cases, a child might even pause their career or move back to Colorado to be by your side. This level of care is a massive commitment of time, energy, and money.

The Rise of Caregiver Resentment

Imagine the child who spent years caring for you discovers that their siblings—who may have been less involved—are receiving the same inheritance. Even with the best intentions, that caregiver often feels invisible or unappreciated. They aren't just losing a parent; they feel they are losing out on compensation for the years they put their own life on hold.

In my experience, siblings who weren't part of the daily caregiving process rarely volunteer to take less. They often feel entitled to their "equal share," leaving the primary caregiver feeling burned out and bitter. This is how equal division can actually cause more problems than it solves for your family's future.

Finding a Fair Path Forward

A "fair" inheritance doesn't always mean a mathematically "equal" one. You might consider an " inheritance equalizer " or a specific gift to acknowledge the extra work one child has done. By talking about these issues now, you can protect your children’s relationships with each other long after you are gone.

If you are ready to build a plan that truly reflects your family's unique needs, we are here to help. Whether you are enjoying a weekend at a Denver Broncos game or planning your next Colorado mountain escape, having a solid plan in place provides real peace of mind.

Schedule Your Consultation Today

Don't leave your family's peace to chance. Contact The McKenzie Law Firm, LLC to discuss how to create a fair and comprehensive estate plan. We proudly serve professional families throughout the Denver metro area .

Call us at 720-821-7604 or schedule your consultation online today.

Why Your House Is the Most Complicated Gift You’ll Ever Leave Your Kids

Wed, 22 Apr 2026 14:30:02 GMT

Whether you’re skiing in the Rockies or cheering on the Broncos, it’s easy to feel like you’ve built a solid future for your family. But have you thought about what will happen to your home one day? While cash and stocks are simple to pass on, your house is a different story. In fact, a family home is often the hardest asset to inherit.

Why Your Home Is Not Like Other Assets

When your children inherit stocks or a bank account, it is simple. Money is "fungible," which is just a legal way of saying one dollar is the same as any other. Your kids won't argue over which specific $100 bill they get. They can easily split the cash or sell the shares and move on.

A house in the Denver metro area is not like that. Every home is unique. From its location to the specific way you’ve decorated it, no two houses are the same. This uniqueness is exactly what makes it a challenge for your heirs.

The Emotional Weight of Real Estate

Houses carry memories. For your children, your home isn't just a piece of real estate; it’s where they grew up. This creates "sentimental value," or an emotional attachment that money can't buy. One child might want to keep the house to stay close to those memories, while another might want to sell it to pay off debt.

Unlike a stock portfolio, people actually live in houses. If one family member is living in the home when you pass away, it can create major conflicts. You can't just "split" a hallway or a kitchen the way you split a bank account. Without a clear plan, these differences in opinion can lead to long, expensive legal battles.

Protecting Your Legacy in Colorado

If you want to make sure your home stays a gift rather than a burden, you need a modern estate plan. Whether you are new to the area or have lived in Denver, Colorado for decades, your plan should reflect your current life.

Don't leave your kids to figure out the hard stuff on their own. We help families create plans that protect their assets and their relationships. To get started, schedule a consultation with The McKenzie Law Firm, LLC . You can reach us at 720-821-7604 . We are proud to serve the entire Denver metro area .

What Happens to My Online Accounts When I Die?

Tue, 21 Apr 2026 14:30:01 GMT

Whether you are heading up to Vail for a weekend of skiing or enjoying a quiet evening in Denver, you probably don’t spend much time thinking about your "digital estate." However, most professionals in the Denver metro area have over 100 online accounts. These range from social media and photo storage to paperless billing for your mortgage and utilities. If you don't have a plan, your family could be locked out of these accounts forever.

The Hidden Danger of Terms of Service

When you sign up for an app or website, you agree to a "Terms of Service" contract. Most of these agreements strictly forbid anyone else from using your login. If a family member tries to log in after you pass away, the company might freeze the account for security reasons. This can create a massive headache for your loved ones who are trying to manage your affairs or save precious family photos. In the legal world, we call these digital assets , which simply means any information about you that is stored online or on a device.

Why Your Digital Assets Matter

In the past, your family could just check the physical mail to see which bills needed to be paid. Today, almost everything is handled via email and online portals. If your executor—the person you choose to handle your final business—cannot access your email, they might miss important bill notifications or insurance updates. Dealing with every tech company’s different rules is a huge hassle during an already difficult time.

How to Protect Your Digital Legacy

The best way to handle what happens to your online accounts when you die is to include a digital asset provision in your estate plan . This gives your family the legal permission they need to work with tech companies. You should also consider using a secure password manager to ensure your spouse or children have a "master key" to your digital life when the time comes.

Get Your Estate Plan Current in Denver

If your current plan is more than five years old, it likely doesn't cover your digital life. At The McKenzie Law Firm, LLC, we help families across the Denver metro area protect everything they’ve built—both offline and online. Don't leave your family locked out of your digital world.

Schedule a consultation with The McKenzie Law Firm today or call us at 720-821-7604 to ensure your plan is ready for the modern world.

Who Should Be the Executor of My Will? Avoiding the "Hidden" Sibling Conflict

Mon, 20 Apr 2026 14:30:07 GMT

As an estate planning attorney in the Denver metro area, I often see families struggle with one specific choice. In my recent video, The Family Conflict Hidden Inside Most Wills , I explain why the person you choose to manage your estate is the most important decision you will make.

Who should be the executor of my will?

Many parents naturally want to name one of their adult children as the executor —the person responsible for carrying out the instructions in a will. While this comes from a place of love, it is often a recipe for conflict. When one sibling is put in charge of the others, it can quickly lead to suspicion and hurt feelings, especially if communication isn't perfect.

The risk of sibling rivalry in estate planning

Even the closest families can feel the strain of a legal process. If the sibling in charge isn't incredibly transparent, other family members may start to wonder if things are being handled fairly. This tension can overshadow your legacy and cause lasting damage long after the legal work is done. Whether your family spends their weekends hiking in the Rockies or cheering on the Denver Broncos , you want those bonds to remain strong.

Considering a professional executor

To avoid these hidden conflicts, we often suggest looking outside the family tree. A professional executor or a neutral third party can handle the paperwork, taxes, and asset distribution without the emotional baggage. This allows your children to focus on supporting each other during a difficult time rather than arguing over logistics.

Choosing the right person for the job

Every family in Centennial and across the Denver metro area is unique. When we sit down for a strategy session , we discuss the specific qualities your representative needs. We assess the complexity of your assets and the dynamics of your family to ensure the person in charge is a good fit for the role.

If it has been more than 5 years since you last reviewed your plan, or if you aren't sure who should be in charge, we are here to help. Contact The McKenzie Law Firm, LLC today to schedule a consultation. Call us at 720-821-7604 to ensure your estate plan brings your family together instead of pulling them apart.

What Happens to Bank Accounts When Someone Dies? A Guide for Denver Families

Sun, 19 Apr 2026 14:30:03 GMT

Losing a parent is one of the hardest things a family can go through. Between grieving and gathering with loved ones, the last thing you want to worry about is a stack of incoming mail. However, the mortgage, utility bills, and insurance don't stop just because a loved one has passed away. Many families in the Denver metro area find themselves wondering: can I pay bills from my parents' account after they die? It is a common question, but the answer is often more complicated than simply writing a check or using a debit card.

Why Banks Freeze Accounts

When a person passes away, their individual bank accounts are usually frozen as soon as the bank is notified. This happens because the bank needs to protect the money until a legal representative is appointed. If you walk into a bank in to ask about a parent's balance, they will likely lock the account immediately. This is done to make sure the right people get paid in the right order. While it might feel like an obstacle when you are trying to keep the lights on at your parents' house, it is a standard part of the legal process.

The Problem With Autopay

Sometimes, bills are set up on autopay and continue to be withdrawn from the account even after a death. While this keeps the bills current for a short time, it can create a "black hole" for the family. You might not know how much money is left or if that money should actually be going to other more important expenses. It is much better to have a clear plan in place. Just like preparing for a weekend trip to the mountains for some skiing or hiking, having your "financial gear" packed and ready through a solid estate plan makes the journey much smoother for your children.

How to Access the Funds Legally

To legally access those funds to pay for estate expenses, you typically need to go through a process called probate. This is a court-supervised transition that gives someone the legal power to handle the bank accounts. If your parents had a trust or named "payable on death" beneficiaries, this process can be much faster. Without these tools, your family might be stuck paying bills out of their own pockets while waiting for the court to grant them access to the estate's funds.

Protect Your Family’s Future

The best way to avoid these headaches is to ensure your own estate plan is up to date. If it has been more than five years since you looked at your documents, they might not protect your family the way you think. At The McKenzie Law Firm, LLC, we help families across the Denver metro area navigate these tough transitions with confidence.

Ready to make sure your family is protected? Schedule a consultation with The McKenzie Law Firm, LLC today. You can reach out to us online or call our office at 720-821-7604. We are proud to serve our neighbors throughout Colorado .

Why Creditors Get Paid Before Your Family in Colorado Probate

Sat, 18 Apr 2026 14:30:02 GMT

Most of us assume that when we pass away, our house, savings, and belongings go straight to our spouse or children. However, there is a specific rule in the Colorado probate process that catches many people off guard. Before your loved ones can receive their inheritance, the law requires that your debts are settled first. This means that creditors, or the people and companies you might owe money to, actually move to the front of the line.

How the Creditor Claim Process Works

When a person passes away, depending on what they own and how their assets are titled, their estate might go through probate . This is the court-supervised process of identifying assets and paying off debts. It is not just about giving things away; it is also a time for anyone who thinks they are owed money to step forward. These claims can include anything from unpaid medical bills to credit card balances or even pending lawsuits. In the Denver metro area , a personal representative must follow specific legal steps to notify these creditors so they have a chance to explain why they should be paid from the estate.

Protecting Your Family from Financial Scrambling

The worst-case scenario happens when a family divides up the money and property too quickly. If a creditor shows up later with a valid claim, the family may have to scramble to pay that money back. This can be incredibly stressful, especially while you are still grieving. While certain laws in Colorado protect a small portion of funds for dependent family members to live on, the rest is often fair game for debt collectors. Just like planning for a long weekend hike in the mountains, being prepared for these "trail hazards" in your estate plan can save your family a lot of trouble.

Secure Your Legacy with The McKenzie Law Firm

You have worked hard to build a life here in Colorado, and you want to make sure your family is taken care of. You deserve the peace of mind that comes with a solid plan. Understanding the Colorado probate process is the first step toward protecting your assets.

We invite you to schedule a consultation with The McKenzie Law Firm today to review your current plan or start a new one. Our team serves the Denver metro area and is ready to help you protect what matters most. Give us a call at 720-821-7604 to get started.

How Long Does Probate Take in Colorado?

Fri, 17 Apr 2026 14:30:06 GMT

You’ve worked hard to build a life here in Colorado . Between weekend trips to the mountains and keeping up with your kids’ busy schedules, the last thing you want to think about is what happens after you're gone. Many people assume that settling an estate is a quick process, but how long probate takes in Colorado can actually be a major surprise for your family.

Why Some Estates Take Years to Settle

Probate is the court-supervised process of distributing a person's property after they pass away. While simple estates might wrap up in a year, others can drag on for much longer. In fact, a couple of cases we have handled in our Centennial office have lasted more than five years. The biggest delay often comes down to one thing: real estate. If you own rental properties or a home with a complex title, the practical work of getting those assets ready to sell or distribute can take a massive amount of time.

The "Blended Family" Complication

Family dynamics play a huge role in the timeline. We once handled a case where a married couple owned a home, but the title wasn't set up for joint ownership. Because they had a blended family that didn't see eye-to-eye, it took years of legal work just to figure out who had the right to make decisions about the house.

Planning Ahead to Save Time

The good news is that you can take steps now to ensure your family isn't stuck in court for half a decade. By reviewing how your assets are titled and having a modern estate plan, you can greatly simplify the process for your loved ones. If your current plan is more than five years old, it might not account for your current assets or the needs of your growing children. Taking care of this now means your family can spend their time appreciating each other's company instead of sitting in a lawyer's office.

Protect Your Family’s Future

Understanding how long probate takes in Colorado is the first step toward avoiding a long, drawn-out process for your heirs. Our team at The McKenzie Law Firm, LLC is here to help you create a plan that works .

If you are ready to protect your legacy in the Denver metro area , call us today at 720-821-8604 or visit our website to schedule a consultation .

Why Your Estate Plan Needs an Update: Don't Let the State Rules Take Over

Thu, 16 Apr 2026 14:30:06 GMT

When someone passes away, the state's strict legal rules take over immediately. If your estate plan isn't up to date, these rules can override your personal wishes, impacting everything from your spouse's inheritance to how your children are supported. Keeping your plan current with your relationships and finances is the only way to ensure the reality of your life matches your paperwork.

Don't Let State Rules Dictate Your Legacy

In Colorado, the law has specific requirements for what you must leave a spouse. If your plan doesn't follow these rules, a spouse could potentially claim a larger portion of your estate than you intended. While the law generally supports your right to choose how your money is distributed, it also steps in to prevent conditions that go against public policy—for instance, you cannot legally force an heir to marry or divorce to receive their inheritance. Once an estate administration begins, the people in charge are bound by the existing paperwork and cannot change the instructions you left behind.

Keeping Your Plan in Sync with Your Life

As a professional in the Denver metro area, your life is dynamic. Whether you’ve recently changed careers, welcomed a new grandchild, or finally bought that vacation home near your favorite hiking trails, your estate plan needs to reflect these changes. An outdated plan is often as risky as having no plan at all because it relies on "old rules" that may no longer apply to your current family or financial status. Reviewing your documents every few years ensures that your assets are protected and your family is provided for exactly as you wish.

Professional Guidance in the Denver Metro Area

Navigating the complexities of estate administration doesn't have to be overwhelming. At The McKenzie Law Firm, we help families in Centennial and across the Denver metro area create comprehensive plans that stand the test of time. Whether you are spending your weekends cheering on the Denver Broncos or exploring the Rockies, you deserve the peace of mind that comes from knowing your legacy is secure. If your plan is more than five years old, it is time to make sure your paperwork still matches your reality.

Take the Next Step

Is your estate plan ready for whatever life brings next? Contact The McKenzie Law Firm today to ensure your wishes are protected. We invite you to schedule a consultation with our experienced team. Call us at 720-821-7604 to get started. We proudly serve clients throughout the Denver metro area and are ready to help you protect what matters most.

Who Will Care for My Kids if Something Happens to Me?

Wed, 15 Apr 2026 14:30:03 GMT

As a parent in the Denver metro area, you likely spend your days juggling work, school schedules, and soccer practice. You do everything to keep your family safe. But have you ever stopped to ask yourself, "What happens to my kids if I die?" While it is a heavy question to think about, having a clear answer is one of the greatest gifts you can give your children. Without a legal plan in place, the future of your family could be left up to a judge who doesn't know your values or your wishes.

The Risk of Family Disputes

Most of the time, family members will step in immediately to care for children. However, if your relatives don't agree on who should take over, things can get messy very quickly. A simple disagreement can turn into a court battle. While the adults argue, Child Protective Services might even get involved to monitor the situation. This adds unnecessary stress to your children during an already heartbreaking time. By documenting your choice, you prevent these "blown up" situations and ensure everyone knows exactly who you trust most.

Managing the Daily Routine

Beyond just who they live with, there are daily tasks that need a legal "green light." Who is allowed to pick your child up from daycare? Who can take them to the doctor or sign school permission slips? In Colorado, there are specific forms you can use for short-term care that don't require a judge's approval. But for long-term situations, a court usually has to sign off. They don't just "send kids to your sister" because she's family. You need a plan that meets specific Colorado legal requirements to make sure the transition is as smooth as possible for your kids.

Protecting Your Children’s Future in Denver

If you are living in Centennial or anywhere in the Denver metro area, you want to make sure your estate plan is up to date and legally sound and compliant with Colorado law. Creating a plan isn't just about money; it’s about making sure your kids are raised by the people you choose. If your current plan is more than five years old, or if you haven't started one yet, now is the time to secure their future. You shouldn't have to wonder "what happens to my kids if I die" when you can have the peace of mind that comes with a professional legal strategy.

Let’s Protect Your Family Together

We help families like yours navigate these big decisions with ease and confidence. If you’re ready to put a plan in place that protects your children, we are here to help .

Please contact The McKenzie Law Firm today to schedule a consultation. You can also reach our office in Centennial at 720-821-7604 . We look forward to serving your family in the Denver metro area.

Estate Planning vs. Probate: How to Protect Your Family’s Future in Denver

Tue, 14 Apr 2026 14:30:01 GMT

For many professional couples in the Denver metro area, life moves fast. You’re busy balancing careers, saving for retirement, and helping your college-aged kids navigate their future. Amidst all this, you might have heard the term “probate” and wondered if it’s something you should worry about. The short answer is: yes, but with the right plan, you can avoid it entirely.

What is Probate and Why Should You Avoid It?

Probate is the legal process that happens after someone passes away. A court steps in to oversee the distribution of their belongings and money. While this process is meant to be helpful, it often leads to a "disaster" of delays and high costs. The primary goal of a solid estate plan is to avoid probate. By setting things up in advance, you ensure your assets go directly to your loved ones without a judge having to make the final decisions.

Making a Plan That Fits Your Life

A great estate plan does more than move money around; it ensures your wishes are carried out by the people you trust most. Whether you want to provide for a second spouse, leave an inheritance directly to your children, or set up a trust, your plan should reflect your unique family. When you have a clear roadmap in place, you remove the guesswork for everyone involved. Without it, a court is left to "guess" who is the best person to manage your affairs, which might not lead to the outcome you wanted.

Protecting Your Family's Future in Colorado

If your current plan is more than five years old, or if you don't have one at all, now is the time to act. You have worked hard to build a life for your family. A modern estate plan ensures that the legacy you've built stays protected and passes to the right hands. Don't leave your family's future up to a court's best guess.

Schedule a Consultation with Our Centennial Team

Are you ready to protect your family and avoid the stress of probate? Our team is here to help you create a plan that fits your life perfectly. We proudly serve families throughout the Denver metro area from our office in Centennial, Colorado.

Contact The McKenzie Law Firm today or call us at 720-821-7604 to schedule your consultation and ensure your estate plan is ready for whatever the future holds.

Your Grandkids Need Protection: How to Safely Leave an Inheritance

Mon, 13 Apr 2026 14:30:02 GMT

Leaving a legacy for your grandchildren is a wonderful goal. You’ve worked hard to build a life and a nest egg. Naturally, you want to ensure your wealth benefits the next generation. But what happens if you feel like your grandkids need protection from their parents?

It’s a common worry. Sometimes, children are already financially stable and don't need an inheritance. In other cases, a child might be irresponsible with money, leaving you concerned that a gift meant for your grandkids would be spent before they ever see it. Without a clear plan, your good intentions could lead to a conservatorship . This is a legal process in which a court appoints an adult to manage a minor's money. In the best cases, it is a massive, expensive hassle.

Avoid the "Massive Hassle" of Court Interference

If you don't name a specific person to manage the money for your minor grandkids, a judge in Colorado will do it for you. This often means your family loses control and ends up spending extra money on legal fees. Plus, a court-ordered conservatorship usually ends when the child turns 21. For many young adults, 21 is still quite young to handle a large sum of money.

To truly protect your grandkids, you need a plan that stays in your family’s hands, not the court's. This often involves creating a trust . A trust lets you choose exactly who manages the money and at what age your grandkids receive it. You can set rules to ensure the funds are used for college, a first home, or starting a business.

Taking the Next Step

You’ve spent years building your retirement savings and working with a financial advisor. Your estate plan should be just as solid. Whether you need to update an old plan or start from scratch, we are here to help you navigate these sensitive family decisions. We want to make sure your legacy reaches the people you love most without the stress of court intervention.

If you are ready to ensure your grandkids are protected, let’s talk. Our team at The McKenzie Law Firm serves the entire Denver metro area from our Centennial office. You can schedule a consultation with us today to start building a plan that fits your family’s unique needs. Give us a call at 720-821-7604 or visit our contact page to get started.

Can My Ex-Spouse Get My Retirement Account? What Denver Professionals Need to Know

Sun, 12 Apr 2026 13:57:32 GMT

The logic and law here can be surprising, but it essentially comes down to how your retirement account is "titled" and the paperwork on file with the financial institution.

Why Your Will Isn’t Enough

When most people think about their final wishes, they focus on their Will or Trust. While these are critical tools, they often do not control who gets your 401(k) or IRA. Retirement accounts are usually transferred through a designated beneficiary form. This is a specific legal document you fill out with your bank or investment firm.

Even if you have a comprehensive trust, you cannot simply "put" a retirement account inside it while you are alive. The IRS requires these accounts to be titled to a living person so they can track distribution requirements—the rules about when you must start taking money out based on your age. Because the beneficiary form acts as a standalone contract, it often overrides whatever you wrote in your Will.

The Post-Divorce Trap

A very common and heartbreaking situation happens after a divorce . While a couple is married, they naturally list each other as beneficiaries. After the divorce is finalized, they may update their Will or establish new bank accounts, but they often forget to update those specific beneficiary forms with their financial advisor or HR department.

If you pass away and your ex-spouse is still listed on that form, the money will likely go to them. In the eyes of the financial institution and the law, that form is a clear instruction that must be followed, regardless of your current relationship status or what your other estate planning documents say.

Protecting Your Legacy in Colorado

If it has been more than five years since you last looked at your estate plan, or if you have gone through a major life change like a divorce, now is the time to act. Ensuring your hard-earned savings go to your children or your current spouse requires a careful review of every account you own.

At The McKenzie Law Firm, LLC , we help families in Centennial and across Colorado ensure their plans actually work when they are needed most. Don't leave your retirement to chance or outdated paperwork. To make sure your plan is up to date, schedule a consultation with our team or call us at 720-821-7604.

Do You Need Two Different Lawyers for Estate Planning

Sat, 11 Apr 2026 17:21:30 GMT

Finding a law firm that fits your specific needs can feel like a tall order. If you are a professional in the Denver area, you likely appreciate the value of working with experts who truly understand your family’s situation. One common question many families face is: do you need two different lawyers for estate planning and probate?

At The McKenzie Law Firm, LLC , we believe in providing clear, straightforward answers. The simple answer is no—you do not necessarily need different lawyers for these tasks. In fact, there are several benefits to having the same attorney handle both.

The Benefit of Continuity

Choosing a lawyer who handles both estate planning and estate administration (also known as probate) can make a difficult time much easier for your family. When the lawyer who drafted your plan is also the one who helps your family through the administration process, they already know the details of your situation. They understand the "why" behind your choices and are better equipped to solve any unexpected problems that might arise.

Why Some Lawyers Specialize

It is important to understand that not all estate planning lawyers handle probate. Some attorneys prefer to focus solely on planning to avoid the complexities of the court system. However, if you want a lawyer who can guide your family through every step—from creating the plan to carrying it out—you need to ensure they offer both services.

Choosing the Right Firm in the Denver Metro Area

If you live in Centennial , Denver , or the surrounding areas, you deserve a legal partner who stands by their work. At The McKenzie Law Firm, LLC , we pride ourselves on being there for our clients and their families for the long haul. Whether you need to update a plan that is more than five years old or you are starting from scratch, we are here to help.

Don't leave your family's future to chance. If you are looking for a trusted partner in the Denver metro area , we invite you to reach out to us .

Schedule a consultation with The McKenzie Law Firm today by calling us at 720-821-7604 . Let's work together to ensure your legacy is protected.

How Blended Families Can Solve the Biggest Inheritance Problem

Fri, 10 Apr 2026 22:12:12 GMT

Planning for the future is a beautiful way to care for the people you love. However, if you are part of a blended family, you might feel like you are walking a tightrope. You want to ensure your spouse is comfortable and well-supported, but you also want to make sure your children from a previous marriage receive their fair share. In the Denver metro area , many couples struggle with this exact "all or nothing" dilemma. The most common inheritance problem in blended families is the long wait—sometimes decades—that children face before receiving any support from their parent’s estate.

The 15-Year Waiting Game

When one spouse passes away, it is very common to leave everything to the surviving spouse. While this protects your partner, it can create tension with your children. If your spouse outlives you by 15 or 20 years, your children are left waiting until they are much older to see any of their inheritance. During that time, life happens. The surviving spouse might get remarried, or their own needs might change, which could accidentally leave your children with nothing at all. This is why many families in Centennial, Colorado , are looking for more balanced solutions.

A Faster Way to Protect Your Kids

One of the best ways to solve this inheritance problem in blended families is to provide an immediate gift. If your finances allow it, you don't have to make your children wait until your spouse passes away. You can set up your plan so that your children receive a specific portion of their inheritance right away. This "immediate gift" gives them support when they might need it most—perhaps for a first home or starting a business—while still ensuring your spouse has the assets they need to live comfortably.

Creating a Plan Everyone Can Live With

A good estate plan acts like a bridge between the people you love. By using tools like trusts , you can protect your spouse’s lifestyle while guaranteeing that your children are looked after eventually. Dealing with these sensitive topics now prevents hurt feelings and legal battles later. If it has been more than five years since you last looked at your paperwork, it is time to make sure your plan still fits your family’s unique shape.

Let’s Secure Your Family’s Future

If you are ready to protect your spouse and your children without the drama, we are here to help. At The McKenzie Law Firm, LLC, we specialize in helping families throughout the Denver metro area find peace of mind. Call us today at 720-821-7604 to schedule a consultation and solve the inheritance problem in blended families once and for all.

Is Being "Equal" Actually Unfair? The Inheritance Trap

Fri, 10 Apr 2026 02:39:41 GMT

Many of the parents we work with in Colorado have one simple goal: treat the children exactly the same. On paper, giving each child an equal share of your estate seems like the right thing to do. You love them equally, so the money should be equal, too. Right?

However, as an estate planning attorney, I often see how "equal" can lead to deep-set resentment.

The Caretaker Gap

Think about your family. As you get older, it is common for one child to take on more responsibility. We often see one sibling step up to handle the "heavy lifting." This might mean managing doctor appointments, helping with daily physical care, or even putting their own career on hold to ensure you are safe and comfortable.

This kind of care is a full-time job. It is physically and emotionally exhausting.

Why "Equal" Can Feel Like a Burden

Imagine a scenario where one of your children spends years caring for you, while the other siblings are less involved due to distance or busy schedules. If your will simply says, "Divide everything into equal shares," that caretaker child might feel forgotten.

When the time comes to settle the estate, that child realizes they are receiving the exact same amount as a sibling who wasn't there for the difficult days. In their eyes, they weren't just a child; they were a caregiver who sacrificed their time and income. Without a plan that recognizes that effort, "equal" can feel like a slap in the face.

Planning with Clarity and Heart

Our most successful clients aren't just looking for "simple" documents. They want a plan that reflects the reality of their family's lives. They want to provide certainty so their children can remain close after they are gone.

If you haven't updated your will in over five years—or if you don't have one at all—it’s time to look at the big picture. You have worked hard to build your legacy. You’ve coached the teams, saved for the college funds, and planned for every "what if." Don't let an "equal" division create a divide between the people you love most.

We are here to help you navigate these tough questions. Let’s sit down in our office and create a plan that provides true protection and peace of mind for your family.

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

The Authority Gap: Why "Next of Kin" Isn’t Always Enough in Colorado Probate

Thu, 09 Apr 2026 23:35:35 GMT

For many families, the reality of the probate process doesn't set in until they encounter a locked door—metaphorically and literally. You might head to the bank to manage a late parent's account, visit a title company to list a family home, or stop by the DMV to transfer a vehicle title. It is in these moments that you are met with the same crucial question: "What is your authority to do this?"

As we discuss in our latest video, The Probate Process Most Families Don’t Understand , there is a common misconception that being a spouse or a child automatically grants you the legal right to handle a decedent's affairs. In the eyes of Colorado law, while you may be the rightful heir, you are not automatically the authorized representative.

Understanding the Threshold of Probate

Probate is the court-supervised process of validating a will (if one exists), identifying assets, paying off debts, and distributing the remaining property. In Colorado, probate is generally triggered when a person passes away with:

Real Estate: Any real property held solely in the decedent’s name.
Small Estate Limits: Personal property (bank accounts, vehicles, etc.) that exceeds a specific dollar threshold—currently $88,000 (as of 2026, adjusted annually).

If the estate falls below this threshold and contains no real property, you may be able to use a Small Estate Affidavit . However, once you cross these lines, the court must formally appoint a Personal Representative (often called an Executor in other states) to provide the "authority" that banks and government agencies require.

Beyond Distribution: The Importance of Record-Keeping

One of the biggest hurdles families face isn't just "who gets what," but "how it was handled." Probate is a mechanical necessity designed to protect three groups: the creditors, the heirs, and the Personal Representative themselves.

The process provides a structured framework for:

Asset Discovery: Ensuring every account, policy, and piece of property is accounted for.
Debt Resolution: Legally noticing creditors so that bills are settled correctly, preventing future claims against heirs.
Transparent Record-Keeping: Creating a clear paper trail of how assets were managed and distributed, which is the best defense against family disputes.

Navigating the Process with Precision

While the term "probate" often carries a negative connotation of delay and expense, it is essentially a system of accountability. It ensures that the right people receive the right assets at the right time.

If you find yourself questioning your authority to manage a loved one's estate, remember that you don't have to navigate the Colorado court system alone. Our firm specializes in streamlining this administration, helping families move from the "authority gap" to a completed, legally sound distribution.

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

What I Told The Empowered Elder Podcast About Estate Planning — And Why It Matters for Your Family

Fri, 03 Apr 2026 22:14:57 GMT

I recently had the pleasure of sitting down with Tasha Beckman and Nicole Robalado on the Empowered Elder Podcast to talk about one of the topics I care most about: helping families protect themselves before a crisis forces their hand.

You can watch the full episode below. But I also wanted to highlight a few of the key points we covered, because they come up in our office week after week.

The Biggest Risk Isn't Death — It's Incapacity

Most people walk into an estate planning conversation focused on what happens after they die. That's understandable. But I always try to redirect that focus, because your most immediate risk probably isn't death. It's an unexpected event that leaves you unable to manage your own affairs while you're still alive.

I use a personal example to illustrate this. When my wife and I moved to Colorado, I arrived 10 days before she did. I needed a power of attorney just to sign the closing documents on our house. She was perfectly healthy — she just wasn't there. Now imagine what happens when someone can't be there because of a medical emergency, and no power of attorney exists. Suddenly your family can't access your bank accounts, can't talk to your doctors, can't do anything without going to court to get permission.

That court process — called a conservatorship or guardianship — is invasive, expensive, and slow. You need background checks, credit checks, doctor testimony, court appearances, and then ongoing annual reporting once it's granted. All of that can be avoided with a simple financial power of attorney and medical power of attorney done in advance.

A Will Does Not Avoid Probate

This surprises a lot of people. A will is an important document, but it doesn't keep your estate out of court. In Colorado, if you pass away owning real estate or assets totaling more than $88,000 — not counting jointly held assets, designated beneficiary accounts, or assets in a trust — your estate goes through probate regardless of whether you have a will.

Probate exists partly because you have creditors, not just heirs. Somebody has to deal with your last utility bill, your HOA dues, your property taxes while the house is being sold. The court is there to oversee that process and make sure everyone gets paid in the right order.

A trust, properly funded, can avoid that process. But the key word is "funded." A trust that's never had assets transferred into it is just an empty container. We see this constantly — people who created a trust years ago and assumed they were set, without ever actually retitling their home or accounts into it.

"Equal" Isn't Always Fair — And Families Fight About More Than Money

One of the most common mistakes I see in estate plans is the assumption that an equal split among children is simple and conflict-free. It rarely is, especially when one child has been doing significantly more caregiving than the others.

The person named as your personal representative or trustee has a legal obligation to follow your instructions — they can't just "figure it out." So if the plan says equal, it means equal, even if one sibling spent years providing hands-on care while others didn't.

The most common trigger for conflict in estate administration? Someone living in the family home who doesn't own it. Every single contested probate I've handled has involved this dynamic. Both sides always have a story. Neither side feels like the bad guy. And by the time it gets to that point, the relationship is usually already broken — sometimes permanently.

Choosing the right person to manage your estate may matter more than the specific instructions you leave them. And that person should know you've chosen them before you need them.

The Documents Every Adult Should Have

We covered a lot of ground in the podcast, but here are the core documents that every adult — regardless of age or asset level — should have in place:

Will — directs what happens to assets in your name when you pass
Financial Power of Attorney — authorizes someone to manage your finances if you can't
Medical Power of Attorney — authorizes someone to make healthcare decisions on your behalf
Living Will (Advance Directive) — documents your wishes if you're unresponsive and doctors determine further treatment is only prolonging death
Memorial Instructions — guidance for your family on how you want your arrangements handled

If you have real estate, minor children, a blended family, or significant assets, a trust is also worth a serious conversation.

How Often Should You Update Your Plan?

More often than you think. In my experience, people consistently underestimate how old their documents are — usually by a factor of two. If you think it's been five years, it's probably been ten.

We reach out to our clients annually as a reminder to pull their plan back off the shelf. The triggers that warrant a closer look include any change in family through birth, death, marriage, or divorce; a significant change in assets; or a major life transition like a move or retirement.

That said, there's no universal rule. A 20-year-old will that still accurately reflects your family and your wishes may be perfectly fine. A plan that's nine months old may already be completely wrong.

If You Haven't Started Yet, You're in Good Company

Roughly 70% of Americans pass away without any will in place. So if you've been putting this off, you're not alone — and there's nothing to be embarrassed about. You do have an estate plan of a sort: Colorado's intestacy laws will govern what happens to your assets if you don't have one of your own. The question is whether the state's default plan matches what you would have chosen.

It usually doesn't.

If this conversation raised questions about your own plan — or the lack of one — we'd be glad to help. You can schedule a consultation here , or call us at 720-821-7604.

The McKenzie Law Firm, LLC serves clients throughout the Denver metro area in estate planning, estate administration, and small business law.

3 Estate Planning Myths Baby Boomers Should Stop Believing

Fri, 03 Apr 2026 21:40:21 GMT

If you've been putting off estate planning — or think you already have it handled — there's a good chance one of these common misconceptions is part of the reason.

Earlier this year, I had the privilege of speaking at an event hosted by Jim Smith , a Golden real estate professional who regularly brings together valuable resources for his clients and community. He recently published a summary of that presentation on his blog, and you can read it here and watch the full video here . I wanted to expand on a few of those key points for our own readers.

Myth #1: A trust protects your assets automatically.

This is one of the most persistent misunderstandings I encounter. Many people go through the process of creating a trust, feel a sense of relief, and move on — without ever actually funding it. A trust is a legal container. Until you formally transfer your assets into it — your real estate, bank accounts, investment accounts, and so on — it holds nothing, and it protects nothing. Your assets will still go through probate when you die, which means court oversight, potential delays of a year or more, and unnecessary expense for your family.

Funding a trust is a step many attorneys don't emphasize enough, and it's one we make a point of walking our clients through carefully.

Myth #2: Estate planning is only about what happens when you die.

This one surprises a lot of people. A complete estate plan isn't just a roadmap for distributing your assets after death — it's also a set of instructions for what happens if you can't speak for yourself while you're still alive. A health care directive, a HIPAA waiver, and medical and financial powers of attorney are what allow trusted people to step in and make decisions on your behalf if you're incapacitated. Without these documents, your family may face court proceedings just to get the authority to help you.

For baby boomers especially, this is often the most urgent part of the conversation.

Myth #3: You disinherit someone by leaving them a dollar.

This old myth has made its way into popular culture, but it's not only wrong — acting on it can backfire. Leaving someone a nominal amount like one dollar can actually make them a legal "interested party," which may give them grounds to contest your estate. The right approach is to explicitly state your disinheritance intent within the plan itself, in a way that's legally clear and defensible.

Situations where this comes up more often than you might expect include estrangement from a family member, a desire to divide an estate unequally among children, concerns about how someone would handle an inheritance, or prior financial support already given in lieu of a bequest.

Bottom Line

Estate planning works best when it's built on accurate information. If any of these myths have been shaping how you think about your own plan — or your lack of one — we'd encourage you to take a fresh look.

We'd also encourage you to check out Jim Smith's full blog post here , and to watch the video of the full presentation if you'd like to go deeper on any of these topics.

If you have questions about your own estate plan, or you're not sure whether what you have in place still reflects your wishes, we're happy to help . A conversation with our team is a good place to start.

The McKenzie Law Firm, LLC serves clients throughout the Denver metro area in estate planning, estate administration, and small business law. Contact us today to schedule a consultation.

Can I Disinherit a Child in Colorado? What the Law Allows

Fri, 27 Mar 2026 04:00:23 GMT

Can I Disinherit a Child in Colorado? What the Law Allows

Disinheriting a child is one of the most difficult decisions a parent can make. Whether due to estrangement, financial concerns, or personal reasons, many Colorado parents want to know if the law allows them to leave a child out of their estate plan.

In Colorado, the answer is generally yes—but only if it is done properly. At The McKenzie Law Firm, LLC , we provide legal assistance to the Colorado public and help individuals create clear, legally sound estate plans that reflect their wishes.

Does Colorado Law Allow You to Disinherit a Child?

Colorado law gives individuals significant freedom when creating a will or trust. In most cases, you may choose who inherits your property and who does not. This includes the ability to disinherit an adult child.

However, there are important legal considerations. Colorado recognizes “forced heirship” only in limited situations, primarily involving a surviving spouse—not children. This means that, unlike some states, Colorado does not require you to leave a portion of your estate to your children.

That said, failing to plan carefully can create disputes, challenges, and unintended consequences.

The Importance of Being Clear in Your Will

If you intend to disinherit a child, your estate planning documents must clearly state that intention. Simply failing to mention a child in your will can create confusion and potentially lead to litigation.

Colorado courts may treat an omitted child differently depending on the circumstances. For example, if a child was born after your will was drafted and not included, the law may presume the omission was accidental. This is known as a “pretermitted heir.”

To avoid this issue, your will should specifically state that you are intentionally not leaving assets to a particular child. Clear language helps reduce the risk of disputes and protects your estate plan from challenges.

Using Trusts to Strengthen Your Plan

In some cases, a revocable living trust may provide additional structure and clarity. Trusts can help:

Distribute assets privately
Reduce the likelihood of court challenges
Control how and when beneficiaries receive property
Provide flexibility in complex family situations

While no estate plan can completely eliminate the risk of a legal challenge, carefully drafted documents can significantly strengthen your position.

Can a Disinherited Child Contest the Will?

Even if you intentionally disinherit a child, that child may attempt to contest your will. Common grounds for contesting a will in Colorado include:

Lack of testamentary capacity
Undue influence
Fraud or coercion
Improper execution of the will

Proper drafting and execution are essential to minimize the risk of a successful challenge. Working with an experienced estate planning attorney helps ensure your documents meet Colorado’s legal requirements.

Alternative Approaches to Consider

Disinheritance is not the only option. Some parents choose alternatives, such as:

Leaving a smaller, defined inheritance
Placing assets in a trust with conditions
Distributing specific property instead of a full share
Using no-contest clauses to discourage litigation

Each family situation is unique, and the right approach depends on your goals, family dynamics, and financial circumstances.

Why Professional Guidance Matters

Disinheriting a child can increase the likelihood of family conflict and legal challenges. A properly structured estate plan can help protect your wishes and reduce uncertainty for your loved ones.

At The McKenzie Law Firm, LLC , we provide legal assistance to the Colorado public and help individuals create estate plans that reflect their intentions while complying with state law. Careful planning today can prevent unnecessary disputes tomorrow.

Estate Planning and Second Homes: What to Do With Your Colorado Vacation Property

Thu, 26 Feb 2026 16:01:29 GMT

Estate Planning and Second Homes: What to Do With Your Colorado Vacation Property

Owning a vacation home in Colorado is a dream for many families. Whether it is a mountain cabin, a ski condo, or a lakeside retreat, your second home likely carries both financial value and sentimental importance. However, without proper estate planning, that cherished property can become the source of conflict, tax issues, and legal complications for your loved ones.

Careful planning ensures your Colorado vacation property is protected and passed on according to your wishes. At The McKenzie Law

Firm, LLC, we provide legal assistance to the Colorado public in creating estate plans that address second homes and other valuable assets.

Why Second Homes Require Special Estate Planning Attention

A second home is more than just another asset. It often involves:

Ongoing maintenance and property taxes
Homeowners’ association obligations
Insurance considerations
Shared family use
Potential rental income

If your estate plan does not clearly address how the property should be handled, your heirs may face disagreements over who gets to use it, who pays for it, or whether it should be sold.

Deciding Whether to Keep or Sell the Property

One of the first decisions in estate planning for a vacation home is whether you want the property to remain in the family or be sold after your passing.

If you want to keep the home in the family, your estate plan should clearly state:

Who will inherit ownership
How expenses will be divided
How usage will be scheduled
What happens if one heir wants to sell

If you prefer that the property be sold, your will or trust should give clear instructions about the sale process and distribution of proceeds.

Using a Trust to Transfer a Colorado Vacation Property

Many Colorado property owners choose to place their vacation home in a revocable living trust. Doing so can:

Help avoid probate
Provide privacy
Allow for smoother transfer of ownership
Establish rules for property management

A trust can also include detailed instructions about how the property should be maintained, who is responsible for expenses, and how disputes should be resolved.

For families who want to preserve a vacation home for generations, more structured arrangements may be considered to provide long-term stability and management.

Addressing Family Dynamics

Vacation homes often carry emotional significance. While one child may want to keep the cabin for family gatherings, another may prefer to receive financial value instead.

An estate plan can address these differences by:

Providing buyout options
Equalizing inheritances with other assets
Establishing usage schedules
Appointing a neutral trustee or manager

Clear instructions reduce the likelihood of family conflict and protect relationships.

Understanding Tax Considerations

Colorado vacation properties may have capital gains implications if sold. Additionally, if the property has significantly appreciated in value, your heirs may benefit from a step-up in basis upon your death.

Estate planning also considers potential federal estate tax exposure for larger estates. Proper planning can help minimize unnecessary tax burdens and preserve more value for your beneficiaries.

Planning for Incapacity

Estate planning is not only about what happens after death. If you become incapacitated, someone may need authority to manage, rent, insure, or sell your vacation property.

A comprehensive estate plan should include:

Durable powers of attorney
A living trust (if appropriate)
Clear instructions for property management

Without these documents, your family may need to seek court intervention to manage the property.

Protecting Your Colorado Legacy

Your Colorado vacation home represents memories, investment, and legacy. Taking the time to create a thoughtful estate plan helps ensure that your wishes are honored and your family is protected from unnecessary legal challenges.

At The McKenzie Law Firm, LLC, we assist the Colorado public with estate planning strategies tailored to second homes and other complex assets. Careful planning today can provide clarity and security for generations to come.

Estate Planning for Single Adults in Colorado: Why It Still Matters

Wed, 21 Jan 2026 05:00:51 GMT

Estate Planning for Single Adults in Colorado: Why It Still Matters

Many single adults assume that estate planning is something only married couples or parents need to think about. In reality, estate planning is just as important—if not more so—for individuals who are unmarried and may not have immediate family members to step in during an emergency. In Colorado, having a clear and legally sound plan ensures your wishes are honored, your assets are protected, and the right people are empowered to make decisions on your behalf.

At The McKenzie Law Firm, LLC, we assist the Centennial community with creating customized estate plans that reflect your goals and protect your future.

Why Estate Planning Matters for Single Adults

1. Control Over Your Assets

Without an estate plan, Colorado’s intestacy laws determine who inherits your property. This typically means assets go to your closest relatives—even if those are not the people you would choose. A will or trust lets you decide exactly where your money, personal belongings, and property should go.

2. Someone to Make Medical Decisions

If you become incapacitated and cannot make your own medical decisions, Colorado law looks to next of kin—often resulting in someone you may not want making those choices. A medical power of attorney allows you to choose a trusted friend, relative, or other individual to act on your behalf.

3. Someone to Handle Finances if You’re Unable

A financial power of attorney gives a person of your choice the authority to manage your bills, accounts, and legal matters if you cannot. Without it, your loved ones may need to go through a court process to obtain authority—causing delays and added stress.

4. Protection Through Advance Directives

An advance directive or living will outlines your preferences for end-of-life care. This prevents confusion, disagreement, and guesswork among those trying to make decisions for you.

5. Planning for Pets

For many single adults, pets are family. Colorado allows you to create a pet trust or include provisions in your estate plan to ensure your animals are cared for and financially supported.

6. Avoiding Court Delays and Conflicts

Clear estate planning reduces the likelihood of probate disputes and makes the administration of your estate faster and smoother. It also ensures someone you trust is appointed as your personal representative (executor).

Key Documents Single Adults Should Consider

Last Will and Testament
Revocable Living Trust
Durable Financial Power of Attorney
Medical Power of Attorney
Living Will / Advance Directive
HIPAA Release
Pet Trust (if applicable)

Why Work With an Attorney?

Colorado’s estate laws can be complex, and a generic online form rarely accounts for a person’s unique circumstances. An attorney can help you understand your options, make informed decisions, and create documents that comply with state requirements.

At The McKenzie Law Firm, LLC, we provide legal assistance to the Centennial public and help individuals create strong, personalized estate plans that offer peace of mind.

The Role of Life Insurance in Your Colorado Estate Plan

Thu, 20 Nov 2025 16:19:52 GMT

The Role of Life Insurance in Your Colorado Estate Plan

Life insurance is one of the most powerful and flexible tools you can include in your Colorado estate plan. While many people think of it only as a way to replace lost income, life insurance also serves important legal and financial purposes—especially when it comes to protecting your family, covering expenses, and ensuring a smooth transfer of assets.

At The McKenzie Law Firm, LLC , we assist individuals and families in Centennial and throughout Colorado with understanding how life insurance fits into a comprehensive estate plan.

Why Life Insurance Matters in Estate Planning

Life insurance provides immediate, liquid funds at the time of death. This makes it valuable in situations where loved ones would otherwise wait for probate or struggle to cover sudden expenses. Some of the key reasons people in Colorado include life insurance in their estate plan include:

1. Providing Financial Support for Loved Ones

Life insurance can replace income, cover living expenses, pay education costs, and offer long-term financial stability to your beneficiaries.

2. Paying Estate Taxes and Final Expenses

While most Colorado estates do not owe state-level estate taxes, some may face federal estate tax obligations. Life insurance can help cover:

Funeral and burial costs
Probate fees
Outstanding debts
Taxes, if applicable

This prevents beneficiaries from dipping into savings or selling assets to cover expenses.

3. Equalizing Inheritances

If you plan to leave a business or real estate to one child but want others to receive comparable value, life insurance can help balance distributions fairly.

4. Funding Buy-Sell Agreements

Colorado business owners often use life insurance to fund agreements that allow surviving partners or heirs to buy the deceased owner's share of a business. This prevents conflicts and helps keep the business stable.

5. Avoiding Probate Delays

Life insurance proceeds go directly to named beneficiaries and bypass probate. This means loved ones receive funds quickly, often within weeks.

Choosing the Right Type of Life Insurance

When building an estate plan, the type of policy you select matters. Common options include:

Term Life Insurance – Provides coverage for a set period and is often more affordable.
Whole Life Insurance – Offers lifelong coverage and builds cash value.
Universal Life Insurance – A flexible policy with long-term investment potential.

Each policy has different benefits depending on your goals, budget, and timeline.

Using Trusts With Life Insurance

Many Colorado residents choose to create a life insurance trust. This can:

Keep policy proceeds out of taxable estates
Protect funds from creditors
Ensure money is used exactly as intended
Support minor or special-needs beneficiaries

An attorney can help determine whether an irrevocable life insurance trust (ILIT) would strengthen your plan.

Why Legal Guidance Matters

Life insurance can greatly enhance an estate plan , but only when structured correctly. Issues like outdated beneficiaries, unclear designations, or failing to coordinate your insurance with your will or trust can lead to unintended results.

At The McKenzie Law Firm, LLC, we help Centennial residents navigate these decisions and build an estate plan that supports long-term goals while protecting their families.

How to Choose the Right Trustee or Executor for Your Estate in Colorado

Thu, 20 Nov 2025 16:15:40 GMT

How to Choose the Right Trustee or Executor for Your Estate in Colorado

Choosing the right trustee or executor is one of the most important decisions you will make during the estate planning process. The person you select will be responsible for managing your assets, following your instructions, and protecting the financial interests of your loved ones after you pass away. For Colorado residents, understanding what these roles involve—and what qualities to look for—can help ensure your estate is handled smoothly and according to your wishes. At The McKenzie Law Firm, LLC we can provide legal assistance to the Centennial public.

Understanding the Roles: Trustee vs. Executor

Although trustees and executors both manage assets, their duties differ:

Executor: Oversees your estate after death, ensuring your will is followed, paying debts, and distributing property.
Trustee: Manages assets placed in a trust, either during your lifetime or after death, depending on the type of trust.

Because these individuals may serve for months or even years, it’s essential to choose wisely.

Key Qualities to Look for in a Trustee or Executor

1. Reliability and Integrity

Your trustee or executor must be someone you trust completely. They will access sensitive financial information and make important decisions. Choose someone known for honesty and follow-through.

2. Organizational Skills

Estate administration in Colorado requires careful tracking of accounts, deadlines, court filings, tax obligations, and communication with beneficiaries. A well-organized person will help prevent costly delays.

3. Financial Understanding

While they don’t need to be a financial professional, they should be comfortable handling money, reading documents, and seeking appropriate help when needed.

4. Willingness to Serve

Never assume someone wants the job. Managing an estate or trust can be time-consuming. Always discuss expectations with them beforehand.

5. Ability to Remain Neutral

Disagreements among beneficiaries are not uncommon. Your trustee or executor should be able to remain impartial and make decisions based on your wishes—not family pressure.

Should You Choose a Family Member, Friend, or Professional?

Each option has benefits:

Family Member or Friend: They may understand your wishes more personally and have an emotional connection.
Professional Fiduciary: Offers experience, neutrality, and consistency. This can be especially helpful for complex or high-value estates.
Colorado Attorney or Corporate Trustee: Often chosen when privacy, efficiency, and professionalism are top priorities.

Your decision should be based on the complexity of your estate, the personalities involved, and the level of trust you have in the individual.

Common Mistakes to Avoid

Choosing someone solely based on birth order or age
Naming someone who struggles with financial decision-making
Failing to name an alternate in case your first choice can’t serve
Forgetting to update your choice after major life changes

How The McKenzie Law Firm, LLC Supports Colorado Estate Planning

Selecting the right trustee or executor is a crucial step toward protecting your legacy. At The McKenzie Law Firm, LLC, we offer guidance to help you understand your options and build a strong, clear estate plan that reflects your goals. We can provide legal assistance to the Centennial public and help you make decisions that give you and your family peace of mind.

Power of Attorney in Colorado: What It Is and Why You Need One

Thu, 21 Aug 2025 15:24:17 GMT

Power of Attorney in Colorado: What It Is and Why You Need One

Planning for the future is not only about creating a will or trust—it also means making sure that your wishes are respected if you are ever unable to make decisions for yourself. A Power of Attorney (POA) is one of the most important legal tools available in Colorado to help you do just that.

What Is a Power of Attorney?

A Power of Attorney is a legal document that allows you to appoint someone you trust, known as your “agent” or “attorney-in-fact,” to make decisions on your behalf. These decisions can involve finances, property, health care, or other matters depending on the type of POA you choose.

In Colorado, there are different types of POAs, including:

Durable Power of Attorney – Remains effective even if you become incapacitated.
Medical Power of Attorney – Allows someone to make health care decisions when you cannot.
Limited or Special Power of Attorney – Grants authority for specific tasks or for a set period of time.

Why You Need a Power of Attorney

Life can be unpredictable, and without a valid POA, your loved ones may face unnecessary delays or even court proceedings to gain authority to act on your behalf. A POA ensures:

Continuity – Your bills, property, and financial matters can still be managed if you are incapacitated.
Peace of Mind – You decide who will make decisions for you, rather than leaving it to a court.
Health Care Advocacy – Someone you trust can step in to communicate with doctors and make medical choices aligned with your values.
Avoiding Guardianship – Without a POA, your family may have to petition the court for guardianship or conservatorship, which is often costly and time-consuming.

How The McKenzie Law Firm, LLC Can Help

Establishing a valid Power of Attorney requires careful legal drafting to ensure it complies with Colorado law. At The McKenzie Law Firm, LLC, we assist Colorado residents in creating Powers of Attorney that reflect their wishes and protect their families. Whether you need a financial POA, a medical POA, or a combination, we can guide you through the process and provide tailored solutions for your situation.

When There’s No Will: Handling Intestate Estates in Colorado

Thu, 21 Aug 2025 15:21:06 GMT

When There’s No Will: Handling Intestate Estates in Colorado

Losing a loved one is never easy, and the process can become even more complicated when the person passes away without a will. In Colorado, this situation is known as dying “intestate.” When this happens, state laws determine how the estate will be divided, which may not always align with the deceased’s wishes. At The McKenzie Law Firm, LLC, we help families in Colorado navigate these difficult circumstances with clarity and care.

What Does Intestate Mean in Colorado?

When someone dies intestate, their property is distributed according to Colorado’s intestacy statutes. These laws set out a strict order of inheritance, prioritizing spouses, children, parents, and other relatives. If no living relatives can be found, the estate may ultimately pass to the state of Colorado.

How Intestate Estates Are Distributed

Colorado law follows a structured hierarchy:

Surviving spouse – In many cases, a surviving spouse inherits most or all of the estate, though the outcome depends on whether the deceased also had children from another relationship.
Children and descendants – If there is no surviving spouse, or if children are from different relationships, the estate is divided between them according to state rules.
Parents and siblings – If the deceased has no surviving spouse or children, parents may inherit, followed by siblings and more distant relatives.

This rigid framework does not consider personal relationships, stepchildren, or close friends who might have been important to the deceased.

The Role of the Probate Court

When there is no will, the probate court appoints a personal representative (sometimes called an administrator) to manage the estate. This person must collect assets, pay debts and taxes, and distribute the remaining property according to Colorado law. The process can be time-consuming and emotionally overwhelming for grieving families.

Why Legal Guidance Matters

Intestate estates often involve questions about rightful heirs, asset valuation, and the probate process. Without a will to provide direction, disagreements among family members may arise, further complicating the matter. Having legal counsel can help reduce conflict and ensure the estate is handled properly.

Moving Forward Without a Will

If you have lost a loved one who did not leave behind a will, you do not have to face the process alone. At The McKenzie Law Firm, LLC, we can provide legal assistance to the Colorado public by guiding families through intestate estate administration and probate proceedings with compassion and diligence.

What Are the Legal Grounds for Contesting a Will in Colorado?

Thu, 21 Aug 2025 15:11:01 GMT

What Are the Legal Grounds for Contesting a Will in Colorado?

When a loved one passes away, their will is intended to carry out their wishes regarding the distribution of property. However, there are situations in which a will may not truly reflect the deceased person’s intent. In Colorado, contesting a will is a legal process that allows certain individuals to challenge its validity. Understanding the legal grounds is important if you believe a will is invalid or unjust.

Who Can Contest a Will in Colorado?

Only “interested parties” may challenge a will. This generally includes heirs, beneficiaries, and others who would be financially impacted by the will.

Legal Grounds for Contesting a Will

A will cannot be contested simply because someone disagrees with its terms. Instead, there must be legally recognized reasons, such as:

Lack of Testamentary Capacity – The testator (person creating the will) must have been of sound mind when making the will. If they did not understand the extent of their assets, the nature of their relationships, or the legal effect of the will, it may be invalid.
Undue Influence – A will can be challenged if someone exerted excessive pressure or manipulation on the testator to benefit themselves unfairly.
Fraud or Forgery – If the will was signed under false pretenses, altered, or forged, it can be contested.
Failure to Follow Legal Formalities – Colorado law requires specific formalities, including proper signing and witnessing. A will that does not comply with these rules may not be valid.
Revocation – If the deceased revoked the will before death, either by creating a new valid will or through a physical act like destroying it, the contested will may not stand.

The Contest Process

Challenging a will in Colorado typically takes place during probate. The court will review evidence and determine whether the will is valid. Because these disputes can be complex and emotional, having legal guidance is critical.

At The McKenzie Law Firm, LLC, we provide legal assistance to the Colorado public in will contests and probate matters. We can help you understand your rights and pursue the best course of action.

Executor vs. Personal Representative: What’s the Difference in Colorado?

Tue, 24 Jun 2025 16:00:02 GMT

Executor vs. Personal Representative: What’s the Difference in Colorado?

In the realm of estate administration, legal terminology can often be confusing—especially when terms vary from state to state. One such distinction that commonly arises is the difference between an “executor” and a “personal representative.” In Colorado, these terms are sometimes used interchangeably, but they carry nuances worth understanding.

At The McKenzie Law Firm, LLC, while we proudly serve clients in Denver, we also provide educational resources to help the public understand estate law principles across the country. If you're navigating probate or estate matters involving Colorado law, understanding these roles is an important first step.

What Is a Personal Representative?

In Colorado, the term "personal representative" is the official title used by the courts to refer to the individual responsible for administering a deceased person's estate. This role involves a number of critical duties, including:

Filing the will with the probate court
Collecting and inventorying estate assets
Paying outstanding debts and taxes
Distributing assets to beneficiaries

The term is gender-neutral and legally inclusive, and it applies whether the individual was named in the will or appointed by the court.

How Does “Executor” Fit In?

The term “executor” is more traditionally used in other states, including Denver, and typically refers to the person named in the will to carry out the deceased’s wishes. In Colorado, however, the legal system consolidates this role under the broader term “personal representative.”

Therefore, while someone in Denver might refer to the role as “executor,” Colorado law would call that person a “personal representative,” whether they were named in the will (a nominated personal representative) or appointed by the court in the absence of a valid will (an appointed personal representative).

Appointed vs. Nominated Personal Representatives

It’s also helpful to distinguish between nominated and appointed personal representatives:

Nominated : Named in the will by the decedent.
Appointed : Selected by the probate court if no valid will exists or the nominated individual is unable or unwilling to serve.

Both types are held to the same fiduciary standards and legal responsibilities.

Why the Terminology Matters

Understanding these differences is not just a matter of semantics. The terminology used in legal documents must be accurate, especially if you're probating a will or administering an estate across state lines. Colorado residents or those handling the estate of a Colorado decedent must ensure that filings and legal references use the correct language to avoid delays or confusion in probate proceedings.

Getting Legal Help

Whether you're dealing with an estate in Denver or navigating probate in another state like Colorado, it’s essential to understand the legal roles and terminology involved. At The McKenzie Law Firm, LLC, we assist Denver clients with all aspects of estate planning and administration, and can provide guidance and referrals for matters involving other jurisdictions.

How Long Does Estate Administration Take in Colorado?

Fri, 23 May 2025 16:02:32 GMT

Understanding the Timeline of Estate Administration in Colorado

Estate administration in Colorado can be a complex and time-consuming process. Whether you're the appointed personal representative or a concerned family member, understanding the stages and timeframes involved can provide clarity during an already difficult period. At The McKenzie Law Firm, LLC, we assist Denver-area families with the legal guidance necessary to navigate this important process effectively.

Typical Duration of Estate Administration

The estate administration process in Colorado generally takes six months to one year , but can extend beyond that depending on several key factors:

Size and complexity of the estate : Larger or more complex estates require more documentation, valuation, and sometimes court oversight.
Disputes among heirs or creditors : Legal challenges or creditor claims can significantly delay the process.
Court schedule and filing requirements : Probate courts have specific timelines and can experience delays.
Whether the estate is subject to probate : Some estates qualify for simplified procedures, such as small estate affidavits or informal probate, which may speed up the process.

Key Steps in Colorado Estate Administration

Filing with Probate Court : This starts the legal process and usually occurs within a few weeks of the person’s passing.
Appointment of Personal Representative : Once appointed, the personal representative must notify heirs, creditors, and begin asset management.
Inventory and Appraisal : All assets must be cataloged and valued, which can take several weeks to several months.
Debt Payment and Tax Filings : Debts and taxes must be settled before any distribution can occur.
Distribution of Assets : Once obligations are fulfilled and court approval is granted, the estate can be distributed.

How Our Firm Can Help

The McKenzie Law Firm, LLC is dedicated to helping families in Denver efficiently handle estate administration. We provide legal support in areas such as:

Filing necessary probate documents
Communicating with creditors and heirs
Ensuring compliance with state and federal laws
Managing the estate’s financial obligations
Facilitating the final distribution of assets

With our support, you can reduce delays, avoid costly mistakes, and carry out your loved one’s wishes with confidence.

Understanding the Legal Grounds for Contesting a Will in Colorado

Fri, 23 May 2025 15:52:52 GMT

Understanding the Legal Grounds for Contesting a Will in Colorado

Creating a will is a critical part of the estate planning process, as it provides clear instructions on how a person’s assets should be distributed after their passing. However, there are situations in which a will may be legally challenged. In Colorado, contesting a will is a complex legal matter that requires valid grounds, proper timing, and adherence to strict legal procedures.

At The McKenzie Law Firm, LLC, while our office assists the New York public with estate planning matters, we also aim to educate individuals about estate law in other jurisdictions, such as Colorado, to help people understand their rights and options.

Common Legal Grounds for Contesting a Will in Colorado

Contesting a will is not simply about being unhappy with its contents. Colorado law sets forth specific legal grounds upon which a will may be challenged:

1. Lack of Testamentary Capacity

The person making the will (the testator) must have been of sound mind at the time the will was created. This means they understood the nature of their property, who their beneficiaries were, and the legal significance of the document. If the testator was suffering from dementia, Alzheimer's, or another condition affecting mental clarity, a challenge may be appropriate.

2. Undue Influence

If someone exerted excessive pressure on the testator to make or change their will—often a caregiver, family member, or friend—the will can be contested on the basis of undue influence. Proving undue influence requires showing that the influencer substituted their own desires for those of the testator.

3. Fraud or Forgery

A will that was forged or created under fraudulent circumstances is not valid under Colorado law. For example, if someone tricked the testator into signing the will or altered the will without permission, it may be grounds for contest.

4. Improper Execution

Colorado requires that wills follow specific formalities: the will must be in writing, signed by the testator, and witnessed or notarized according to state law. Failure to meet these requirements could render the will invalid.

5. Revocation

A will that has been legally revoked—either by a subsequent will or by physical destruction—cannot be enforced. If someone attempts to probate a revoked will, interested parties can challenge its validity.

Who Can Contest a Will in Colorado?

Only "interested parties" may challenge a will in Colorado. This includes heirs, beneficiaries named in a previous version of the will, and creditors with a financial stake in the estate. Challenges must typically be filed within a specific time frame, usually within three months after the will is admitted to probate.

Why Legal Guidance Matters

Contesting a will is not only emotionally charged but also legally complex. If you believe a loved one’s will is invalid or was created under questionable circumstances, it’s important to consult with an attorney familiar with probate law and will contests. Although The McKenzie Law Firm, LLC is based in New York, we can assist with understanding general legal principles and provide referrals to trusted counsel in Colorado when needed.

Differences Between a Trust and a Will in Colorado

Mon, 14 Apr 2025 14:45:00 GMT

Differences Between a Trust and a Will in Colorado

When planning for the future, understanding the differences between a trust and a will is essential for making informed decisions about your estate. Both legal documents serve important roles in distributing assets after death, but they function in distinct ways. At The McKenzie Law Firm, LLC, we help Colorado residents determine which estate planning tools best suit their needs.

What Is a Will?

A will is a legal document that specifies how an individual’s assets should be distributed upon their passing. It allows the testator (the person creating the will) to name beneficiaries, appoint an executor to manage the estate, designate guardians for minor children, and express wishes for funeral arrangements. However, a will only takes effect after death and must go through probate , a court-supervised process that validates the will and oversees asset distribution.

What Is a Trust?

A trust is a legal arrangement where a trustee manages assets on behalf of designated beneficiaries. Unlike a will, a trust can take effect while the grantor is still alive, allowing for the controlled management and distribution of assets. There are different types of trusts, but the two primary categories are revocable trusts and irrevocable trusts . A revocable trust can be modified or revoked during the grantor’s lifetime and helps avoid probate, while an irrevocable trust cannot be changed after it is created but offers asset protection and potential tax benefits.

Key Differences Between a Trust and a Will

One major distinction between wills and trusts is when they take effect. A will is only enforceable after death, while a trust can operate both during the grantor’s lifetime and after their passing. This makes trusts an effective tool for individuals who want to manage their assets in the event of incapacity or long-term planning.

Probate is another significant difference. A will must go through the probate process , which can be time-consuming and costly. Probate also becomes part of the public record, making the details of an estate accessible to anyone. In contrast, a properly funded trust allows assets to pass directly to beneficiaries without probate, maintaining privacy and avoiding court delays.

When it comes to control over asset distribution, wills provide a simple way to designate beneficiaries, but they generally distribute assets in a lump sum. Trusts, on the other hand, offer greater flexibility by allowing for structured distributions over time, which can be useful for beneficiaries who may need financial oversight or protection.

Additionally, trusts provide benefits that wills do not. For instance, while a will can name guardians for minor children, it does not offer any asset protection. Certain types of trusts, particularly irrevocable trusts, can shield assets from creditors and lawsuits, providing an added layer of financial security.

Which One Is Right for You?

Choosing between a will and a trust depends on your specific needs and financial goals. A will is often a good choice for individuals with straightforward estate planning needs, especially if they have minor children and need to appoint guardians. A trust may be more beneficial for those who want to avoid probate, maintain privacy, and provide long-term financial management for beneficiaries. Many estate plans incorporate both a will and a trust to maximize benefits and cover all aspects of an individual's estate.

How The McKenzie Law Firm, LLC Can Help

At The McKenzie Law Firm, LLC, we assist Colorado residents in creating personalized estate plans that align with their needs. Whether you require a will, a trust, or a combination of both, our team can guide you through the process to ensure your assets are protected and your wishes are carried out.

If you are considering estate planning in Colorado, contact us today for legal assistance in securing your legacy.

Who Can I Name as an Heir in Colorado?

Thu, 13 Mar 2025 14:45:00 GMT

Who Can I Name as an Heir in Colorado?

When creating an estate plan, one of the most important decisions is determining who will inherit your assets. Colorado law allows individuals to name heirs in a will or trust, giving you the flexibility to distribute your estate according to your wishes. Without proper estate planning, your assets will be distributed under Colorado’s intestacy laws, which may not align with your preferences. At The McKenzie Law Firm, LLC, we help Colorado residents navigate estate planning to ensure their heirs receive their intended inheritance.

Who Can Be Named as an Heir in Colorado?

Colorado law allows you to name a variety of individuals or entities as heirs, including:

Family Members – You can name your spouse, children, grandchildren, parents, siblings, or extended relatives as heirs.
Friends – Unlike intestate succession laws that prioritize biological and legal family, a will or trust allows you to leave assets to close friends.
Charitable Organizations – If you have a favorite charity, nonprofit, or religious organization, you can designate them as an heir in your estate plan.
Business Partners – If you co-own a business, you may choose to leave your share to your business partner.
Trusts – You can designate a trust as an heir, allowing for controlled asset distribution based on specific conditions.
Legal Guardians or Caretakers – If someone has taken care of you, your children, or your pets, you may leave assets to them as a token of appreciation.

What Happens If You Don't Name Heirs?

If you pass away without a will or trust, Colorado’s intestacy laws determine who inherits your estate. Generally, assets go to immediate family members first, starting with a surviving spouse and children. If there are no immediate family members, the estate may pass to extended relatives. In cases where no heirs are found, the state of Colorado may claim the estate.

Considerations W

hen Naming Heirs

When selecting heirs, consider the following factors:

Age and Legal Capacity – Minors cannot directly inherit property, so a trust may be necessary to manage their inheritance.
Financial Responsibility – If an heir has financial difficulties, a structured trust can prevent mismanagement of assets.
Family Dynamics – If disputes are likely, clearly outlining your wishes can help prevent legal challenges.
Tax Implications – Certain inheritances may have tax consequences, so proper estate planning can minimize liabilities.

How The McKenzie Law Firm, LLC Can Help

Estate planning ensures that your assets go to the individuals or organizations you care about most. At The McKenzie Law Firm, LLC, we guide Colorado residents through the estate planning process, helping them draft legally sound wills and trusts to protect their heirs and legacy.

If you need assistance naming heirs and securing your estate, contact us today for personalized legal support.

Consequences of Dying Without a Will in Colorado

Wed, 12 Feb 2025 15:31:57 GMT

Consequences of Dying Without a Will in Colorado

Planning for the future is essential to ensuring that your assets are distributed according to your wishes. However, when someone passes away without a will in Colorado, the state determines how their estate is handled through intestate succession laws. At The McKenzie Law Firm, LLC, we assist Colorado residents in navigating estate planning to avoid unnecessary complications for their loved ones.

What Happens When You Die Without a Will in Colorado?

Dying without a will, known as dying intestate, means that your assets will be distributed based on Colorado’s intestacy laws. The probate court will appoint a personal representative to manage the estate and distribute assets according to legal guidelines. This process can be time-consuming, costly, and may not reflect what the deceased would have wanted.

How Are Assets Distributed Under Colorado’s Intestacy Laws?

The distribution of an estate under intestacy laws follows a specific hierarchy:

Surviving Spouse – If the deceased leaves a spouse but no children or parents, the spouse inherits everything.
Spouse and Children – If the children are from the deceased and the surviving spouse, the spouse typically receives the entire estate. However, if the deceased had children from a previous relationship, the estate is divided among the spouse and children.
No Spouse, But Children – The entire estate is divided equally among the children.
No Spouse or Children – The deceased’s parents inherit the estate. If they are deceased, the estate goes to siblings, then to extended family members such as nieces, nephews, or cousins.
No Identifiable Relatives – If no legal heirs exist, the estate may ultimately be claimed by the State of Colorado.

Challenges and Complications of Dying Without a Will

Without a will, your estate may be subject to lengthy court proceedings, disputes among family members, and unintended financial burdens. Some key issues include:

Delays in the Probate Process – Intestate estates often take longer to settle due to court supervision and potential disputes among heirs.
Unintended Beneficiaries – Assets may go to relatives you did not intend to inherit, while close friends or charities you wanted to support receive nothing.
Guardianship Decisions for Minor Children – If you have minor children and no will, the court decides who will be their guardian, which may not align with your wishes.
Higher Costs and Taxes – Without an estate plan, legal fees, court costs, and potential tax implications can reduce the value of your estate.

How The McKenzie Law Firm, LLC Can Help

Creating a will ensures that your wishes are honored and your loved ones are protected from unnecessary legal stress. At The McKenzie Law Firm, LLC, we provide comprehensive estate planning services to help Colorado residents draft legally sound wills, establish trusts, and make informed decisions about their assets.

If you need assistance with estate planning in Colorado, contact us today to secure your legacy and protect your family’s future.

What Types of Assets Can Be Included in a Colorado Trust?

Thu, 30 Jan 2025 20:53:12 GMT

What Types of Assets Can Be Included in a Colorado Trust?

A trust is a valuable estate planning tool that allows individuals to manage and protect their assets while ensuring a smooth transfer to beneficiaries. Whether you are looking to avoid probate, reduce taxes, or safeguard wealth for future generations, properly funding your trust is essential. At The McKenzie Law Firm, LLC , we help Denver residents establish and manage trusts to meet their financial and estate planning goals.

In Colorado, a wide range of assets can be placed in a trust, including:

Real Estate – Residential homes, rental properties, vacation homes, and commercial real estate can be placed in a trust to avoid probate and simplify inheritance.
Financial Accounts – Bank accounts, stocks, bonds, mutual funds, and brokerage accounts can be included to ensure smooth financial management for beneficiaries.
Business Interests – Ownership in a corporation, LLC, or partnership can be transferred to a trust to facilitate business succession planning.
Life Insurance Policies – Placing a life insurance policy in an irrevocable trust can help reduce estate taxes and protect proceeds from creditors.
Retirement Accounts (With Designation) – While IRAs and 401(k)s cannot be directly transferred into a trust, a trust can be named as a beneficiary to control distributions after death.
Personal Property – Jewelry, artwork, antiques, collectibles, and valuable heirlooms can be included in a trust to ensure proper distribution.
Vehicles – Cars, boats, and recreational vehicles can be placed in a trust, though this is more common for high-value assets.

Selecting the right assets for your trust depends on your estate planning goals. A well-structured trust can protect assets, minimize taxes, and ensure an efficient transfer to beneficiaries . At The McKenzie Law Firm, LLC , we provide comprehensive estate planning services to help Denver residents make informed decisions about their future.

What is a Guardianship and When Do I Need One?

Mon, 02 Dec 2024 17:56:01 GMT

What is a Guardianship and When Do I Need One?

A guardianship is a legal arrangement where one person is appointed by the court to care for another individual who is unable to make decisions for themselves. This typically involves making decisions about the individual’s personal care, medical treatment, living arrangements, and finances. Guardianships are often established for minors or adults who are incapacitated due to illness, disability, or aging. At The McKenzie Law Firm, LLC, we provide legal assistance to the Colorado public to navigate the guardianship process and ensure that the best interests of your loved ones are protected.

Types of Guardianships

Guardianship of a Minor

In situations where a child’s parents are unable or unfit to care for them (due to death, incapacity, or other circumstances), a guardian may be appointed to make decisions regarding the child's upbringing. This includes decisions about education, healthcare, and living arrangements. A guardianship for a minor can also be temporary, such as during a family emergency.

Guardianship of an Incapacitated Adult

When an adult becomes mentally or physically incapable of making decisions due to conditions like Alzheimer’s disease, stroke, or severe mental illness, a guardianship may be established. This allows the appointed guardian to make decisions regarding the individual’s healthcare, living situation, and finances. Guardianship may be limited or full, depending on the individual’s specific needs.

When Do You Need a Guardianship?

For a Minor Child

A guardianship may be needed if both parents are deceased or incapable of providing care, or if a parent has been deemed unfit by the court. It’s also necessary if there is no existing will or plan in place for the child’s care.

For an Incapacitated Adult

If an adult is no longer able to make informed decisions due to a medical condition, cognitive impairment, or physical disability, a guardianship may be necessary to ensure that they are cared for and their needs are met. This can apply to elderly individuals, those with developmental disabilities, or people suffering from serious mental health conditions.

To Protect Property and Finances

In cases where an individual is unable to manage their own financial matters due to incapacity, a guardian may also be appointed to handle the individual’s financial decisions. This helps protect the person’s assets and ensures that their financial affairs are taken care of.

How is a Guardianship Established?

In Colorado, a guardianship is established through a court process. The process typically involves:

Filing a petition with the court to establish guardianship.
Providing evidence of the individual’s incapacity or need for care.
Attending a court hearing, where a judge will review the case and determine if guardianship is appropriate.
Selecting a guardian, who will be responsible for making decisions on behalf of the individual.

How The McKenzie Law Firm, LLC Can Help

Establishing a guardianship can be a complex and emotional process. If you are considering a guardianship for a loved one in Colorado, the legal professionals at The McKenzie Law Firm, LLC can help guide you through each step. We understand the importance of ensuring that the person in need of care is properly supported and that their rights are respected.

Whether you’re seeking guardianship for a minor child or an incapacitated adult, our experienced attorneys are here to assist you in navigating the legal process and protecting your loved one’s best interests.

What Are the Required Documents to Create a Will in Colorado?

Mon, 28 Oct 2024 20:55:55 GMT

What Are the Required Documents to Create a Will in Colorado?

Creating a will is an essential part of estate planning, ensuring that your assets are distributed according to your wishes after you pass away. For residents of Colorado, gathering the correct documents can simplify the process and help avoid potential delays. At The McKenzie Law Firm, LLC , we guide Denver residents through the process of will creation, making it easy and efficient.

Key Documents Needed to Create a Will in Colorado

Identification of Assets and Liabilities

Property Deeds : Documents proving ownership of real estate.
Bank Statements and Investment Records : A full list of financial assets, including savings accounts, retirement funds, and investments.

List of Beneficiaries

Names, addresses, and contact information for individuals or organizations to whom you wish to leave assets.

Executor Information

Details of the person you wish to appoint as the executor (responsible for managing your estate), including their contact information.

Guardianship Designation (if applicable)

If you have minor children, you’ll need to identify a person you trust as their guardian.

Personal Identification

A valid government-issued ID, which is required for any formal signing process to ensure the document is legally binding.

How We Can Help

Creating a will doesn’t have to be complex. At The McKenzie Law Firm, LLC , we assist Denver residents with every step, ensuring that your wishes are clearly documented and legally enforceable. Contact us today to get started on your estate plan and secure peace of mind for your future.

Probate in Colorado: A Guide for Families and Executors

Tue, 01 Oct 2024 03:01:38 GMT

Dealing with the death of a loved one is never easy, and navigating the legal process that follows can add stress during an already difficult time. In Colorado, probate is the legal process by which a deceased person’s estate is administered, their debts are paid, and their assets are distributed to beneficiaries. Whether you’re an executor, beneficiary, or family member, understanding how probate works in Colorado can help you anticipate the steps involved and your potential responsibilities. This blog post will provide an overview of the probate process in Colorado, outline when probate is necessary, and offer guidance on how to navigate the system effectively.

What is Probate?

Probate is the legal process that occurs after someone dies to ensure their assets are distributed according to their will or, if there is no will, according to state law. The probate process includes validating the will, inventorying the deceased’s assets, paying off debts and taxes, and distributing the remaining assets to the rightful heirs.

While probate is often associated with lengthy court proceedings, not all estates require formal probate. Colorado offers several options depending on the size and complexity of the estate, which can help simplify the process in many cases.

When is Probate Necessary in Colorado?

Probate is not always required in Colorado. Whether an estate must go through probate depends on the types and value of the deceased’s assets. Generally, probate is necessary if:

The deceased owned real estate solely in their name.
The deceased’s assets, such as bank accounts or investments, were not held in joint tenancy or designated to transfer on death.
The deceased had personal property valued at over $74,000 (as of 2023).

If an estate falls below this threshold and does not include real estate, the beneficiaries can often use a Small Estate Affidavit to claim the assets without going through probate.

Types of Probate in Colorado

Colorado has three main types of probate procedures: small estate procedures, informal probate, and formal probate. The type of probate required depends on the estate’s value and whether there are disputes among heirs or creditors.

Small Estate Procedure (Collection by Affidavit)

The small estate procedure can be used if the value of the deceased’s assets is less than $74,000 and does not include real estate. This process involves filling out a Small Estate Affidavit, which allows the heirs to collect and distribute the assets without opening a probate case in court. It is the simplest and fastest way to handle a small estate.

Informal Probate

Informal probate is used when there is a valid will and no disputes among heirs or creditors. The process is overseen by a court-appointed Personal Representative (executor), but there is minimal court supervision. Most of the process, such as distributing assets and paying debts, is handled by the Personal Representative, with only basic filings required with the court. Informal probate is less time-consuming and costly than formal probate.

Formal Probate

Formal probate is required when there are disputes regarding the will’s validity, disagreements among heirs, or if the estate is complex and needs court intervention. The process is supervised by the court, and all major decisions, such as approving the distribution of assets, must be approved by a judge. Formal probate can take much longer and involve more legal fees than informal probate.

Steps in the Colorado Probate Process

While the specific steps in probate can vary depending on the type of probate and the complexity of the estate, the general process in Colorado typically includes the following:

Filing the Probate Petition

The process begins with filing a Petition for Probate with the appropriate Colorado probate court. The petition is usually filed by the executor named in the will or an interested party if no will exists.

Appointment of the Personal Representative

The court will appoint a Personal Representative (executor) to manage the estate. If there is a valid will, the person named as executor is typically appointed. If no will exists, the court will appoint someone, usually a family member, to serve as the Personal Representative.

Notice to Heirs and Creditors

The Personal Representative must notify all potential heirs and creditors of the probate proceeding. This step is essential for providing an opportunity for interested parties to come forward and make claims against the estate.

Inventory and Appraisal of Assets

The Personal Representative must create an inventory of all the deceased’s assets and have them appraised if necessary. This inventory will include real estate, personal property, financial accounts, investments, and any other assets owned by the deceased.

Paying Debts and Taxes

Before distributing assets, the Personal Representative must pay off the deceased’s debts and any taxes owed. If the estate does not have enough assets to cover all debts, Colorado law dictates the order in which creditors are paid.

Distribution of Assets

Once all debts and taxes have been paid, the Personal Representative can distribute the remaining assets to the beneficiaries according to the will or, if no will exists, according to Colorado’s intestacy laws.

Closing the Estate

After all assets have been distributed and all required filings have been made with the court, the Personal Representative can file a Petition for Final Settlement to close the estate. Once approved, the Personal Representative’s responsibilities are complete.

Challenges and Disputes in Colorado Probate

Unfortunately, probate can sometimes become contentious, especially in cases involving high-value estates or when family members disagree on how assets should be distributed. Some common challenges in Colorado probate include:

Will Contests
Heirs or beneficiaries may challenge the validity of a will, claiming it was signed under duress, there was undue influence, or the deceased lacked the capacity to create the will. Will contests can significantly delay the probate process and require formal probate to resolve.
Executor Misconduct
If an executor is not fulfilling their duties or is mishandling estate assets, beneficiaries can file a complaint with the court and request the executor’s removal.
Disputes Among Beneficiaries
Disputes can arise over specific bequests, how assets are divided, or even the valuation of estate property. Mediation or formal court intervention may be necessary to resolve these disputes.

How a Colorado Probate Attorney Can Help

Navigating the probate process can be overwhelming, particularly when dealing with the emotional aftermath of losing a loved one. An experienced probate attorney can help in several ways:

Guiding You Through the Process

An attorney can explain the probate process, help you understand your rights and responsibilities, and ensure all legal requirements are met.

Managing Court Filings and Deadlines

Probate involves numerous legal documents and deadlines. An attorney can handle these tasks, ensuring that everything is filed correctly and on time.

Resolving Disputes

If disputes arise, an attorney can provide representation in negotiations, mediation, or court hearings to protect your interests and work toward a fair resolution.

Minimizing Costs and Delays

With the guidance of a skilled attorney, you can often minimize the time and expense associated with probate, helping ensure the process goes as smoothly as possible.

How The McKenzie Law Firm, LLC Can Help

At The McKenzie Law Firm, LLC, we understand the complexities of the probate process and are committed to helping families navigate it with compassion and expertise. Whether you’re an executor needing assistance with your duties or a family member looking to understand your rights, our experienced probate attorneys can provide the support you need.

If you have questions about probate in Colorado or need legal assistance, contact us today to schedule a consultation. We are here to guide you through the process and ensure your loved one’s wishes are honored.

Understanding the Notice to Creditor Form in Colorado Probate: Pros and Cons

Tue, 10 Sep 2024 20:02:38 GMT

As probate attorneys in Colorado, we often field questions about the intricacies of estate administration. One common topic is whether to mail a Notice to Creditor form , as outlined in Colorado Revised Statute 15-12-801(2). This decision can significantly impact the probate process, so it's crucial to understand the pros and cons before choosing.

What is the Notice to Creditor Form?

The Notice to Creditor form informs potential creditors of a deceased person's estate that the probate process has begun. While publishing a notice in a local newspaper is mandatory under Colorado law, mailing individual notices to known or reasonably ascertainable creditors is optional.

Pros of Mailing the Notice to Creditor Form

Shortened Creditor Claims Period : By mailing this notice, you can reduce the creditor claims period from one year to four months from the date of fir st publication. This can significantly expedite the probate process.
Increased Certainty : Proactively notifying known creditors provides more certainty about potential claims against the estate, allowing for better financial planning.
Potential Cost Savings : While mailing notices have an upfront cost, they may lead to long-term savings by avoiding delayed or unexpected claims that could complicate estate administration.
Fiduciary Duty Fulfillment : As the personal representative, sending these notices helps fulfill your fiduciary duty to identify and address potential creditors promptly.

Cons of Mailing the Notice to Creditor Form

Upfront Costs : The estate will need to cover the expenses associated with preparing and mailing these notices.
Administrative Burden : Preparing and sending notices to all reasonably ascertainable creditors can be time-consuming and may require additional documentation.
Potential for Overlooked Creditors : If a creditor is inadvertently missed, it could lead to complications or potential liability for the personal representative.
Earlier Claim Submissions : By alerting creditors, you may prompt them to submit claims they might otherwise have forgotten or chosen not to pursue.
Privacy Considerations : Sending notices may draw attention to the decedent's passing and financial affairs, which some families prefer to keep private.

Important Considerations

Statutory Requirement : While mailing individual notices is optional, publishing a notice in a local newspaper is mandatory under Colorado law.
Reasonably Ascertainable Creditors : The law requires notifying creditors who are "reasonably ascertainable." This necessitates thoroughly reviewing the decedent's financial records to identify these creditors.
Balancing Act : The decision often involves weighing the desire for a quicker probate process against the additional upfront work and potential for prompting claims.

Making the Decision

Deciding whether to mail Notice to Creditor forms involves careful consideration of the estate's specific circumstances. Factors to consider include:

The size and complexity of the estate
The number of known creditors
The personal representative's comfort with potential risks
The family's desire for privacy versus expediency in the probate process

Next Steps

If you decide to proceed with mailing the notices, you'll need to:

Compile a comprehensive list of potential creditors
Draft the notices in compliance with statutory requirements
Maintain proof of mailing for your records

Seek Professional Guidance

Every estate is unique, and the decision to mail Notice to Creditor forms can have significant implications. It's always advisable to consult with an experienced probate attorney who can provide guidance tailored to your specific situation.

At The McKenzie Law Firm, we help you navigate these complex decisions and ensure smooth estate administration. Feel free to contact us for personalized advice on your probate matters.

What Next?

If you need assistance or advice regarding the administration of an estate, you can:

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

Understanding Special Needs Trusts in Colorado

Fri, 30 Aug 2024 18:17:27 GMT

Understanding Special Needs Trusts in Colorado

Planning for the future is important, especially when it comes to caring for loved ones with special needs. One way to ensure their financial security and well-being is by setting up a special needs trust. At The McKenzie Law Firm, LLC, we have experience in estate planning matters, including creating special needs trusts for Colorado residents. In this blog post, we will explore what a special needs trust is, how it can benefit your loved one with special needs, and why it is crucial to seek professional help when setting one up.

A special needs trust is a legal arrangement that allows funds to be set aside for the benefit of an individual with disabilities without jeopardizing their eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI). These trusts are specifically designed to provide for the supplemental needs of the beneficiary while preserving their access to essential government assistance programs. By establishing a special needs trust, you can ensure that your loved one will have financial support beyond what public benefits provide.

There are two main types of special needs trusts: first-party and third-party trusts. A first-party trust is funded with the assets of the beneficiary themselves, such as an inheritance or personal injury settlement. On the other hand, a third-party trust is funded with assets from someone other than the beneficiary, such as a parent or grandparent. Both types of trusts have specific rules and regulations that must be followed in order to protect the beneficiary's eligibility for government benefits.

Setting up a special needs trust requires careful consideration of various factors such as selecting a trustee, determining how funds will be used, and ensuring compliance with state laws. This process can be complex and overwhelming, which is why it is important to seek guidance from an experienced estate planning attorney like those at The McKenzie Law Firm, LLC. Our team has extensive knowledge of Colorado laws and regulations surrounding special needs trusts and can help you create a customized plan that meets your specific needs.

In addition to preserving eligibility for government benefits, a special needs trust also provides peace of mind knowing that your loved one will be taken care of financially in the long term. Funds from the trust can be used to cover expenses not covered by public benefits such as medical treatments, therapies, education costs, housing expenses, transportation services, and more. By carefully crafting a special needs trust tailored to your loved one's unique circumstances and requirements, you can ensure their quality of life is maintained even after you are no longer able to provide care.

In conclusion, establishing a special needs trust is an essential part of planning for the future of a loved one with disabilities in Colorado. By working with The McKenzie Law Firm, LLC, you can ensure that your loved one's financial security and well-being are protected through a carefully crafted trust that meets their specific needs. Don't wait until it's too late – contact us today to learn more about how we can assist you in creating a comprehensive estate plan that includes provisions for a special needs trust. Your peace of mind and your loved one's future are worth it!

Protecting Your Legacy: Beneficiary Deeds vs. Life Estates in Colorado

Wed, 17 Jul 2024 21:37:53 GMT

As an estate planning attorney, I'm often asked about the best ways to transfer property to heirs while avoiding probate. Two popular options in Colorado are beneficiary deeds and life estates. Let's explore these instruments and when you might choose one over the other.

Beneficiary Deeds: The Modern Approach

A beneficiary deed, a transfer-on-death deed, allows you to name a beneficiary who will receive your property upon death. The key features are:

You retain full ownership and control of the property during your lifetime.
The transfer occurs automatically at death, avoiding probate.
You can change or revoke the beneficiary at any time.
The beneficiary has no rights to the property while you're alive.

Life Estates: The Traditional Method

A life estate is an arrangement where you (the life tenant) retain the right to use and occupy the property for your lifetime while another person (the remainderman) receives ownership upon your death. Important aspects include:

You can't sell or mortgage the property without the remainderman's consent.
You're responsible for property taxes and maintenance.
The transfer is irrevocable without the remainderman's agreement.
The property avoids probate upon your death.

Comparing the Two

Pros of Beneficiary Deeds:

Flexibility to change beneficiaries or sell the property
Simpler to execute and understand
Avoids probate

Cons of Beneficiary Deeds:

Doesn't protect against creditors or Medicaid estate recovery
May not be ideal for complex family situations

Pros of Life Estates:

Provides more robust protection against creditors
Can be helpful for Medicaid planning
Avoids probate

Cons of Life Estates:

Less flexibility for the property owner
Potential conflicts with the remainderman
More complex to set up and manage

When to Choose Each Option

Consider a beneficiary deed when:

You want to maintain complete control of your property
Your estate planning needs are relatively straightforward
You may need to sell or refinance the property in the future

Opt for a life estate when:

Asset protection is a primary concern
You're engaged in Medicaid planning
You want to ensure a specific person receives the property

Both beneficiary deeds and life estates can be valuable tools in your estate planning toolkit. The right choice depends on your unique circumstances, financial situation, and long-term goals. As with any legal decision, consulting with an experienced estate planning attorney is crucial to determine the best approach for your needs.

What Next?

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

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.
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.
Learn more by reading our blog or watching our videos .

The Importance of Estate Planning in Colorado

Tue, 16 Jul 2024 15:16:48 GMT

The Importance of Estate Planning in Colorado

Estate planning is a crucial aspect of preparing for the future, yet many individuals in Colorado overlook its importance. Without a proper estate plan in place, the consequences can be severe and may lead to complications for your loved ones after you pass away. At The McKenzie Law Firm, LLC, we understand the complexities of estate planning and are here to assist Colorado residents with creating a comprehensive plan that meets their unique needs and goals.

One of the most significant consequences of dying without an estate plan in Colorado is the possibility of your assets going through probate. Probate is the legal process through which a deceased person's assets are distributed to their heirs and beneficiaries. Without a will or trust in place, your estate will be subject to probate court proceedings, which can be time-consuming, expensive, and public. By creating an estate plan, you can avoid probate and ensure that your assets are distributed according to your wishes.

Another consequence of dying without an estate plan is the lack of control over who will inherit your assets. Without a will or trust specifying how you want your assets to be distributed, Colorado intestacy laws will determine who receives your property. This means that individuals who you may not have intended to inherit from you could end up receiving a portion of your estate. By creating an estate plan, you can ensure that your assets go to the people or organizations that you choose.

In addition to asset distribution, an estate plan also allows you to appoint guardians for any minor children or dependents. If you pass away without naming guardians in your will, the court will have to decide who will take care of your children. By including guardianship provisions in your estate plan, you can ensure that your children are taken care of by someone whom you trust and who shares your values.

Furthermore, dying without an estate plan can lead to family disputes and strain relationships among loved ones. When there is no clear guidance on how assets should be distributed or who should make decisions on behalf of the deceased individual, disagreements can arise among family members. This can result in costly legal battles and irreparable damage to familial bonds. By creating an estate plan that outlines your wishes clearly, you can help prevent conflicts and promote harmony within your family after you pass away.

Estate planning is essential for all Colorado residents, regardless of age or financial status. By working with experienced attorneys at The McKenzie Law Firm, LLC, you can create a comprehensive estate plan that protects your assets, provides for your loved ones, and ensures peace of mind for yourself. Don't wait until it's too late – contact us today to start planning for the future and securing a legacy that reflects your values and priorities.

A Guide to Forming an LLC in Colorado

Sun, 30 Jun 2024 17:23:58 GMT

A Guide to Forming an LLC in Colorado

Are you a Colorado resident looking to start your own business? One of the first steps you'll need to take is forming a Limited Liability Company (LLC). An LLC offers personal liability protection and tax flexibility for small businesses. But what documents are required to form an LLC in Colorado? In this blog post, we will outline the necessary steps and documents needed to successfully set up your LLC in the beautiful state of Colorado.

Choose a Name: The first step in forming an LLC in Colorado is choosing a unique name for your business. Your chosen name must include the words "Limited Liability Company" or one of its abbreviations (LLC or L.L.C.). Additionally, the name must be distinguishable from other existing businesses in the state. You can check the availability of your desired business name on the Colorado Secretary of State's website.

Articles of Organization: Next, you will need to file Articles of Organization with the Colorado Secretary of State. This document includes basic information about your LLC, such as the name, address, registered agent, and purpose of the business. You can file online or by mail, along with a filing fee.

Operating Agreement: While not required by law, it is highly recommended that you create an operating agreement for your LLC. This document outlines the ownership structure, management responsibilities, and operational procedures of your business. Having an operating agreement can help avoid misunderstandings among members and protect your limited liability status.

EIN Number: To hire employees or open a business bank account, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This unique nine-digit number is used to identify your business for tax purposes. You can easily apply for an EIN online through the IRS website.

Business Licenses and Permits: Depending on the nature of your business, you may need to obtain specific licenses and permits to operate legally in Colorado. Check with local government agencies or use online resources like Colorado Business Express to determine which permits are required for your industry.

Starting an LLC in Colorado involves several important steps and required documents. By following these guidelines and seeking assistance from legal professionals like The McKenzie Law Firm, LLC, you can ensure that your business formation process is smooth and successful. Remember that each state has its own rules and regulations when it comes to forming an LLC, so be sure to research specific requirements for Colorado residents before getting started on your entrepreneurial journey. Good luck with your new venture!

Understanding the Types of Assets that can be Included in a Will

Fri, 31 May 2024 17:48:34 GMT

Understanding the Types of Assets that can be Included in a Will

Estate planning is an important process that ensures your assets are distributed according to your wishes after you pass away. One key aspect of estate planning is creating a will, which is a legal document that outlines how your assets should be distributed. At The McKenzie Law Firm, LLC, we assist Colorado residents with their estate planning needs. In this blog post, we will discuss the types of assets that can be included in a will and why it is important to have a comprehensive estate plan in place.

When it comes to creating a will, there are several types of assets that can be included. These assets can include real property such as homes, land, and vacation properties. Personal property such as vehicles, jewelry, furniture, and collectibles can also be designated in a will. Additionally, financial assets like bank accounts, investments, retirement accounts, and life insurance policies can be specified in a will. It's important to list all of your assets in your will to ensure that they are distributed according to your wishes.

Another type of asset that can be included in a will is digital assets. In today's digital age, many people have online accounts and digital files that hold sentimental or monetary value. These assets can include social media accounts, email accounts, digital photo albums, cryptocurrency holdings, and other online accounts. By including instructions for these digital assets in your will, you can ensure that they are managed or transferred appropriately after you pass away.

In addition to tangible and digital assets, business interests can also be included in a will. If you own a business or have shares in a company, you may want to designate how those interests should be handled after your death. This could involve passing ownership onto family members or selling the business altogether. Including specific instructions for your business interests in your will can help prevent disputes among heirs and ensure the smooth transition of ownership.

It's also important to consider any debts or liabilities when creating a will. Your debts may need to be settled using the proceeds from your estate before any remaining assets are distributed to your beneficiaries. By addressing these debts in your will, you can provide clarity on how they should be paid off and prevent any confusion or disputes among creditors.

In conclusion, there are various types of assets that can be included in a will when creating an estate plan. Whether it's real property, personal property, financial assets, digital assets, business interests or debts; having a comprehensive plan in place ensures that your wishes are carried out after you pass away. At The McKenzie Law Firm, LLC we understand the importance of estate planning and are here to assist Colorado residents with their legal needs. Contact us today to learn more about how we can help you create an effective estate plan tailored to your unique circumstances.

The Probate Process in Colorado

Tue, 30 Apr 2024 14:41:25 GMT

The Probate Process in Colorado

Dealing with probate can be a daunting and confusing process, especially during an already difficult time. If you are a Colorado resident facing probate, you may be wondering how long the process will take and what steps are involved. At The McKenzie Law Firm, LLC, we assist Colorado residents with all aspects of probate matters. In this blog post, we will break down the probate process in Colorado and provide insight into how long it typically takes.

Probate is the legal process through which a deceased person's estate is settled and their assets are distributed to heirs or beneficiaries. In Colorado, the probate process can vary in length depending on various factors such as the size of the estate, whether there are any disputes among heirs or creditors, and whether a will exists. On average, probate in Colorado can take anywhere from six months to two years to complete.

During the probate process, several steps must be completed before assets can be distributed to beneficiaries. These steps include validating the deceased person's will (if one exists), inventorying and appraising assets, paying off debts and taxes owed by the estate, and distributing remaining assets to heirs or beneficiaries. Each of these steps can add time to the overall length of probate.

One factor that can significantly impact the length of probate is whether there are any disputes among heirs or creditors. If there are disagreements over how assets should be distributed or if creditors come forward with claims against the estate, these issues can prolong the probate process as they must be resolved before distribution can occur. Working with an experienced probate attorney can help navigate these potential roadblocks and expedite the process.

At The McKenzie Law Firm, LLC, we understand that dealing with probate can be overwhelming for many individuals. Our team of experienced attorneys is here to guide you through every step of the probate process and ensure that your loved one's wishes are carried out efficiently and effectively. Whether you need assistance with validating a will, inventorying assets, resolving disputes among heirs, or any other aspect of probate administration, we are here to help.

Dealing with probate in Colorado can be a complex and time-consuming process. By understanding the various factors that can impact the length of probate and working with an experienced attorney like those at The McKenzie Law Firm, LLC, you can navigate this challenging time with confidence and peace of mind. Contact us today to learn more about how we can assist you with all aspects of your probate matter.

When and How Often Should You Update Your Estate Plan?

Thu, 04 Apr 2024 20:18:29 GMT

Estate planning is a crucial aspect of financial management that often gets overlooked. It’s not just for the wealthy or older people - anyone who has people relying on them financially should consider it. Here’s a guide to help you understand when to start estate planning and how often to update your plan.

When Do You Need to Start Estate Planning?

The simple answer is as soon as you have people relying on you financially. This could be because you’re investing in assets with someone else, taking on debt with someone else, or otherwise combining your finances.

One of the most obvious situations where you need to have a plan is if you have small children. However, there might be more people relying on you than you realize. For instance, if you’re supporting a parent or sibling, or if you have business partners who would be affected by your sudden death or incapacitation, you need an estate plan to explain what happens to your part of any asset or debt that you co-own with someone else. Hopefully, your co-owners will do the same courtesy for you.

How Often Should You Update Your Estate Plan?

Most plans start to need updates after about three years. It’s rare to go more than five years without needing any updates. However, events are more important than time. Critical life events such as a change in family due to marriage, divorce, birth, or death often necessitate an update to your estate plan.

Another situation that requires updates is when there is ambiguity around certain relationships. This is commonly seen when someone is living in a home that they have no documented right to live in (such as when an adult child is living with parents in their home) or when people are living out of alignment with their marital status (such as when people are living like a married couple even though they’re not married or are living separately but are married).

The Importance of Updating Your Estate Plan

Estate distributions are a zero-sum event, meaning that every dollar that goes to one person is a dollar that is not going to someone else. We have seen situations where someone might be able to prove they were married to the deceased person, in which case they will get that person’s entire estate. But if they are unable to prove they were married successfully, then they will get nothing, and everything will go to the deceased person’s biological family instead. This dramatically different result can turn on a very small number of facts.

In conclusion, estate planning is not a one-time event but an ongoing process. As your life changes, so too should your estate plan. Regular updates ensure your wishes are respected, and your loved ones are protected. If you have any questions or need assistance with your estate planning, don’t hesitate to contact a professional .

What next?

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

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.
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.
Learn more by reading our blog or watching our videos .

The Importance of Estate Planning: Avoiding Probate and Protecting Your Assets

Fri, 29 Mar 2024 16:17:24 GMT

The Importance of Estate Planning: Avoiding Probate and Protecting Your Assets

Estate planning is a crucial aspect of financial planning that often gets overlooked. Many people may not realize the importance of estate planning until it's too late. By planning ahead, you can ensure that your assets are protected and distributed according to your wishes. One key reason for estate planning is to avoid probate, which can be a lengthy and costly process. At The McKenzie Law Firm, LLC, we understand the importance of estate planning and can assist Colorado residents with their estate planning needs.

One of the main reasons why you want to avoid probate is to save time and money for your loved ones. Probate is a legal process where a court validates a will and oversees the distribution of assets. This process can take months or even years to complete, tying up your assets in the meantime. Not only does probate delay the distribution of assets, but it also comes with hefty legal fees and court costs that can eat away at your estate's value.

Another reason to avoid probate is to maintain privacy for your family. When an estate goes through probate, it becomes a matter of public record. This means anyone can access information about your assets, debts, and beneficiaries. Creating an estate plan that avoids probate lets you keep these details private and protect your family's financial matters from prying eyes.

If something happens to you, estate planning also allows you to designate guardians for minor children or dependents. Without a proper estate plan in place, the court will decide who takes care of your loved ones if you pass away unexpectedly. By taking control through estate planning, you can ensure that your children are cared for by someone you trust.

The McKenzie Law Firm, LLC provides comprehensive estate planning services tailored to meet each client's unique needs. Our experienced attorneys can help Colorado residents create wills, trusts, powers of attorney, healthcare directives, and other essential documents to protect their assets and loved ones. We understand the intricacies of Colorado estate law and work closely with our clients to develop personalized plans that reflect their wishes.

Estate planning is an essential part of financial planning that should not be overlooked. By avoiding probate through proper estate planning, you can save time and money for your loved ones while maintaining privacy for your family's financial matters. At The McKenzie Law Firm, LLC, we are dedicated to helping Colorado residents navigate the complexities of estate planning and create customized plans that protect their assets and loved ones for years to come. Contact us today to learn how we can assist you with your estate planning needs.

What Next?

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

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.
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.
Learn more by reading our blog or watching our videos .

Understanding Probate in Colorado: The Guide to Timelines, Steps, and What to Expect

Wed, 28 Feb 2024 15:03:27 GMT

Understanding Probate in Colorado: The Guide to Timelines, Steps, and What to Expect

When a loved one passes away, their estate often goes through probate. This process can seem complex and drawn out in Colorado, leading many to wonder how long they can expect it to take. Navigating the courts, legal requirements, and potential family disputes can make probate a challenging experience. This comprehensive guide is here to demystify the probate process, providing clear insights into the steps involved, the factors influencing the timeline, and how to set realistic expectations.

What is Probate, and Why Does it Matter in Colorado?

Probate is a court-supervised process where a deceased person's assets are managed and distributed. The primary purposes are:

Ensuring all debts and taxes are paid
Resolving claims and disputes
Passing clear title to heirs or beneficiaries

In Colorado, probate is especially pertinent if a deceased person owned real property in their name or property valued over a certain amount ($80,000 since July 1, 2023), making it a central element in many estate planning discussions.

The Initial Steps of the Probate Process

1. Prepare and File a Petition for Probate

The first formal step is to prepare and file a petition with the appropriate probate court. This document initiates the process and typically includes critical information such as:

A list of the deceased’s assets and their values
A list of the deceased's debts
Identifying information about the heirs or beneficiaries

2. Appoint an Executor or Administrator

If the deceased had a will, they would have nominated an executor. If not, the court will appoint an administrator to fulfill the role. The executor/administrator is responsible for managing the estate through probate.

3. Notice to Heirs and Creditors

Once an executor/administrator is appointed, they must notify all heirs and potential creditors, allowing them to contest the Will, if applicable, or file claims against the estate.

Probate Timeline Factors in Colorado

The time it takes to complete probate can vary significantly, but here are the primary factors that influence the timeline:

The Size and Complexity of the Estate : Larger or more complex estates generally take longer to go through probate.
State Law and Court Rules : These may require certain waiting periods or specific actions.
Creditor Claims and Lawsuits : Probate must remain open long enough for creditors to file claims, and any disputes may prolong the process.
Real Estate Sales : If the estate includes real property to be sold, this can involve significant delays.

The Probate Process in Detail

Understanding the general process can help you set expectations and prepare for what lies ahead.

1. Validation of the Will

The will's validity is verified by the court overseeing its execution. If there is no will, the distribution of the estate's assets will be governed by Colorado's intestacy statute.

2. Inventory of the Estate

The executor takes stock of all the assets, working with appraisers to value them as necessary.

3. Notification of Creditors

A formal notice is published in a local newspaper to alert potential creditors to the probate proceedings.

4. Payment of Debts and Taxes

Before any assets can be distributed, the executor must address all valid creditor claims and pay any taxes owed.

5. Distribution of Remaining Assets

After all obligations are met, the remaining assets are distributed to the heirs or beneficiaries.

How Long Does Each Stage of Probate Usually Take in Colorado?

1. Petition Filing to Executor Appointment

This initial step can usually be completed within a few weeks, assuming no complications or disputes regarding the appointment.

2. Creditor Notification and Claim Period

The timeline for the creditor notice period is typically three to four months from the date the notice is published. Creditors have a specific window in which to file claims against the estate.

3. Debt Resolution

Once creditor claims are resolved, the funds distribution can take place. In simple, uncontested cases, this might occur within a few months. If disputes arise, it could take longer.

4. Final Distribution and Closing

The process will generally close after all debts are paid and assets are distributed, but if there are significant complications, it can take six months to two years or longer.

Anticipating the Total Time Required

Under normal circumstances, the total probate process can take six months to several years. The average probate case in Colorado might take approximately 9 to 24 months.

It's important to remember that while these timelines are typical, each probate case is unique, and many variables can affect the duration.

Tips for Streamlining the Process

1. Good Record-Keeping

Ensuring all financial and legal paperwork is well-organized can significantly speed up the probate process.

2. Open and Clear Communication

Keeping heirs, beneficiaries, and other involved parties informed can prevent delays caused by misunderstandings.

3. Seek Legal Counsel

Enlisting the help of an experienced probate attorney can ensure that the process is handled efficiently and according to Colorado law.

4. Mediation for Disputes

Pursuing mediation can be a more efficient and amicable way to resolve issues in the event of family disagreements.

The Costs Associated with Probate in Colorado

Probate can be costly, with fees and expenses including court costs, attorney fees, appraiser fees, executor fees, and potentially more. Expenses are generally paid from the estate's funds before distribution to beneficiaries.

Final Thoughts on the Colorado Probate Process

While the probate process in Colorado can seem daunting, it is manageable with a bit of preparation and understanding. It's crucial to be patient and thorough, as the ultimate goal is to ensure the deceased's wishes are carried out. Seeking professional guidance when necessary and keeping lines of communication open can go a long way in making the process as smooth as possible for all involved. In emotionally charged times, clear-headed navigation of legal processes can provide tranquility and closure.

If you're currently in a probate process or preparing an estate plan to simplify the process for your loved ones, we at The McKenzie Law Firm, LLC are here to help. We have experience with probate and estate planning in Colorado and can offer the guidance you need. Remember, the more you learn, the better prepared you'll be to face any challenges that may come your way during this important, albeit often difficult, time.

What next?

If you are involved in an estate administration and think you might benefit from professional guidance, you can:

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.
Visit our estate administration page to learn how proper estate administration can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
Learn more by reading our blog or watching our videos .

Sharing Your Estate Plan: A Delicate Balance

Sun, 04 Feb 2024 17:56:47 GMT

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.

what next?

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

Call us at 720-821-7604 to schedule an "Attorney Evaluation Session" to determine whether our firm would fit your needs well. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos .

Contesting a Will in Colorado: A Simple Guide

Fri, 29 Dec 2023 21:43:59 GMT

This post addresses a topic that can be pretty sensitive but is essential to understand: contesting a will in Colorado. We’ll also touch on some key Colorado Revised Statutes (C.R.S.) that pertain to this process.

What Does It Mean to Contest a Will?

Contesting a will means challenging its validity in court. This usually happens when someone believes the will doesn’t reflect the true intentions of the deceased person (the decedent).

Who Can Contest a Will?

In Colorado, only “interested parties” can contest a will. An “interested party” is anyone who would inherit from the decedent under Colorado law if there was no will or someone named as a beneficiary in the current or a previous will.

Grounds for Contesting a Will

A will can’t be contested just because someone thinks it’s unfair. There must be a valid legal reason. Here are some common grounds for contesting a will in Colorado:

Improper Execution : The will wasn’t signed or witnessed correctly.
Lack of Mental Capacity : The decedent wasn’t of sound mind when they made the will.
Fraud : Someone lied to the decedent to get them to change the will.
Undue Influence : Someone manipulated the decedent into changing the will.

How to Contest a Will

You must submit a petition to the probate court to contest a will. This petition explains why you’re objecting to the will. You also need to provide evidence showing your relationship with the decedent and how you stand to gain from prevailing on your claims.

Understanding C.R.S. §§ 15-12-401 - 404

These sections of the Colorado Revised Statutes deal with formal testacy proceedings. They outline the process for proving the validity of a will in court.

Understanding C.R.S. § 15-10-201(27)

This section defines an “interested person” in the context of Colorado probate law. As mentioned earlier, only an “interested person” can contest a will in Colorado.

Remember, contesting a will is a serious legal action that can cost a lot of time and money, not to mention family harmony. If you’re considering it, consulting with an attorney specializing in probate and trust administration is a good idea. They can guide you through the process and help you understand your rights and options.

What next?

If you think you might either need to contest or defend a will in probate, you can:

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.
Visit our estate litigation 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.
Learn more by reading our blog or watching our videos.

What to Do If You Think Your Trustee Is Not Doing Their Job Right

Tue, 26 Dec 2023 11:45:00 GMT

If you are a trust beneficiary, you have certain rights and expectations. You expect the trustee, who manages the trust, to act in your best interest and follow the terms of the trust agreement. But what if you think the trustee is not doing their job right? What if you suspect the trustee has made mistakes or errors or breached their fiduciary duty to you and the other beneficiaries? What can you do to protect your rights and interests?

Check the Trust Agreement

The first thing you should do is check the trust agreement. This document created the trust and spells out the rules and instructions for the trustee and the beneficiaries. The trust agreement may provide remedies or options if you are unhappy with the trustee’s performance. For example, some trust agreements may allow you to:

Replace the trustee . Some trust agreements may give you and the other beneficiaries the power to remove and replace the trustee without going to court. If you and the other beneficiaries agree on a new trustee, this may be a quick and easy way to solve the problem.
Appoint a trust protector . A trust protector is a person who has the authority to oversee the trustee and make specific changes to the trust. Some trust agreements may name a trust protector or give you and the other beneficiaries the power to appoint one. A trust protector can help you monitor the trustee’s actions and intervene if necessary.
Use alternative dispute resolution . Alternative dispute resolution (ADR) is a way of resolving conflicts without going to court. Some trust agreements may have an ADR clause requiring you and the trustee to use mediation or arbitration to settle disputes. Mediation is when a neutral third party helps you and the trustee communicate and reach a voluntary agreement. Arbitration is when a neutral third party hears both sides and makes a binding decision.

Review Colorado’s Uniform Trust Code

The next thing you should do is review Colorado’s Uniform Trust Code. This law governs trusts in Colorado and provides the rights and duties of trustees and beneficiaries.

The Uniform Trust Code may give you additional remedies or options if the trust agreement does not address your situation or the trustee has violated the law. For example, some sections of the Uniform Trust Code that may be relevant to you are:

Section 15-5-1001 . This section lists the remedies for breach of trust. A breach of trust is a violation by the trustee of a duty they owe to the beneficiaries. Some of the remedies include compelling the trustee to perform their duties, enjoining the trustee from committing a breach of trust, compelling the trustee to pay money or restore property, ordering the trustee to account or report, appointing a special fiduciary, removing the trustee, or ordering other appropriate relief.
Section 15-5-706 . This section explains the removal of trustees. The settlor, a cotrustee, or a beneficiary may request the court to remove a trustee. In some circumstances, if the breach is particularly egregious, the court can remove a trustee on its initiative. The court may remove a trustee if the trustee has committed a serious breach of trust, the trustee is unfit, unwilling, or unable to administer the trust effectively, or the removal of the trustee best serves the interests of the beneficiaries and is not inconsistent with a material purpose of the trust.

Consult a Lawyer

The last thing you should do is consult a lawyer. A lawyer can help you understand your rights and options, advise you on the best action, and represent you in legal proceedings. A lawyer can also help you communicate with the trustee and the other beneficiaries, negotiate a settlement, or draft a new trust agreement. A lawyer can protect your interests and help you achieve your goals.

If you are looking for a lawyer specializing in trust administration in Colorado, contact us at 720-821-7604 or click the button above to schedule an evaluation with one of our attorneys. We have the experience and expertise to help you with any trust-related issues. We offer a free initial consultation and a reasonable fee structure. We are committed to providing you with quality legal services and personalized attention. Call us today to schedule an appointment .

What Next?

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

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

What is the Formal Probate Process in Colorado and When Do You Need It?

Sun, 24 Dec 2023 20:00:27 GMT

Probate is the legal process of settling the estate of a deceased person. It involves identifying and collecting the assets, paying the debts and taxes, and distributing the remaining property to the heirs or beneficiaries. In Colorado, there are three types of probate: small estate, informal probate , and formal probate. This blog post will focus on the formal probate process, how it differs from the informal probate process, and when it is necessary or advisable to use it.

Formal Probate vs. Informal Probate

Informal probate is the most common and straightforward way of probating an estate in Colorado. It is available when there is a valid will or a clear line of descent from the intestate decedent (the person who died without a will). Informal probate involves filing certain forms with the probate court, usually in the county where the decedent lived at their death, and appointing a personal representative (also known as an executor or administrator) to administer the estate. The personal representative has the authority to act on behalf of the estate without much court supervision or intervention as long as they follow the law and the will (if any). Informal probate is usually faster, cheaper, and more convenient than formal probate.

On the other hand, formal probate is a court proceeding requiring more involvement and oversight from the judge. Formal probate is necessary or advisable in certain situations, such as:

When there is no will, or the will is contested, unclear, invalid, or lost;
When there are apparent or actual significant challenges or disputes in the administration of the estate, such as identifying heirs, determining property titles, resolving creditor claims, or dealing with complex or unusual assets;
When the personal representative is unable or unwilling to serve, or there is a conflict of interest or disagreement among the personal representatives or the heirs or beneficiaries;
When a person who is not a resident of Colorado or a US citizen wants to serve as the personal representative;
When a minor or an incapacitated person is an heir or beneficiary or has a claim against the estate;
When the estate is insolvent (the debts exceed the assets) or has tax issues;
When a special administrator is needed to preserve the estate or perform certain acts before the appointment of the personal representative;
When a supervised administration is requested or ordered by the court, the personal representative must obtain the court’s approval for every transaction or action they take on behalf of the estate.

How to Start a Formal Probate Process

A formal probate process can be started by an interested person, including heirs, beneficiaries, creditors, and anyone else with a property right or a claim that may be affected by the probate. The interested person must petition the probate court, requesting that the court enter an order after notice and hearing. The petition must contain the following information:

The name, address, and interest of the petitioner;
The name, age, domicile, and date and place of death of the decedent;
The names and addresses of the heirs, devisees (recipients named in the will), and personal representatives, if any;
The facts and reasons why formal probate is necessary or advisable;
The original will, if any, or a statement of its contents and whereabouts if it is lost or unavailable;
The name and address of the person whom the petitioner wants to be appointed as the personal representative and their priority and qualifications to serve;
Whether supervised administration is sought;
Any other relevant information or requests.

The petition must be accompanied by a filing fee and any other required documents, such as a death certificate, a bond, or a renunciation of the right to serve as the personal representative. The petitioner must also give notice of the petition and the hearing to all interested persons and publish a notice to creditors in a newspaper of general circulation in the county where the petition is filed. The notice must inform the interested persons of their right to appear and object to the petition and the creditors of their right to present their claims against the estate.

The petitioner will typically choose a date for a " non-appearance hearing ." As may be apparent from the name, a non-appearance hearing is not a hearing. It's a date by which anyone who has an objection to the petition needs to let the court know. If that happens, the court will schedule a hearing on the petition and hear the evidence and arguments of the petitioner and any other interested persons who appear. If no one objects by the date for the non-appearance hearing, the court usually enters the order requested by the petitioner. Sometimes, the court may appoint a special administrator to preserve the estate or perform certain acts pending the hearing outcome.

After the hearing, the court will enter an order granting or denying the petition and admitting the will to formal probate or determine the decedent's intestacy and heirs. The court will also appoint a personal representative and issue letters of administration , the official documents that authorize the personal representative to act on behalf of the estate. The personal representative must then file an information of appointment with the court, and give notice of their appointment to all interested persons and creditors.

What are the Duties and Responsibilities of the Personal Representative in a Formal Probate Process?

The personal representative in a formal probate process has the same duties and responsibilities as in an informal probate process but with more court supervision and intervention. The personal representative must:

Collect, inventory , and appraise the assets of the estate;
Pay the debts, taxes, and expenses of the estate;
Distribute the remaining assets to the heirs or beneficiaries according to the will or the law;
File an accounting and a closing statement with the court and obtain the court’s approval and discharge.

However, unlike in an informal probate process, the personal representative in a formal probate process must obtain the court’s approval for every transaction or action they take on behalf of the estate unless the court grants them unsupervised administration. This means that the personal representative must file a petition and notify all interested persons for every sale, transfer, payment, distribution, or other disposition of the estate’s property. The court will then hold a hearing and enter an order approving or disapproving the petition. The personal representative must also file periodic accountings with the court, showing the receipts and disbursements of the estate, and the court may order an audit or a review of the accountings. The personal representative must also respond to any objections, motions, or petitions filed by any interested persons and attend any hearings or conferences ordered by the court.

The formal probate process can be complex, time-consuming, and costly, but it can also provide more protection and certainty for the estate and the interested persons. If you need help with the formal probate process or any other probate matter, consult an experienced probate attorney in Colorado .

Summary and Explanation of Sections 15-12-401 and 15-12-402 on the Colorado Probate Code

Sections 15-12-401 and 15-12-402 on the Colorado Probate Code are the statutes that govern the formal probate process in Colorado. Section 15-12-401 defines a formal probate proceeding and when it can be commenced. Section 15-12-402 describes what a petition for formal probate or appointment must contain and how to file it.

Section 15-12-401 states that a formal probate proceeding is litigation to determine whether a decedent left a valid will and to appoint a personal representative for the estate. A formal probate proceeding can be started by an interested person filing a petition with the court, requesting that the court enter an order after notice and hearing. The petition can request one or more of the following:

An order probating a will, which means that the court declares that the will is valid and enforceable and determines who are the heirs or devisees of the decedent;
An order setting aside an informal probate of a will, which means that the court cancels or revokes a previous informal probate of a will that was done without a court order;
An order preventing an informal probate of a will, which means that the court stops or blocks a pending application for an informal probate of a will that was filed with the court;
An order that the decedent died intestate, which means that the court declares that the decedent did not leave a valid will and determines who the heirs of the decedent are according to the law.

A petition for formal probate can be filed regardless of whether the same or a conflicting will has been informally probated. A formal probate proceeding may or may not involve a request to appoint a personal representative. During a formal probate proceeding, the court will not act on any application for informal probate or appointment, and the previously appointed personal representative must refrain from making any further distribution of the estate unless the petition also requests confirmation of their appointment.

Section 15-12-402 specifies what information and documents a petition for formal probate or appointment must include and how to file it. A petition for formal probate of a will must:

Request an order as to the testacy of the decedent in relation to a particular will and determining the heirs;
Contain the name, address, and interest of the petitioner; the name, age, domicile, and date and place of death of the decedent; the names and addresses of the heirs, devisees, and personal representatives, if any; and the facts and reasons why formal probate is necessary or advisable;
State whether the original will is in the court's possession or accompanies the petition, or if not, state the contents of the will and indicate that it is lost, destroyed, or otherwise unavailable.

A petition for adjudication of intestacy and appointment of an administrator must:

Request an order that the decedent left no will and determine the heirs;
Contain the name, address, and interest of the petitioner; the name, age, domicile, and date and place of death of the decedent; the names and addresses of the heirs and personal representatives, if any, and the facts and reasons why formal probate is necessary or advisable;
State the name and address of the person the petitioner wants to be appointed as the administrator and their priority and qualifications to serve.

A petition for appointment of a personal representative to succeed one who has been appointed previously must:

Request an order appointing a successor personal representative;
Contain the name, address, and interest of the petitioner, the name and address of the person whose appointment is sought, and their priority and qualifications to serve;
State why the appointment of a successor is necessary, such as the death, resignation, removal, or incapacity of the prior personal representative.

A petition for formal probate or appointment must be filed with the court in the county where the decedent was domiciled or had a place of abode or where any property of the decedent was located at the time of their death. The petition must be accompanied by a filing fee and any other required documents, such as a death certificate, a bond, or a renunciation of the right to serve as the personal representative. The petitioner must also give notice of the petition and the hearing to all interested persons and publish a notice to creditors in a newspaper of general circulation in the county where the petition is filed.

Sections 15-12-401 and 15-12-402 on the Colorado Probate Code are important statutes that regulate the formal probate process in Colorado. They provide the legal framework and the procedural steps for initiating and conducting a formal probate proceeding. You should consult a qualified probate attorney in Colorado if you have any questions or concerns about these statutes or other aspects of the formal probate process.

Conclusion

The formal probate process in Colorado is a court proceeding that requires more involvement and oversight from the judge. It is necessary or advisable in certain situations, such as when there is no will, the will is contested, unclear, invalid, lost, or significant challenges or disputes in the estate administration. The formal probate process can be complex, time-consuming, and costly, but it can also provide more protection and certainty for the estate and the interested persons. If you need help with the formal probate process or any other probate matter, contact an experienced probate attorney in Colorado .

what next?

If you are in need of assistance with a probate, you can:

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

How to Start an Informal Probate Process in Colorado

Sun, 24 Dec 2023 04:39:52 GMT

Do you need to open a probate in Colorado? This post will explain how to start an informal probate process. We’ll focus o n Section 15-12-301 of the Colorado Probate Code. Don’t worry; we’ll keep it simple!

What is Informal Probate?

Informal probate is a way to recognize a person’s will after they pass away legally. It’s called “informal” because it doesn’t involve a court hearing. Instead, a registrar (a court official) handles it.

Starting the Informal Probate Process

You need to apply for informal probate or appointment to start the process. This application is directed to the registra r. You need to ensure all the information in the application is correct and complet e.

What to Include in the Application

The application should include the followin g:

An explanation of your interest in the estate for which you are trying to open the probate.
The name and date of death of the person who passed away, their age, and where they lived at the time of death.
The names and addresses of the spouse, children, heirs, and devisees, and the ages of any who are minors.
If the person was not living in the state at their death, a statement explaining why the court to which you are applying is the correct venue.
A statement identifying any personal representative of the decedent appointed in this state or elsewhere whose appointment has not been terminated.
A statement indicating whether you have received a demand for notice or are aware of any demand for notice of any probate or appointment proceeding concerning the decedent that may have been filed in this state or elsewhere.
A statement indicating that the time limit for informal probate or appointment provided in this article has not expired either because three years or less have passed since the decedent’s death or, if more than three years have passed since the decedent’s death because the circumstances described in section 15-12-108 authorizing tardy probate or appointment have occurred.

If you’re applying for informal probate of a will , you should also state that the original of the decedent’s last will is in the court's possession or accompanies the application or that an authenticated copy of a will probated in another jurisdiction accompanies the applicatio n.

Remember, this is just a summary. Consulting with a legal professional is always a good idea if you're dealing with probate matters. Stay tuned for more posts where we’ll continue to demystify the Colorado Probate Code!

Please note that this is a simplified explanation and does not cover all the nuances of the law. Always consult with a legal professional for advice about your specific situation.

What next?

If you need to administer someone's estate, you can:

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

What To Do With the Will of Someone Who Has Passed Away in Colorado

Thu, 21 Dec 2023 18:14:28 GMT

When a loved one passes away, handling their last will and testament is crucial in honoring their final wishes. In Colorado, the law is clear about the responsibilities of the person in possession of the will, known as the custodian. Here’s a simplified breakdown of what the law requires:

Prompt Delivery : The custodian must deliver the will to the appropriate probate court within ten days of the testator’s death or as soon as they become aware.
Correct Court : If the deceased was a Colorado resident, the will goes to the court in the county where they lived. If not, it should be sent to the court in the county where they owned property.
Unknown Details : When the custodian doesn’t know where the deceased lived or owned property, or if an out-of-state court refuses the will, it should be sent to the court in the county where the will was found.
Court’s Role : A court with the will must lodge it in its records upon learning of the death.

This process ensures that the will is recorded correctly and can be followed according to the testator’s intentions.

As specialists in probate and trust administration, we will guide you through these steps and ensure your loved one’s legacy is preserved. If you’re holding a will or are involved in the probate process, feel free to reach out for professional assistance. Remember, failing to comply with these duties can lead to legal consequences, so acting promptly and correctly is essential.

What next?

If you are trying to figure out how to handle the affairs of someone who has recently passed away, you can:

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.
Visit our estate administration page to learn about the steps that need to be taken, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
Learn more by reading our blog or watching our videos .

What You Don't Know Can Hurt You: The Hidden Dangers of Administering an Estate

Sat, 02 Dec 2023 22:29:34 GMT

Will your loved ones know what to do when you are disabled or gone?

If you’ve named your children, relatives, or friends to be in charge as “Successor Trustee” of your Living Trust when you’re disabled or pass away, they probably have no idea of what to do! After all, they’ve probably never served as a Trustee before! Unfortunately, what your successor trustee doesn't know could cost your family hundreds of thousands!

Worse yet, if your Successor Trustee fails to handle specific tasks promptly and correctly, he or she may be personally liable to your beneficiaries out of his or her pocket! And you could be placed at risk if an unprepared successor trustee steps in when you're sick or disabled!

Statistics tell us there’s more than a 50% chance you won’t be able to handle things for yourself at some point later in life -- and the Successor Trustee better know what to do then, when you’re most depending on it!

For example, does your Successor Trustee know how to:

Properly carry out the duties owed to your beneficiaries?
Work together with your beneficiaries to avoid conflict and resolve disputes.
Access your funds immediately when the time comes.
Qualify you for Colorado Medicaid nursing care benefits, should you need them?
Deal with your creditors and overdue bills?
Avoid an IRS audit?
Properly determine the value of your assets.
Successfully defend against contests?
Avoid liability for self-dealing or conflicts of interest?
Get paid compensation and get reimbursed for expenses?
Set up proper accounting procedures?
Avoid many other pitfalls for the unwary that could expose the Trustee to personal liability -- even if he or she is intelligent, responsible, and good with money.

Your Successor Trustee should. Find Out What they need to know by attending a special presentation.

Advice from Someone Administering an Estate

Fri, 24 Nov 2023 22:04:45 GMT

Administering an estate can be daunting, especially if you’re doing it for the first time. Here are some pieces of advice many of our clients say they would give to someone just starting this process.

1. Establish Trust with Beneficiaries Early and Often

The first step is to establish communication with the beneficiaries as quickly as possible. Earning their trust early on will ensure a smooth process moving forward. If you’re administering the estate of a loved one, the beneficiaries might be grieving and anxious about what will happen next. Communicating openly and honestly can help alleviate their concerns and build trust.

You will want to keep communicating regularly and consistently throughout the process to maintain that trust. Remember that administering an estate can be more complex than many realize. As the executor, the beneficiaries can potentially sue you for mistakes that cost them money, even if those mistakes were innocent and made with the best intentions. This is less likely to happen when you have established a pattern of open, honest communication that demonstrates your good faith.

2. Set Aside Personal Feelings

In many situations, the estate executor is closely related to both the decedent and the beneficiaries. You will bring a long history of thoughts and opinions into the job if that describes you. Your job as the executor, however, is to follow the instructions given in the decedent’s will or trust, not to make your judgments about what was a good idea and what was not. Setting aside your feelings about the instructions or the beneficiaries is essential. You might disagree with how the assets are distributed, but it’s not your place to change that. You must carry out the decedent’s wishes as outlined in the will or trust or according to state law if there is no governing document.

3. Be Conservative with Promises to Beneficiaries

Be conservative with promises to the beneficiaries about when and what they will receive. Both you and the heirs need to understand that your job is not just to hand out money to the beneficiaries but also to identify and resolve creditor claims against the estate. You also need to ensure that you correctly handle the taxes. Both of these tasks can take longer than people expect. A beneficiary might expect to receive their inheritance quickly, but it could take longer if outstanding debts or taxes must be paid.

The most challenging situation is when a beneficiary is in a difficult financial situation and badly needs the money. A good executor understands their competing responsibilities, carefully evaluates all their options, and balances their legal obligations with compassion for the beneficiary's situation.

4. Treat the Estate Like a Business

Treat the estate like a business. This means keeping good financial records, communicating regularly and candidly with all the stakeholders, setting your emotions aside to make the best decisions for the estate's good, and hiring good people to help you complete the tasks you don’t know how to do on your own. For example, you might need to hire an accountant to help with the estate’s taxes or a lawyer to help with legal issues .

5. Seek Professional Help

Don’t hesitate to seek professional help if you need it. Administering an estate can be complex, and admitting when you’re out of your depth is okay. For example, you might need to hire a business valuation expert if the estate includes a business. If the estate has substantial personal property, you might need to hire an estate sales expert or organizational guru.

Remember, your role as an executor is serious, and it’s essential to carry out your duties with diligence and integrity. By following these pieces of advice, you can help ensure a smooth and efficient administration process.

See this article for additional thoughts and advice from someone who has been through this process before.

what next?

If you have been nominated to administer an estate and think you might need assistance, you can:

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos.

How to Communicate Effectively with the Beneficiaries and Co-Trustees

Wed, 22 Nov 2023 22:06:54 GMT

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. Sometimes it is obvious which parts those would be, but not always. A page giving a specific gift to a particular beneficiary would need to be shown to that beneficiary. But what about the "Definitions" section often included in trust agreements, where specific terms are 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.

What next?

If you are administering and would appreciate expert assistance, you can:

Call us at 720-821-7604 to schedule an "Attorney Evaluation Session" to determine whether our firm would fit your needs well. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos .

Estate Planning for the Engaged Couple

Tue, 21 Nov 2023 04:37:45 GMT

Are you engaged to be married soon? Congratulations! It’s an exciting time; understandably, you want to start building a life together with your partner. However, it’s important to remember that until you are married, you don’t have any legal right to each other’s assets in the event of death or incapacity. If something happens to one of you, the other could find themselves in a difficult situation.

Many people start buying significant assets together during their engagement, such as a house and cars, and they combine bank accounts. Although, understandably, they want to start gaining the efficiencies that come with two people contributing towards these purchases, becoming financially dependent on someone you are not married to and don’t have any contractual relationship with can be risky. Here are some reasons why:

Lack of legal protection : Until you are married, you have no legal right to each other’s assets in the event of death or incapacity. If something happens to one of you, the other could find themselves in a difficult situation. For example, you could co-own your house with people who would have been your in-laws.
No contractual relationship : When you get married, you enter into a contractual relationship that provides certain legal protections. Until then, you don’t have any contractual relationship with your partner. This means you could be left without legal recourse if something happens.
Financial risk : Becoming financially dependent on someone to whom you are not married can be a risky thing to do. You could have a difficult financial situation if something happens to your partner. For example, you could be left with a mortgage payment you can’t afford alone.

For these reasons, thinking about estate planning during your engagement is essential. Estate planning is planning what happens to your assets in the event of your death or incapacity. An estate plan is critical to ensure your assets are distributed according to your wishes.

Here are some steps you can take to start the estate planning process if you are combining finances with someone to whom you are not married:

Create a will : A will is a legal document that outlines how you want your assets to be distributed after your death. It’s essential to have a will in place to ensure that your assets are distributed according to your wishes.
Create a power of attorney : A power of attorney is a legal document that gives someone else the authority to decide on your behalf if you become incapacitated.
Create a living will : A living will is a legal document that outlines your wishes for medical treatment if you become incapacitated.

By taking these steps, you can ensure that your assets are protected and that your wishes are carried out during your death or incapacity. Congratulations again on your engagement, and best of luck with your estate planning!

What next?

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

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.
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.
Learn more by reading our blog or watching our videos .

How to Deal with Creditors and Claims Against an Estate or Trust in Colorado

Sun, 05 Nov 2023 18:10:56 GMT

If you are appointed as the executor of an estate in Colorado, whether as the Personal representative in a probate process or as the Trustee of a trust, one of your duties is to deal with the creditors of the deceased person. This can be a complex and time-consuming process. Still, it is essential to ensure that the estate is administered correctly and distributed according to the law and the will or trust of the decedent. In this blog post, we will explain your options for handling creditors' claims in Colorado probate and why it is essential to do so correctly.

What are creditors' claims?

Creditors' claims are the debts and obligations the deceased person owed at the time of death. These include mortgages, loans, credit cards, medical bills, taxes, and other liabilities. Creditors have the right to file claims against the estate to recover the money they are owed. However, not all claims are valid or enforceable, and some may have expired or been discharged by law. Therefore, it is the executor's responsibility to review and verify each claim and to pay or reject them accordingly.

How do we notify creditors of the probate?

For estates being administered through probate, the first step in dealing with creditors' claims is to notify potential creditors of the probate proceeding. This can be done in two ways: by publication and by mail.

By publication : The executor must publish a notice to creditors in a newspaper of general circulation in the county where the estate is being administered. The notice must be published at least three times, once a week, for three consecutive weeks. The notice must contain the decedent's name, the case number, the name and address of the executor, and the deadline for filing claims. The deadline is usually four months from the date of the first publication or one year from the date of death, whichever is earlier .
By mail : The executor may also give written notice by mail or other delivery to any creditor that they are aware of or can reasonably ascertain. The written notice must contain the same information as the notice by publication and notify the creditor of the time limit for filing claims. The time limit is the later of the following: the deadline set by the notice by publication, or 60 days from the mailing or delivery of the notice, but not later than one year from the date of death.

How do you handle creditors' claims?

Once the creditors are notified of the probate, they can file their claims with the court or the executor. The executor must review each claim and determine whether to allow or disallow it. The executor may allow a claim in whole or in part or reject it entirely. The executor must notify the creditor of their decision in writing within 63 days of receiving the claim . If the executor fails to do so, the claim is deemed allowed.

If the executor allows a claim, they must pay it from the estate's assets in the order of priority established by law. The order of priority is as follows :

Costs and expenses of administration, including attorney's fees and executor's commissions.
Reasonable funeral expenses.
Debts and taxes with preference under federal law, such as income and estate taxes.
Reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending the decedent.
Debts and taxes with preference under other laws of this state, such as property taxes and sales taxes.
All other claims.

If the executor disallows a claim, the creditor may file a petition with the court to contest the decision within 63 days of receiving the notice of disallowance. The court will then hold a hearing and decide whether the claim is valid.

Why is it essential to handle creditors' claims correctly?

The executor needs to handle creditors' claims correctly for several reasons.

First, it is part of their fiduciary duty to the estate and the beneficiaries to pay the lawful debts of the decedent and to protect the estate from invalid or fraudulent claims.

Second, it is necessary to avoid personal liability for the executor. If the executor pays a claim that is not valid or enforceable or pays a claim out of order, they may be liable to the estate or the beneficiaries for the amount paid. Conversely, if the executor fails to pay a valid and enforceable claim, they may be liable to the creditor for the amount owed.

Third, it is essential to ensure the proper distribution of the estate. Suppose the executor does not pay or reject the claims promptly. In that case, they may delay or prevent the final settlement of the estate and the distribution of the assets to the beneficiaries.

How can we help?

Handling creditors' claims in Colorado probate can be a daunting task for any executor. That is why it is advisable to seek the assistance of an experienced probate attorney who can guide you through the process and ensure that you comply with the law and protect the interests of the estate and the beneficiaries.

At The McKenzie Law Firm, we have the knowledge and expertise to help you with all aspects of probate and trust administration, including dealing with creditors' claims. Contact us today for a free paralegal consultation, and let us take care of your probate needs.

what next?

If you think you might need assistance administering an estate, you can:

Call us at 720-821-7604 to schedule a review with one of our paralegals to determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

How To Handle Taxes and Accounting for the Trust

Fri, 03 Nov 2023 17:29:00 GMT

If you are serving as the trustee of a trust, you may be wondering how to handle taxes and accounting for the trust. In this blog post, I will give you some general guidance on these topics, but remember that every trust is different, and you should consult a qualified attorney and accountant for your specific situation. There are many kinds of trusts with varying treatments of tax and creditor obligations.

As the trustee of a trust, your most important responsibilities are to find the trust assets (also known as marshaling the assets), secure those assets, protect the assets, and account to the beneficiaries about what the trust receives and spends. Comprehensive, accurate, and well-organized record-keeping is critical. You should keep track of all the income and expenses of the trust, as well as any distributions to beneficiaries. You should also keep copies of all the documents related to the trust, such as the trust agreement, deeds, titles, contracts, invoices, receipts, bank statements, tax returns, etc.

The taxes most trustees need to be concerned about are the estate tax, income tax, and capital gains tax. Let me explain these taxes and how they may affect your trust.

Estate Tax

The estate tax is a federal tax that applies to transferring property at death. The estate tax exemption is the amount of property that can be shared without paying any estate tax. For 2023, the estate tax exemption is $12.92 million per person (or $25.84 million per married couple). This means that if the total value of your estate (including any trust assets) is less than the exemption amount, you do not have to worry about the estate tax. However, if your estate exceeds the exemption amount, you may have to pay a 40% tax on the excess amount. The estate tax is paid by the estate or the trust, not the beneficiaries.

Income Tax

The income tax is a federal and state tax that applies to the income earned by the trust. The income tax brackets are very compressed for trusts, and they hit the highest tax bracket at only approximately $13,000 of income. Any income above that amount will be taxed at 37% (plus any state income tax). The income tax is paid by the trust or the beneficiaries, depending on whether the income is retained by the trust or distributed to the beneficiaries. If the trust retains the income, the trust pays the income tax. If the income is distributed to the beneficiaries, the beneficiaries pay the income tax and receive a credit for any tax the trust pays.

Capital Gains Tax

The capital gains tax is a federal and state tax that applies to the profit made from selling an asset that has increased in value. The capital gains tax rate depends on how long you have owned the asset and your income level. Most trusts' capital gains tax rate is 20% (plus any state capital gains tax). The trust or the beneficiaries pay the capital gains tax, depending on whether the gain is retained or distributed to the beneficiaries. If the trust retains the gain, the trust pays the capital gains tax. If the income is distributed to the beneficiaries, the beneficiaries pay the capital gains tax and receive a credit for any tax the trust pays.

One of the most significant tax-saving opportunities in the tax code is the step up in capital gains basis. This means that when an asset is transferred at death, its basis (or cost) is increased to its fair market value. This reduces or eliminates any capital gains tax that would otherwise be due if the asset is sold later. For example, if you inherited a house worth $500,000 that your parents bought for $100,000, your basis in the house would be $500,000, not $100,000. If you sold the house for $600,000 later, you would only pay capital gains tax on the $100,000 gain that happened since your parents' deaths, not the $500,000 in gain that happened since your parents bought the house.

To take advantage of this step up in basis, it is essential to establish the value of high-value assets as soon as possible, either by selling them or having them appraised, so that you have a good record for maintaining that step up. If you do not have a reliable valuation of the assets at the time of death, you may have to pay more capital gains tax later if the IRS challenges your claimed basis.

As you can see, taxes and accounting for a trust can be complicated and confusing. That's why hiring an attorney specializing in probate and trust administration, like The McKenzie Law Firm, is wise to help you navigate these issues and avoid costly mistakes. If you need assistance with your trust, please contact us today for an attorney evaluation session. We look forward to hearing from you.

What next?

If you are serving as the trustee of a trust, you can:

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

The Executor of an Estate is an Employee, Not The Boss

Thu, 02 Nov 2023 16:13:37 GMT

Are you an executor of an estate in Colorado? If so, you might be feeling a lot of pressure and responsibility. You might also be feeling a sense of authority and power. After all, you are the one who is in charge of managing the estate's assets, paying its debts, filing its tax returns, and distributing the inheritance. You are the one who is making the critical decisions about how to carry out the wishes of the deceased.

But before you get too comfortable in your role, you should know that being an executor is not a position of power but a position of service. You are not the boss. You are an employee. And your bosses are the estate's beneficiaries.

As an executor, you have a fiduciary duty to act in the best interests of the beneficiaries. You have to follow the instructions in the will or trust, and you have to comply with the laws and rules that govern estate administration in Colorado. You also have to keep the beneficiaries informed and involved in the process. You must provide them with regular reports and accountings of your actions and expenses. You have to respond to their questions and concerns. And you have to respect their rights and interests.

You could face severe consequences if you fail to do any of these things. The beneficiaries can challenge your actions or decisions in court. They can petition to remove you as the executor and appoint someone else. They can even sue you for breach of fiduciary duty and seek damages from your assets.

Being an executor is not easy, but it can be rewarding if you do it right. You can honor the memory of the deceased and help their loved ones through a difficult time. But it would be best to remember that you are not the boss but the employee. And your job is to serve the beneficiaries, not yourself.

Contact us today if you need help with estate planning or administration in Colorado. We specialize in estate planning and probate law. We can help you understand your rights and responsibilities as an executor and guide you through the process with professionalism and compassion.

What next?

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

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

Take a Moment This Halloween to Remember an Underserved Part of Our Community

dan@themckenziefirm.com (Dan McKenzie) — Mon, 30 Oct 2023 16:41:55 GMT

Happy Halloween, everyone! While this is a fun day of costumes and candy consumption for most people, we want to make a serious point about an underserved part of our community where we see a lot of dangerously inadequate planning. Perhaps more than any other undead people, vampires consistently make several massive estate planning mistakes. They erroneously think they don't need an estate plan just because they have been reanimated from the dead and could potentially live forever. That's a grave error (pun intended) for the following reasons.

First, their fearsome reputation and indefinite lifespans often make them forget they are not immortal. Although their life expectancies are infinite, they can still be killed by a wooden stake through the heart, exposure to sunlight, garlic, holy water, or a silver bullet (that last one might be werewolves). So, although their chance of dying is lower than those who have not previously died, they can’t completely ignore the possibility.

Second, their extended life expectancies increase vampires' chances of suffering incapacity events . The odds of going centuries without ever struggling with your mental faculties, getting into a coma, or being unexpectedly trapped in a coffin for an extended period are exceedingly low. Who will make decisions for you if any of those events does happen? Who will manage your assets? Who will pay your bills? Even people who never die need a durable power of attorney and a healthcare proxy to appoint someone they trust to handle these matters.

Third, vampires have unique tax planning challenges that mortals don't face. For example, capital gains tax can be an especially acute problem when you hold assets for centuries. Imagine buying a painting for $100 in the 18th century and selling it for $10 million in the 21st century. That's a lot of taxable gain. If you face this problem, you might consider donating some of your appreciated assets to charity or using a trust to minimize your tax liability.

Another tax minimization strategy every vampire should consider is the Roth IRA . Unlike traditional IRAs, Roth IRAs do not require taking minimum distributions when you reach a certain age. That means you can let your money grow tax-free for as long as you want. The potential value of tax avoidance for someone who might live for centuries should be obvious.

Despite their indefinite life spans, vampires need estate planning just as much as anyone else. We have had some vampire clients with powers of attorney based on statutes that were hundreds of years out of date or that named agents from several generations ago. That's not very smart. Everyone needs to update their estate plan regularly to reflect the changes in their life and the law.

If you are a vampire or know someone who is, please contact us today for a personalized attorney evaluation. We specialize in estate planning for both the living and the undead. We can help you create a plan that suits your needs and protects your legacy. Please don't wait until it's too late. Call us now or visit our website at www.vampirelawyer.com .

what next?

If you are undead, but still think it might be time to think through your estate plan, you can:

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.
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.
Learn more by reading our blog or watching our videos .

Understanding Probate: What Assets are Subject to Probate

Thu, 26 Oct 2023 14:50:50 GMT

The death of a loved one brings with it an array of emotions and obligations. One of the most important and complex obligations is the process of probate. Probate is the legal procedure by which a deceased individual's assets are transferred to their beneficiaries or heirs. This process can be lengthy, complicated, and often requires the involvement of an attorney. In this blog post, we'll explore what assets are subject to probate, why the assistance of a legal professional is often necessary, and how The McKenzie Law Firm, LLC can help Colorado residents navigate probate matters.

What is Probate?

Probate is the process through which a court confirms and monitors the distribution of a deceased individual's assets. The process is overseen by an executor or personal representative who is responsible for ensuring that the deceased's assets are properly distributed and all claims, taxes, and debts are settled. The process can be complex and typically involves multiple stages, including the identification of assets, the payment of debts and taxes, the distribution of assets according to the deceased's will or, in the absence of a will, state laws.

What Assets are Subject to Probate?

Not all assets are subject to probate. Assets that pass outside the probate process include joint property, accounts with named beneficiaries, retirement assets, and life insurance death benefits. In contrast, assets that are subject to probate include assets that are solely owned by the deceased at the time of their death. This can include real estate, bank accounts, investment accounts, personal property, and business interests.

Why is an Attorney Necessary?

The probate process can be complicated and time-consuming, requiring an array of paperwork, legal procedures, and court appearances. Hiring an attorney can help make the process smoother and more efficient. An attorney can help settle disputes between beneficiaries, locate and identify the deceased individual's assets, file paperwork with the court, and ensure all legal requirements are met. Furthermore, an attorney can ensure that all probate assets are properly accounted for, and all legal obligations are fulfilled. Finally, an attorney can help navigate the complexities of estate taxation.

How can The McKenzie Law Firm, LLC Help with Probate Matters?

The McKenzie Law Firm, LLC has been helping Colorado residents with probate matters for years. Our experienced attorneys are adept at handling all aspects of the probate process, from identifying assets and beneficiaries to resolving disputes and filing paperwork with the court. We approach each case with a compassionate and empathetic approach, recognizing the emotional difficulty often associated with probate matters. Our client-focused approach means that we keep our clients fully informed during every stage of the probate process, and we are dedicated to ensuring that your loved one's assets are distributed according to their wishes.

The probate process can be complicated, stressful, and time-consuming. However, with the right attorney, the process can be less burdensome, and ensure that the deceased loved one's assets are properly distributed. The McKenzie Law Firm, LLC is committed to providing Colorado residents with exceptional legal representation, and our team of dedicated attorneys is here to help guide you through the probate process. Contact us today to schedule a consultation and learn how we can help you navigate these difficult times.

The Pros and Cons of Hiring a Professional Trust Administrator

Sun, 22 Oct 2023 23:39:41 GMT

If you are planning or administering an estate, one of the most important decisions you will make is who should serve as the estate's executor. The executor is the person who is responsible for carrying out the instructions in your trust or will, paying your debts and taxes, and distributing your assets to your beneficiaries. It is an important role that requires a lot of time, attention, and skill.

Generally, there are two options. One option is to appoint a professional fiduciary as your executor. A professional fiduciary is licensed and regulated by the state to provide fiduciary services, such as acting as an executor, trustee, guardian, or conservator. Some of the benefits of choosing a professional fiduciary are:

A professional fiduciary will be intimately familiar with the typical tasks required to administer an estate and the rules governing that process. Administering an estate often requires familiarity with several complex areas of law, including your state's trust and probate codes, state and federal tax laws, real estate law, contracts, etc. A professional who does this work regularly will know how to file the necessary paperwork, keep accurate records, communicate with the beneficiaries and creditors, and handle any disputes or challenges that may arise.
A professional fiduciary is likelier to follow your instructions and administer the estate dispassionately since they don't have any relationship or history with the beneficiaries and aren't a beneficiary themselves. This can help avoid conflicts of interest, favoritism, or resentment affecting a friend or family member serving as the executor.
A professional fiduciary will have insurance to cover any errors or omissions under their watch. This can protect the estate and the beneficiaries from any potential losses or liabilities resulting from a mistake or negligence by the executor.

Another option is to rely on a friend or family member to serve as your executor. This can be someone who you trust and who knows you well. Some of the advantages of having a friend or family member do the job are:

They might start with more familiarity about where your assets, debts, and family members are than a professional would. This can save time and money in locating and valuing your estate.
They might be able to guess better than a professional would how you would handle situations that aren't explicitly addressed in the estate plan documents. For example, if you left a vague or ambiguous instruction in your will, they might better understand what you intended or what would be fair to the beneficiaries.
Friends and family members often charge little to nothing to complete the job. This can reduce the expenses of administering the estate and leave more money for the beneficiaries.

There is no single answer to who should be your executor. It depends on your personal preferences, the complexity of your estate, and the availability and willingness of your potential candidates. You should weigh the pros and cons of each option carefully and consult with an experienced attorney before making your decision.

what next?

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

What to Do When You Can’t Find a Life Insurance Policy: A Beneficiary’s Guide

Thu, 19 Oct 2023 20:37:54 GMT

Life insurance is one of the most valuable assets in many probate cases and trust administrations. Life insurance is a critical need for many people that can provide financial security for your family after you pass awa y. However, sometimes, people forget to tell their beneficiaries about their coverage or lose or misplace their policy documents . This can make it difficult for the heirs to claim the benefits they are entitled to. It is estimated that there could be as much as $1 billion of unclaimed life insurance funds in the United States!

If you are in this situation, several steps might help you locate a missing life insurance policy and make a claim:

Ask around : Talk to the deceased’s family members, friends, co-workers, or anyone with information about their life insurance policy. They may know the insurance company's name, the agent who sold the policy, or where the policy documents are s tored.
Contact the insurer : If you know the name of the insurance company that issued the policy, you can call them directly and ask for help. You must prove you are a beneficiary using documents such as your identification and the d eceased's death certificate.
Search online : Some online tools can help you find a life insurance policy, such as the Life Insurance Policy Locator Service provided by the National Association of Insurance Commissioners (NAIC). You can submit a request with some basic information about the deceased, and the NAIC will contact participating insurers on your behalf. If they find a policy with you as a beneficiary, they will let you know how to proceed with your claim.
Check unclaimed property : If no one claims the life insurance benefits within a certain period, the insurer may turn the money to the state’s unclaimed property office. You can check if your state has any unclaimed life insurance benefits by visiting MissingMoney.com or Unclaimed.org , websites maintained by the National Association of Unclaimed Property Administrators (NAUPA).
Consult an attorney : If you still can’t find the policy or have trouble making a claim, you may want to consult an estate planning attorney who can help you with the legal aspects of your case. An attorney can also help you with estate planning, such as creating a will, trust, or power of attorney.

As Colorado estate planning specialists, we have helped many clients with their life insurance claims and other estate planning needs. If you need assistance or have questions, please contact us . We would be happy to help you and your family.

What next?

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

Probate and Estate Planning Myths: The Truth About "No Contest" Clauses

Tue, 17 Oct 2023 23:18:02 GMT

If you are involved in probate or estate planning, you may have heard of "no contest" clauses. These provisions in a will or trust say that anyone who challenges the document's validity or the executor's actions will forfeit their inheritance. Sounds simple, right? Well, not quite. There are some common misconceptions about how these clauses work and their effectiveness. Here are some facts you need to know.

Myth #1: A "no contest" clause protects the executor from any liability

Some people think that the beneficiaries can't question how they choose to administer the estate if they are named as the executor of a will or trust with a "no contest" clause. This is not true. An executor has a fiduciary duty to act in the best interests of the estate and the beneficiaries. This fiduciary duty cannot be waived. Whether there is a "no contest" clause, the executor must follow the will or trust terms, keep accurate records, pay taxes and debts, distribute assets, and report to the court. If they fail to do any of these things, they can be held liable for breach of fiduciary duty.

For example, suppose an executor fails to account for the estate assets or delays the administration of the estate. In that case, the beneficiaries can sue them for damages and will not lose their share of the estate, even if there is a "no contest" clause. The "no contest" clause only prohibits the beneficiaries from challenging the substantive decisions made by the decedent.

Myth #2: A "no contest" clause prevents anyone from challenging the will or trust

Some people think that if they include a "no contest" clause in their will or trust, they can disinherit anyone they want, and there is nothing those people can do about it. This is not true either. A "no contest" clause only disincentivizes people from challenging the plan documents and only works if the beneficiaries have something to lose by doing so. People wholly disinherited have nothing to fear because they have nothing to lose.

For example, suppose someone leaves their entire estate to their caregiver, disinherits their children, and includes a "no contest" clause. In that case, the children may still challenge the will or trust for undue influence, fraud, lack of capacity, or other reasons. And they probably will do so since they would not get anything anyway, absent the challenge.

A "no contest" clause only works as a deterrent if the beneficiaries are entitled to receive enough from the estate that they are scared to lose if they challenge it. People often ask us how much they should give to a beneficiary to make the "no contest" clause effective. That depends on many factors, including the beneficiary's expectation about what they would receive, the beneficiary's financial position, the beneficiary's anger about their disfavored position, the beneficiary's feelings toward and relationship with the other beneficiaries of the estate, the size of the estate, and the reason for the disinheritance.

Myth #3: A "no contest" clause is always valid and enforceable

Some people think that if they include a "no contest" clause in their will or trust, the court will automatically uphold it and dismiss any challenges. This is not true either. A "no contest" clause is not a magic bullet that can shield a will or trust from scrutiny. Courts know that sometimes people use undue influence, fraud, coercion, or other improper means to get someone to create a will or trust that favors them. They are also aware that sometimes these same people use these same means to get them to include a "no contest" clause in the document.

So, courts do not necessarily take "no contest" clauses at face value and will still evaluate them through litigation. They will look at factors such as the reason for the challenge, the strength of the evidence, the relationship between the parties, the size of the estate, and the public policy implications. Courts may enforce or invalidate a "no contest" clause depending on these factors.

The bottom line is that probate and estate planning are complex and nuanced law areas requiring professional guidance and advice. If you are an executor or a beneficiary of a will or trust with a "no contest" clause, or if you are considering including one in your estate plan, you should consult an experienced attorney who can help you understand your rights and obligations and protect your interests.

What next?

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

SECURE 2.0 Act: How It Affects You and Your Retirement Account Beneficiaries

dan@themckenziefirm.com (Dan McKenzie) — Wed, 11 Oct 2023 03:35:09 GMT

On December 29, 2022, President Biden signed the Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0 Act) . The previous SECURE Act in 2020 made several changes to retirement planning:

It increased the required beginning date (RBD) for required minimum distributions (RMDs) from your retirement accounts from 70 ½ to 72 years of age.
It eliminated the age restriction for contributions to qualified retirement accounts.
It requires that most designated beneficiaries withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.

Eligible Designated Beneficiaries Exempt from the 10-Year Rule

The old SECURE Act provided a few exceptions to the mandatory 10-year withdrawal rule with a list of eligible designated beneficiaries:

Spouses
Beneficiaries who are not more than ten years younger than the account owner
The account owner’s children who have not reached the age of majority
Disabled individuals and chronically ill individuals

New Provisions in the SECURE 2.0 Act

The SECURE 2.0 Act made several enhancements to clarify the original legislation. Several of the key enhancements are summarized below:

It raises the RBD age for RMDs to 73 in 2023 and 75 by 2033.
It decreases penalties for not taking RMDs to 25 percent of the RMD amount and ten percent of IRAs if corrected timely.
Employees will be automatically enrolled in 401(k) and 403(b) plans but may opt out within 90 days.
Higher catch-up contributions are allowed for participants over 50 ($7,500 in 2023).
There is more flexibility in annuity payments paid from qualified retirement plans.
Early distributions are permitted for long-term care contracts without penalty.
Qualified charities can be named as remainder beneficiaries after the death of a disabled or chronically ill beneficiary without disqualifying the trust as a see-through trust.
Plan sponsors may match contributions made on student loan repayments on the same vesting schedule as elective deferrals, effective 2024.
529 plans maintained for at least 15 years may be rolled into a Roth IRA with a $35,000 lifetime limit, effective 2024.

Exceptions To The Early Distribution Rule

The SECURE 2.0 Act allows exceptions to the ten percent early distribution excise tax, including the following:

Qualified births and adoption expenses
Terminally ill individuals
Federally declared disasters
Emergency personal expenses
Domestic abuse victims

The new provisions and exceptions in the SECURE 2.0 Act may change the decisions you have made for your intended beneficiaries and alter the path to achieving your long-term goals.

Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act and SECURE 2.0 Act, the shorter 10-year time frame for taking distributions will accelerate income tax due, possibly bumping your beneficiaries into a higher income tax bracket and causing them to receive less of the funds in the retirement account than you may have originally anticipated. Eligible designated beneficiaries exempt from the 10-year rule may still have the opportunity to benefit from future retirement plan growth.

Your estate planning goals likely include more than just tax considerations. You may also be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, and a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now.

Review Your Revocable Living Trust Or Standalone Retirement Trust

We may have addressed the distribution of your retirement accounts in your living trust, or we may have created a retirement trust that would handle your retirement accounts at your death. Your trust may have included a conduit provision, which requires that retirement distributions be immediately distributed to or for the benefit of the beneficiaries (rather than being held in trust). With the SECURE Act’s passage, a conduit trust structure may not be the best choice any longer because the trustee will be required to distribute the entire retirement account balance to most types of beneficiary within 10 years of your death (which, as discussed above, can create an income tax headache for the beneficiary).

Under the current rules, if a person dies prior to their required beginning date for RMDs, then designated beneficiaries will not be required to take out RMDs during the 10-year payout period (but would need to take full distribution by the end of the 10-year payout period). However, if the person died after their required beginning date, the beneficiary must continue to take out RMDs on an annual basis (with full distribution at the end of the 10-year payout period). [1] We should discuss the benefits of an accumulation trust, an alternative trust structure through which the trustee can take any required distributions and continue to hold them in a protected trust for your beneficiaries.

[1] Different distribution rules may apply to different types of beneficiaries, and eligible designated beneficiaries may be subject to different rules.

Consider Additional Trusts

For most Americans, a retirement account is the largest asset they will own when they pass away. If we have not done so already, it may be beneficial to create a trust to handle your retirement accounts. While many accounts offer simple beneficiary designation forms that allow you to name an individual or charity to receive funds when you pass away, this form alone does not take into consideration your estate planning goals and the unique circumstances of your beneficiary. A trust is a great tool to address the mandatory 10-year withdrawal rule under the SECURE Act, providing continued protection of a beneficiary’s inheritance.

If you have beneficiaries with a disability or chronic illness, you may want to consider a special needs or supplemental needs trust. Beneficiaries are exempt from the mandatory 10-year payout rule, giving them more time for the retirement account to grow tax-deferred.

Review Intended Beneficiaries

With the changes to the laws pertaining to retirement accounts, now is a great time to review and confirm your retirement account information. Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. If your intention is for the retirement account to go into a trust for a beneficiary, the trust must be properly named as the primary beneficiary. If you want the primary beneficiary to be an individual, they must be named on a beneficiary designation form. You should ensure that you have listed contingent beneficiaries as well.

If you have recently divorced or married, you will need to ensure that the appropriate changes are made to your current beneficiary designations. At your death, in many cases, the plan administrator will distribute the account funds to the beneficiary listed, regardless of your relationship with the beneficiary or what your ultimate wishes might have been.

Other Strategies

Although these new laws may be changing the way we think about retirement accounts, we are here and are prepared to help you properly plan for your family and protect your hard-earned retirement accounts. If you are charitably inclined, now may be the perfect time to review your planning and possibly use your retirement account to fulfill your charitable desires.

A charitable remainder trust can use annuity and unitrust payments to mimic the “stretch” provided by using life expectancy. Assets are funded into the trust and then liquidated or sold by the trust. The money from the sale is then invested to produce a stream of income. The sale avoids capital gains tax at the trust level because the trust is liquidating the account and is tax-exempt. However, the noncharitable recipient of the income stream will still be responsible for income tax on the distributions. In contrast, you may distribute your entire retirement asset directly to a charity, and they will not have to pay tax on the income from the plan. Additionally, If you have a significant estate, there may be an estate tax charitable deduction.

Following the recent changes to the SECURE Act, you may be concerned about the amount of money that will be available to your beneficiaries following your death and the impact that the potential accelerated income tax may have on that ultimate amount. We can explore different strategies with your financial and tax advisors to infuse your estate with additional cash upon your death.

Give us a call today to schedule an appointment to discuss how your estate plan and retirement accounts might be impacted by the SECURE Act and SECURE 2.0 Act.

What next?

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

What To Do If You Are Sued By A Beneficiary Of The Trust

Mon, 09 Oct 2023 02:34:16 GMT

If you have been asked to serve as the successor trustee of a trust after the death of the person who created it, you need. One of the most serious risks is the possibility of being sued by a trust beneficiary. In this blog post, I will explain what you should do if you find yourself in this situation and why you should consult an attorney who specializes in probate and trust administration.

Many people who agree to be trustees worry about the time and effort required to manage the trust assets and distribute them to the beneficiaries according to the trust terms. However, they may not realize that being a trustee also comes with a high level of liability. As a trustee, you have a fiduciary duty to act in the beneficiaries' best interests and follow the trust agreement's instructions. If you fail to do so , even unintentionally or in good faith, you may be held personally liable for any losses or damages caused by your actions or inactions.

Moreover, even if you are doing everything right as a trustee, you may still face a lawsuit from a disgruntled beneficiary who is unhappy with your decisions or the instructions the trust maker left behind. Unfortunately, anyone can sue anyone in our legal system, regardless of how strong their case is. Being a trustee can sometimes mean making tough choices that may upset some beneficiaries, even if those choices are consistent with the trust agreement and the law. For example, you may have to sell some assets a beneficiary wanted, pay taxes or expenses that reduce what the beneficiaries ultimately receive, or deny beneficiary requests.

So, what should you do if you receive a threat or a notice of a lawsuit from a beneficiary? The first thing you should do is review the trust agreement carefully. It may contain provisions that can help you deal with the dispute. For instance, it may require that any conflicts be resolved through mediation or arbitration instead of litigation. This can save you time, money, and stress. It may also allow you to use the trust funds to pay your legal fees and expenses. This can protect you from having to pay out of your pocket. It may also include an indemnification clause that shields you from personal liability for any claims arising from your role as trustee.

However, before you take any action or make any statement, you should seek legal advice from an attorney experienced in probate and trust administration. This is because you may have personal liability for any mistakes or admissions you make in responding to the lawsuit. You should not ignore or dismiss any lawsuit threat, but you should also not panic or react impulsively. You should act diligently and professionally and follow the guidance of your attorney.

Being a trustee can be a rewarding but challenging role. You may have to deal with complex legal and financial issues and emotional and interpersonal conflicts. If a beneficiary sues you, you should not take it personally, but you should take it seriously. You should review the trust agreement, consult an attorney, and respond appropriately. By doing so, you can protect yourself and fulfill your fiduciary duty.

What next?

If you are serving as the executor of an estate, whether through probate or a trust administration, you can:

Call 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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

How To Avoid Common Mistakes In Trust Administration

Sat, 07 Oct 2023 18:03:50 GMT

If you are administering the trust of someone who has passed away, you may feel overwhelmed by the responsibilities and tasks you have to perform. Trust administration can be complex and time-consuming, and it is easy to make mistakes that can have severe consequences for you and the beneficiaries. In this blog post, I will share some tips on avoiding common errors in trust administration and help you fulfill your role as a trustee with confidence and competence.

Carefully Read the Trust Agreement and State Law

The first thing you need to do as a trustee is to carefully review the trust agreement and the Colorado Uniform Trust Code. The trust agreement is the document that spells out the grantor's wishes, the terms of the trust, and your powers and duties as a trustee. The Colorado Uniform Trust Code is the state law that governs trusts and trustees in Colorado. You need to familiarize yourself with both sources of authority and follow them faithfully. If you have any questions or doubts about the trust agreement or the law, consult an experienced probate and trust attorney .

Understand Your Fiduciary Duties

The second thing you need to do as a trustee is to ensure you understand the fiduciary duties you owe to the beneficiaries. A fiduciary duty is a legal obligation to act in the best interests of another person or entity. As a trustee, you have several fiduciary responsibilities, such as:

Duty of loyalty : You must act solely in the interests of the beneficiaries and avoid any conflicts of interest or self-dealing.
Duty of prudence : You must manage the trust assets with care, skill, and diligence and invest them reasonably and diversified.
Duty of impartiality : You must treat all beneficiaries fairly and equally, not favor one over another.
Duty of accounting : You must keep accurate records of all transactions and activities related to the trust and provide regular accountings to the beneficiaries.
Duty of administration : You must administer the trust according to its terms and purposes and in compliance with the law.

If you breach any of these fiduciary duties, you may be held personally liable for any damages or losses that result from your actions or inactions.

Common Mistakes and Oversights

The third thing you need to do as a trustee is to avoid some common mistakes that trustees make. Here are some examples of such errors:

Failing to secure personal property properly: If the trust includes personal property, such as jewelry, art, or collectibles, you must protect them from theft, damage, or loss. You should inventory all personal property, store them safely, insure them if necessary, and appraise them.
Assuming that you don't need to provide regular accountings to the beneficiaries: Even if the trust agreement does not explicitly require you to give accountings, you still have a fiduciary duty to do so under the law. Accountings are essential for keeping the beneficiaries informed of the status and performance of the trust assets and documenting your actions as a trustee. You should provide accountings at least annually or more frequently if requested by a beneficiary or ordered by a court.
Failing to administer the trust with an appropriate level of diligence: Trust administration is not a one-time event but an ongoing process that requires constant attention and monitoring. You need to keep track of all income and expenses related to the trust, pay taxes and fees on time, distribute income and principal to the beneficiaries according to the trust agreement, review and update the investment strategy regularly, communicate with the beneficiaries and co-trustees effectively, and respond to any issues or challenges that may arise.

These are just some of the common mistakes that trustees make. Many other potential pitfalls can jeopardize your success as a trustee. That is why it is advisable to seek professional guidance from a qualified probate and trust attorney who can help you navigate the complexities of trust administration and avoid costly errors.

As attorneys in Colorado specializing in probate and trust administration, we have helped many clients like you fulfill their duties as trustees and achieve their goals as grantors. If you need assistance with any aspect of trust administration, please contact us today for an attorney evaluation session. We look forward to hearing from you.

What next?

If you are administering a trust and think you might benefit from professional assistance, you can:

Call 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.
Visit our estate administration page to learn more about how we might be able help you.
Learn more by reading our blog or watching our videos .

Don't Draft Your Own Deed

Fri, 29 Sep 2023 01:52:11 GMT

After helping to plan and administer more estates than we could count, one of the most common problems we have encountered is cases where people tried to draft their deeds for their property, causing severe problems. In this blog post, I want to explain the consequences of a poorly drafted deed and why you should seek professional help when dealing with such important documents.

A deed is a legal document that transfers property ownership from one person or entity to another. It must contain certain elements, such as the names of the parties, the description of the property, the consideration (price or value), and the signatures of the grantor (seller). It must also be recorded in the county where the property is located to make it effective and public.

If you draft your deed without proper knowledge and guidance, you may make mistakes that can seriously affect your property rights and interests. Here are some of the possible consequences of a poorly drafted deed:

You may not transfer the property as you intended. For example, if you want to add an owner to your property, specify whether they are a joint owner or a tenant in common. The former means that you share equal rights and responsibilities with the co-owner and that if one of you dies, the other inherits the whole property. The latter means that you own a separate share of the property and that if one of you dies, that person's share goes to their heirs or beneficiaries. If you omit or misuse the word "jointly," you may create confusion or conflict over who owns what and who inherits what, and you may end up co-owning your property with someone you didn't choose or don't even know!
You may create legal disputes or challenges over the validity or enforceability of the deed. For example, you may leave room for ambiguity or error if you do not adequately describe the property or its boundaries. This may lead to questions or claims about who owns what part of the land or whether the deed covers the whole property or only a portion of it. You may also face problems with title insurance, taxes, mortgages, liens, easements, or other encumbrances that affect your property rights.
You may incur additional costs or liabilities to fix or correct the deed. For example, if you discover that your deed has a mistake or an oversight, you may need to hire an attorney to draft a new deed or a corrective deed. You may also need to obtain the consent and cooperation of the other party or parties involved in the deed, which may not be easy or possible. You may end up paying more money and time than you would have if you had hired an attorney in the first place.

These are just some issues that can arise from drafting your deeds. There are many more that I could mention, but I think you get the point.

Your house is probably your most valuable asset and has a lot of emotional and sentimental value. You don't want to risk losing it or having it diminished by a poorly drafted deed to save a few bucks. I strongly recommend hiring a qualified attorney to help you with your deed and ensure it complies with all the relevant laws and standards. It may cost you some money upfront, but it will save you and your family a lot of headaches and expenses in the long run.

what next?

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

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.
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.
Learn more by reading our blog or watching our videos .

Understanding Probate Law: Who Does a Probate Attorney Represent in Colorado?

Thu, 28 Sep 2023 21:12:48 GMT

Probate law can be a confusing and overwhelming subject for many people, especially if you have recently lost a loved one. It can be challenging to know who to turn to for help or what your options are. If you live in Colorado and need assistance with probate matters, The McKenzie Law Firm, LLC is here to help. In this blog post, we’ll discuss who a probate attorney represents, what to do if you want to contest a will, and how an attorney can help you navigate the probate process.

Who Does a Probate Attorney Represent?

A probate attorney represents an estate's personal representative (executor), or any heirs or beneficiaries who need legal assistance during the probate process. If a will exists, the personal representative is the person named to manage the estate. If there is no will, the court will appoint a personal representative. The probate attorney’s role is to help ensure the deceased's wishes are carried out lawfully and efficiently.

If You Want to Contest the Will, Who Would You Contact?

If you suspect that the will of a deceased loved one is not valid or was not executed properly, you may need to contest the will. This complex process requires a skilled probate attorney who can help you navigate the legal challenges and complexities involved. If you want to contest a will, contact an experienced attorney immediately. They can help you determine your valid claim and guide you through the process.

How Can an Attorney Help Me?

A probate attorney can help you in many ways. They can assist with the court process, including petitioning for probate, filing estate tax returns, and dealing with creditors. They can also assist with estate planning, including drafting a will or trust and advising on how best to distribute your assets. Additionally, a probate attorney can help you avoid common mistakes often lead to contested wills or probate litigation.

At The McKenzie Law Firm, LLC, We Can Assist the Colorado Public with Probate Matters.

If you need assistance with probate matters in Colorado, The McKenzie Law Firm, LLC is here to help. We have extensive experience assisting clients through all stages of the probate process, from petitioning for probate to distributing assets to heirs and beneficiaries. We understand this can be a difficult and emotional time, and we are committed to helping our clients navigate this process with compassion and understanding.

In conclusion, a probate attorney can be an invaluable resource if you are dealing with the death of a loved one and need help navigating the probate process in Colorado. They can assist with everything from petitioning for probate to contesting a will and advising on estate planning matters. If you need help with probate matters, don’t hesitate to contact The McKenzie Law Firm, LLC . Our experienced attorneys are here to help you through this challenging time.

what next?

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

When Planning Your Estate, Don't Ignore Your Personal Property

Thu, 28 Sep 2023 01:08:01 GMT

As estate planning experts, we often see people make the mistake of assuming that their tangible personal property will be easy to deal with. They think they have taken care of everything because they have designated beneficiaries for their bank accounts, retirement plans, and life insurance policies. But what about their furniture, jewelry, art, collectibles, and other items with physical presence and value?

Unlike bank accounts, personal property can be challenging to divide among heirs. It may have sentimental meaning to kids entirely out of step with its market value, making it difficult to negotiate a compromise. For example, a painting you bought at a garage sale for $10 might be worth little to an appraiser but priceless to your daughter, who remembers it hanging in your living room since she was a child. Or a set of china that you inherited from your grandmother might be worth nothing to you but very important to your son who wants to keep it in the family.

That's why we encourage our clients to carefully consider whether they have any personal property that might be something their kids would fight about and potentially discuss it with their kids. You might be surprised by what they care about and what they don't. You might also discover that they have different preferences or expectations than you do. You can avoid misunderstandings and conflicts later on by having an open and honest conversation.

Of course, talking to your kids is not enough. You need to put your wishes in writing. You can do this by creating a personal property memorandum, which is a document that lists specific items of personal property and who you want to receive them. This document is separate from your will but must be referenced in your will and signed by you. The great thing about a personal property memorandum is that you can change or update it anytime without changing your will.

A personal property memorandum can save you and your heirs time, money, and stress. It can also help preserve the harmony and legacy of your family. If you need help creating one or have any questions about estate planning in general, please contact us today. We would love to assist you with this important matter.

What next?

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

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.
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.
Learn more by reading our blog or watching our videos .

When Avoiding Probate Causes More Problems Than It Solves

Wed, 27 Sep 2023 03:59:25 GMT

As estate planning specialists, we often see clients who want to avoid probate at all costs. Probate is the legal process of settling a deceased person's estate and distributing their assets to their heirs. While probate can be time-consuming, expensive, and public, sometimes avoiding it causes more problems than it solves.

The two most common probate-avoidance techniques that lead to problems are jointly titling assets with your beneficiaries and designating beneficiaries on everything. Both methods can result in multiple beneficiaries owning assets together, with no obligation to one another to consider what is best for the other.

For example, suppose you own a house and add your son as a joint owner. You may think this will make it easier for him to inherit the house when you die without going through probate. However, there are several drawbacks to this approach.

First, the IRS might consider this a gift and expect a gift tax return. Depending on the house's value, you may have to pay gift taxes or use up part of your lifetime gift tax exemption.

Second, adding owners to an asset during a lifetime can undo one of the most significant tax benefits available, which is the step up in basis for capital gains tax purposes. When you die, your son will inherit your share of the house at its fair market value, which means he will not have to pay capital gains tax on any appreciation during your lifetime. However, if you add him as a joint owner before you die, he will only get a step up in basis on half of the house, and he will have to pay capital gains tax on the other half when he sells it.

Third, adding owners to an asset expands the pool of creditors who could collect against that asset if any owners pick up unexpected liabilities. For instance, if your son gets divorced, sued, or files for bankruptcy, his creditors could go after his share of the house, even if you still live there.

Similarly, designating beneficiaries on everything can also create problems. Many think that by naming beneficiaries on their bank accounts, retirement accounts, life insurance policies, and other assets, they can avoid probate and simplify their estate plan. However, there are two significant drawbacks to this strategy.

One is that there is no way to control or protect distributions made to people via designated beneficiaries. For example, suppose you name your daughter as the beneficiary of your IRA. In that case, she will receive the entire account balance when you die, regardless of her age, financial situation, or personal circumstances. She may not be ready or able to manage such a large sum of money responsibly. She may also lose some of the tax benefits of inheriting an IRA if she withdraws too quickly or does not follow the required minimum distribution rules.

The other problem is remembering the designated beneficiaries on which asset and keeping those instructions updated as things change. They can be tough to revise after death if outdated or incorrect. For instance, if you name your spouse as your life insurance policy beneficiary and then get divorced, you may forget to change the beneficiary designation. If you die without updating it, your ex-spouse might receive the death benefit instead of your current spouse or children.

What are some of the benefits of the probate process that these avoidance techniques can miss? One is that it puts one person in charge of making the best decisions for everybody. This person is called the personal representative or executor of the estate. They have a fiduciary duty to act in the estate's and its beneficiaries' best interest. They must also follow the instructions in your will or trust if you have one.

Another benefit is that probate provides a forum to resolve disputes or modify the plan if necessary. For example, if there is a conflict among your heirs over how to divide your assets or who should inherit what, probate can help settle these issues through mediation or litigation. Probate can also allow changes to be made to your plan if unforeseen circumstances affect your beneficiaries' needs or wishes.

And finally, probate ensures that all interested parties have access to the same information. Probate requires that all assets and debts of the estate be inventoried and appraised. It also requires that all creditors be notified and paid before any distributions are made to the heirs. Probate also requires that all beneficiaries be informed of their rights and entitlements under the law and their will or trust.

In conclusion, avoiding probate is not always a good idea. Sometimes, it can cause more problems than it solves. Suppose you want to avoid probate without creating unintended consequences for yourself or your loved ones. In that case, you should consult an experienced estate planning attorney who can help you create a comprehensive and customized plan that meets your goals and protects your assets.

what next?

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

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.
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.
Learn more by reading our blog or watching our videos .

The Four Pillars of Proper Estate Planning

Wed, 20 Sep 2023 17:37:56 GMT

Many people think that estate planning is simply about documents. Getting a will in place and maybe a trust. There is way more to it than that, though, and we often advise our clients to think of their estate plan as a house built on four pillars. Each pillar is essential to support the structure and protect your legacy. Here are the four pillars of estate planning and why they matter.

Pillar #1: Up-to-date instructions

The first pillar is up-to-date instructions. These include a will, powers of attorney, and designated beneficiary instructions. A will tells the court how you want your property distributed after death. Powers of attorney allow you to appoint someone to act on your behalf in financial and medical matters if you become incapacitated. Designated beneficiary instructions let you name who will receive certain assets, such as life insurance or retirement accounts, without going through probate. Some people may also benefit from creating and funding a trust, providing more control and flexibility over managing and distributing your assets.

Pillar #2: Putting the right people in the right jobs

The second pillar is appointing the right people to the right jobs. These jobs include personal representative, financial agent, medical agent, and maybe a trustee. A personal representative is the person who will carry out your wishes in your will. A financial agent is the person who will handle your finances if you are unable to do so. A medical agent is the person who will make health care decisions for you if you are unable to do so. A trustee is the person who will manage the assets in your trust for the benefit of your beneficiaries.

These jobs require skill and knowledge, and not everyone is suited for them. Many choose family members to fill these roles, but that may not be the best option . It would be best to consider the abilities, availability, and compatibility of the people you choose and ensure they are willing and able to serve. It is also critical that the beneficiaries of the estate trust that person.

Pillar #3: Organization

The third pillar is keeping your financial affairs organized. This means having a system allowing someone else to understand and access your financial information without your instructions. You can use software like Quicken, Mint, or You Need a Budget to track your income, expenses, assets, and liabilities. You can also keep important documents like insurance policies, deeds, titles, contracts, and tax returns in a safe place where your appointed fiduciaries would know where to look for them. Additionally, you should make sure that any documents stored in safes or safe deposit boxes can be accessed by the people who will need them. This will save time and money for your estate and reduce the risk of confusion or conflict.

Pillar #4: Liquidity

The fourth and final pillar is ensuring that your estate has sufficient liquidity. Liquidity means having enough cash or readily convertible assets to pay for the expenses and obligations of your estate. These may include funeral costs, taxes, debts, legal fees, administration costs, and beneficiary distributions. If you have illiquid assets like real estate, business interests, or significant personal property, you may need to sell them or find other sources of funding to cover these costs. Also, if there are disputes among your heirs or creditors, having cash available can help resolve them more quickly and peacefully.

I use these four pillars of estate planning to help my clients create a solid and comprehensive plan for their future. If you have any questions or need assistance with your estate plan, please get in touch with me today for a consultation.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Common Estate Planning Choices That Frequently Turn Out To Be Mistakes (Adult Children Edition)

Wed, 20 Sep 2023 03:34:01 GMT

You might think estate planning will be easy if you have adult kids. You write a will splitting everything equally between those kids and naming them to serve together as your estate's executor. But just that one sentence contains several decisions that might benefit from careful reconsideration. Here are some common estate planning choices that people with adult kids make that often become the source of significant disagreement and difficulties when the time comes to administer the estate.

Nominating one of the estate’s beneficiaries as its executor. You might think that because your kids know your assets and debts better than anyone else, they are best positioned to handle the wrapping up of your affairs. That might be true, but the frequent decision to make one of the estate's beneficiaries its executor creates an inherent conflict of interest that can be difficult for that person to navigate.

What if your kids all want the same item of personal property? What if they disagree on the value of various assets? The executor is supposed to act in the beneficiaries' best interest, but determining what that is when they stand to directly benefit from an outcome that contradicts their siblings' desires can be challenging. Instead of putting your kids in this situation, a better choice might be to name a neutral third party as the executor, such as a professional fiduciary or a friend or family member not entitled to receive anything from the estate.
Naming more than one person to serve as co-executors. You might think that naming two or more of your kids as co-executors will prevent them from fighting and force them to work together. You might also be worried about hurting one kid's feelings if you give this critical job to a sibling. But naming multiple people to serve in this job could backfire, too.

Co-executors must agree on every decision and sign every document related to the estate. That frequently causes delays, confusion, and frustration. It can also lead to deadlocks if they can't agree on something. We have seen many situations where a unanimity requirement effectively meant that the executor who didn't want to take action got their way by default.

A better choice might be to name one person as the executor and another as the backup executor in case the first one can't or won't serve.
Not considering how to divide items that can't be easily split. You might have unique or sentimental items like jewelry, art, antiques, or real estate that are impossible to divide. You might also have some substantial assets, such as a vacation home or a business, that comprise most of your estate. What if more than one of your kids wants the same item? How will they decide who gets what? If you don't give them a plan, or at least something to negotiate around, you could leave your kids with a difficult mess to sort out.

They might have to sell some items and split the proceeds, which could reduce their value and cause emotional distress. They might also have to go to court to resolve their disputes, which could cost time and money.

A better choice might be to talk to your kids about what they want and what they are willing to give up. You could also instruct your executor to use a system of bidding, drawing lots, or rotating choices to divide the items fairly.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos.

The Perils of Leaving Your Kids' Assets to a Non-Trustee

Thu, 14 Sep 2023 20:56:20 GMT

If you have minor children, you may think that naming an adult friend or family member as the beneficiary of your life insurance and retirement accounts is an excellent way to provide for your children after your death. You may expect that the friend or family member will use the money for the benefit of your kids and give it to them when they reach a certain age. However, this arrangement has many drawbacks and risks you may not be aware of.

A better option is to designate a trust as the beneficiary of your assets and name the friend or family member as the trustee. Here are some reasons why:

Without a trust, there is no clear guidance on when or if the friend or family member is supposed to give the money to the child. The friend or family member may have different ideas than you about how much money the child needs or what it should be used for. The child may also have no way of knowing how much money was left for them or how to access it.
Without a trust, the money is legally the friend's or family member's, and it is on their conscience to give to the child. The friend or family member may be tempted to use the money for their purposes or may be influenced by other people to do so. Even with good intentions, they may face pressure from their spouse, creditors, or other relatives to share or spend the money.
Without a trust, even if the friend or family member is morally pure and fully intends to give the child all the money, they can inadvertently lose the funds to a divorce, an unexpected medical bill, a lawsuit, or any other financial hardship. The money is not protected from the friend or family member's creditors or legal claims and may be seized or garnished at any time.
Without a trust, giving the money to the friend or family member will confuse who is responsible for taxes on income earned by the assets. It may also result in gift tax returns having to be filed when the friend or family member gives money to the kid. Those gift tax returns will complicate the friend or family member's estate planning and may reduce their lifetime gift tax exemption.
Without a trust, while the money is under the friend or family member's control, it is part of their estate. If that person dies with money meant to go to your kids, it would instead go to the beneficiaries of the friend or family member’s estate. This may not be what you or your kids want and may cause conflicts among your relatives.

In contrast to all this, a trust allows you to put the money for your kids under that adult's control but makes it clear to that adult, your kids, and everyone else that the money is for the benefit of the kids and can't be misspent or lost by the adult. A trust lets you specify how much money the child should receive and when. A trust protects the money from creditors, lawsuits, divorces, and other risks. A trust also simplifies tax reporting and estate planning for you and your friend or family.

As you can see, naming a trust as the beneficiary of your life insurance and retirement accounts is a much safer and smarter way to provide for your minor children than naming an adult friend or family member. If you want to learn more about how to set up a trust for this purpose, contact me today. The McKenzie Law Firm specializes in estate planning, and we can help you create a trust that meets your needs and goals.

What next?

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

Give us a call at 720-821-7604 to schedule an evaluation session with an attorney at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos .

In a Domestic Partnership? Make Sure You Have a Will.

Thu, 31 Aug 2023 13:03:40 GMT

Creating a will is an essential life task that many of us put off until it's too late. However, for those in domestic partnerships, having a will is crucial because of legal limitations that can prevent a partner from inheriting the estate of their loved one without one. In Colorado, domestic partnerships have existed since 2009, providing couples with legal recognition of their relationship. However, without a will, a domestic partner may be left vulnerable and without any legal standing, despite having paid years of shared expenses and living together for decades. In this blog, we will go over the importance of having a solid will in a domestic partnership, including the legal implications and reasons why it's essential for all couples in Colorado.

According to Colorado law, if an unmarried partner dies without a will, their assets pass to their blood relatives, which means their surviving domestic partner would receive nothing. This can be a devastating realization for those who have shared finances, property, and even children. Having a solid will outlines your wishes and ensures that your assets are distributed correctly and legally. Without one, the surviving partner could be left facing legal battles or financially strained and unable to sustain their current living standards.

Additionally, if there are children involved in the partnership, the stakes get even higher. If a partner dies without a will, they may inadvertently exclude their surviving partner from any custody arrangements. This means that if the surviving partner is not granted custody, they may not be allowed to have any contact with their children, even though they have lived with them and contributed to their upbringing.

Having a will not only ensures that your assets and children are taken care of after your death, but it also provides peace of mind. Knowing that your partner and children will be taken care of according to your wishes when you're gone can alleviate any stress or doubts that may arise during your lifetime.

It's essential to understand that even if you're in a domestic partnership, you still need to create a solid will. A domestic partnership does not grant the same legal rights as a marriage. Without a will in place, the legal system may not even recognize your partner as an inheritor, despite having lived together for years.

Lastly, creating a will is an easy process that shouldn't be put off until it's too late. With the help of a qualified attorney, you can ensure that all your assets are distributed according to your wishes. Additionally, the cost of creating a will is relatively low. The long-term benefits outweigh any short term cost involved.

If you're in a domestic partnership in Colorado, it's crucial to have a will in place. Without one, you risk leaving your partner without legal inheritance rights and potential custody issues, which could lead to expensive legal battles and emotional turmoil. A will provides peace of mind, legal protection for your partner and children, and ensures that your assets are distributed according to your wishes. It's essential to remember that domestic partnerships do not provide the same legal rights as marriage, and so creating a will is the best way to ensure your well-being, and that of your loved ones, in the event of your death. Don't wait until it's too late; speak with a qualified attorney today to create a will.

An Overview of Revocable Living Trusts in Colorado

Wed, 19 Jul 2023 20:55:31 GMT

Few people want to think about what will happen to their property after they die. However, individuals may inadvertently place undue hardships on their families and other beneficiaries without thorough and effective planning.

Complicated laws, excess tax burdens, and uncertainty over which properties should pass to whom can create challenges and costs. A revocable living trust can ease these burdens and help property owners and their families focus on more important matters.

WHAT IS A REVOCABLE LIVING TRUST?

A Revocable Living Trust is an estate planning solution that helps property owners transfer their property and assets at death without going through a court-administered process. The trust is a written document that should provide clear instructions for property management, distribution, and ownership. Should the trust maker, also called the grantor, become mentally incapacitated or pass away, another appointed person, a successor trustee, should administer the trust. It is considered “revocable” because the grantor can amend the trust to reflect changing circumstances or decisions during their lifetime.

The stakeholders can include:

Grantor / Trust Maker .: The property owner who creates the trust.

Trustee : The individual who is responsible for managing the trust property. The grantor typically acts as the trustee until they die or become incapacitated.

Successor Trustee : When the original trustee dies or can no longer serve in this role, the successor manages the trust.

Beneficiary : The trust establishes this person as the one who will receive the property after the death or incapacitation of the grantor.

WHAT HAPPENS TO MY PROPERTY IF I DON’T ESTABLISH A REVOCABLE LIVING TRUST?

Revocable living trusts provide significant protection for individuals and their families in the case of their death or incapacitation. Under Colorado estate laws, properties typically go into probate after the deaths of their owners, potentially leading to complicated legal issues and considerable expenses for the beneficiaries.

A carefully crafted revocable living trust can help circumnavigate the probate process. Wills are subject to court involvement, and they become part of the public record; revocable living trusts, however, allow grantors to distribute their property privately.

HOW DO I SET UP A REVOCABLE LIVING TRUST IN COLORADO?

Setting up your Colorado Revocable Living Trust is probably much easier than you think. Property owners generally enlist the help of an experienced and qualified estate planning attorney. A lawyer can carefully examine your circumstances and ensure your trust is effectively written, funded, and executed. That being said, here is a list of things to remember when thinking about drafting and funding your trust.

What are your assets?

The steps for setting up a trust include the following:

Obtain the necessary paperwork for your assets.
Decide who should inherit the trust property.
Decide on a successor trustee.
Draft the trust documents.
List the trust’s beneficiaries.

DO I NEED A REVOCABLE LIVING TRUST?

As you may have heard before, in most cases, a Trust is not something you get for yourself; instead, it should help make the lives of your family and other beneficiaries safer and more accessible. One of the advantages of a Revocable Living Trust is a more precise, more streamlined succession plan that will not necessarily require the supervision of a probate court. Additionally, once the trust becomes irrevocable, the beneficiaries can enjoy a degree of protection if the assets remain in the trust and are managed by a third-party trustee.

WHAT DOES A REVOCABLE LIVING TRUST DO FOR ME?

A revocable living trust does two things. First, a revocable living trust allows your assets to avoid probate. Second, a revocable living trust protects your property from lawsuits brought against a beneficiary other than yourself. A revocable living trust does not reduce your taxes, it does not protect property from your creditors or lawsuits, and it will not help you become eligible for government benefits. (Other trusts are available that serve these purposes, but a revocable living trust does not do any of these.)

WHAT DOES IT MEAN TO FUND A TRUST?

Funding a trust means transferring the ownership of property to the trust. For an asset to avoid probate, it should be transferred to your trust. For example, by signing a deed, you can transfer your real estate ownership to your revocable living trust, keeping your real estate out of probate. A trust can also be named a beneficiary on bank accounts, retirement accounts, insurance policies, and other assets. Funding the trust is a crucial part of your estate plan since only the assets in the trust generally can avoid probate and receive third-party management and protection.

WHAT DOES IT MEAN TO BE A TRUSTEE OR A BENEFICIARY?

The trustee is the trust administrator but is not permitted to have beneficial use of the property unless also named as a beneficiary. Generally, the person who sets up the trust wants to be the trustee for the rest of their life. The grantor should select a successor trustee who would take over the management of the trust once the grantor becomes incapacitated or passes away.

The trust's beneficiaries are those who benefit by receiving distributions from the trust. Generally, this means the grantor’s children, grandchildren, or other family members, but it can also include charitable organizations and other loved ones.

ARE REVOCABLE LIVING TRUSTS NECESSARY?

The answer to that question will depend on various factors, such as your level or assets, your family situation, and your plans for the future. Only you can determine whether you need a trust, but with effective counsel, you can get answers to all your trust-related and other estate planning questions.

At The McKenzie Law Firm, we take pride in helping our clients create strong trusts to set their minds at ease and facilitate transitions for their beneficiaries. Contact us today to schedule a personalized Attorney Evaluation Session.

What next?

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

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.
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.
Learn more by reading our blog or watching our videos.

Why An Attorney Should Review Every Contract Before You Sign It

Mon, 03 Jul 2023 16:17:00 GMT

Contracts are everywhere and in every aspect of our lives today. Whether it’s a rental agreement, a loan agreement, an employment agreement, or a business contract, we all have to sign on the dotted line many times throughout our lives. However, we don’t realize that some contracts contain clauses that can be problematic after the agreement is signed. That is why your attorney needs to review every contract before you sign it. In this blog post, we will discuss why you need to retain an attorney before signing any contract.

Complex Legal Terms

Legal documents are often written using complex legal terms that may not be familiar to most of us. You may sign a contract without fully understanding the legal jargon and its consequences. However, when you involve an attorney, they can explain the legal implications of the terms in plain language for you to understand. An attorney can also highlight areas that can lead to trouble.

Protect Your Rights

A contract is a legally binding agreement that outlines the rights and obligations of the parties involved. Unfortunately, some agreements may breach our rights unknowingly, leading to a legal battle afterward. To protect your rights, an attorney can help draft or review the contract before you sign it to ensure that both parties comply, and your rights are protected.

Spotting Ambiguities

Some contracts may contain ambiguous clauses that can be open to interpretation. In these cases, an attorney can help clarify any ambiguities to ensure both parties understand the agreement. This is especially important in business, employment, and real estate contracts, where disputes can be expensive. A clearer agreement will prevent prolonged legal battles.

Prevent Future Disputes

A correctly drafted contract can prevent future disputes from occurring. Your attorney can ensure the contract reflects the agreement between the parties and covers all eventualities by adding essential clauses. This clarifies what the parties have agreed to and can prevent any misunderstandings. You can save money and hassle in the long run by preventing future disputes.

Expertise And Experience

Attorneys have the experience, knowledge, and training to draft and review contractual agreements. They understand the intricacies of the law and the consequences of specific provisions in a contract. For example, an attorney can help you identify and eliminate hidden costs that may not have been apparent.

In conclusion, having an attorney review any contract before signing it is always wise. Contracts are legally binding and have long-term implications. Your attorney can provide the expertise needed to ensure that your rights are protected, and that the agreement reflects what you intend to accomplish. The McKenzie Law Firm provides contract drafting and reviewing services to the Colorado public. Contact us today to schedule a consultation. Don’t sign anything without an attorney present!

What next?

If you are considering entering into a legal relationship with someone, you can:

Give us a call at 720-821-7604 to schedule a "Attorney Evaluation Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos.

Can You Set Up A Trust Without An Attorney?

Wed, 17 May 2023 21:10:22 GMT

When people think of a trust, they might imagine a heavy and intimidating legal document. The truth is a trust is simply a relationship in which one person, known as the grantor, gives another the right to hold title to specific assets for the benefit of someone else. A trust can be as simple or comprehensive as the situation requires.

Some U.S. states even allow oral trusts, which means the trust can exist simply by the understanding of the parties without having anything written down. The dangers of such an arrangement should be obvious. Most seasoned attorneys have plenty of horror stories about well-intentioned laypersons trying to do their own court filings or other legal work.

As we will discuss in this article, just because it is possible to create trust on your own does not mean it makes sense to do so.

In straightforward cases, a person with no legal background can create a trust using legal drafting software or standardized forms. If you plan on taking the do-it-yourself approach to estate planning, expect to spend some time researching to ensure you are on the right track.

There is a lot of information available in legal books, online resources, sample documents, and even services that sell blank trust forms that need to be completed with personal information. If your situation is straightforward or commonplace, you might find a standard form that fits your needs.

You will need to take inventory of your assets, determine the correct type of trust form to use, and decide who should act as trustee. Most importantly, you must evaluate your situation carefully to ensure you are not missing contingencies or leaving anything out of your plan.

There are many cases where professional counsel is almost always required. If your net worth is close to the estate tax exemption, your heirs could benefit significantly from estate tax planning.

Otherwise, if you have a special needs child, want your estate to be distributed in some way other than a single, outright distribution, or would like help funding the trust, then working with a professional is certainly advisable.

Even for more straightforward matters, working with an estate planning attorney can give you the peace of mind that you have an expertly drafted estate plan and a helpful resource for all your questions.

WHAT ARE THE BENEFITS OF PUTTING YOUR HOME IN A TRUST?

A trust can only control assets that are contributed to the trust, also known as “funding” the trust. You can have a professionally drafted trust by the best attorneys in the country, but if assets are never placed in it, the document will be essentially useless.

When considering funding a trust, people usually wonder about their home since it is often their most important asset. The main reason to place your home in trust is to allow your family to inherit the house without going through the lengthy and expensive probate court process. If a trust holds the home, it can be transferred to the beneficiaries privately and without court involvement after the grantor dies.

Another critical reason to consider having your home held in trust is to plan for incapacity. A revocable living trust should include a successor trustee responsible for managing any trust assets after the grantor cannot do so.

In case of incapacity, the new trustee would step in to manage and care for the trust assets. Without a trust in place, a family member would need to petition a court to appoint a guardian with the authority to manage an incapacitated person’s financial matters. This process is known as a conservatorship and is almost always best avoided.

If you are working with an estate planning or real estate professional, placing a house in trust should be straightforward. If you use a revocable living trust to hold title to your home, you remain entirely in control of the house and can sell or gift the property as if it were your own.

There are no changes to your property taxes or mortgage payments, and you can even cancel the trust in the future if you change your mind or circumstances change.

CAN YOU PUT YOUR HOUSE IN A TRUST WITHOUT AN ATTORNEY?

You must also oversee the funding process if you are drafting your trust. The funding process can sometimes take more time and energy than preparing the trust. In the case of real estate, ownership is determined by public records kept in the county where the property is located.

The legal document representing ownership of real estate is called a deed. As with other legal documents, numerous resources online and elsewhere discuss deeds and even provide blank deed forms to be filled by the parties.

A real property owner can always transfer a deed to another person without going through a lawyer or real estate professional. First, you will need a copy of your original deed. If you do not have your original deed, you can obtain a copy from the recorder of deeds in the county where the property is located.

For any real estate transaction, you must determine what type of deed is required, as there are quitclaim deeds, general warranty deeds, bargain and sale deeds, beneficiary deeds, etc. Next, you must select the appropriate deed form for the county and state.

Deeds are subject to formal requirements established by each state’s regulations. It is essential to follow these requirements to ensure the county’s clerk and recorder accept the deed and to help avert any legal issues later. A deed must identify the property being transferred.

The address, legal description, and parcel identification number of the property must be copied carefully from the original deed since even a tiny typo could cause problems with the chain of title. The deed must include the date, the parties to the transaction, and the proper legal language, such as words of conveyance and consideration.

Deeds can appear as relatively simple legal documents, often only one or two pages long but full of detailed information. Due to the complexity and potential consequences caused by recording an erroneous deed, it is generally advisable to consult with an attorney or real estate professional before moving forward with a real estate transaction, even if it is only to transfer a home to a revocable living trust.

DISADVANTAGES OF NOT HIRING A LAWYER

The main disadvantage of not hiring an attorney is that there is simply no guarantee the documents will be effective. Unfortunately, we have seen mistakes or inconsistencies even in straightforward wills drafted using standard forms without professional assistance.

Documents prepared using forms or templates often come with instructions that must be followed carefully to avoid ambiguities. Since these documents are usually only found or examined by attorneys after the author has passed away, there are no more opportunities to ask what was intended or what any unclear language could mean.

Such documents often end up at the discretion of a probate judge, making the legal process lengthier and more expensive. Having professionally drafted and comprehensive estate planning documents can help prevent ambiguities and conflicts.

Another common drawback of the do-it-yourself approach to estate planning is that trusts are often not funded. As mentioned above, a trust only works with the assets transferred to it.

Often, grantors are unaware of or forget about the funding; they keep putting it off or are confused about what assets should go into the trust or how to re-title them. The result is that trusts are either never funded or only partially funded. The trust might not have enough assets to carry out its intended purpose, and any assets left outside the trust might need to go through probate.

When you work with The McKenzie Law Firm, you can be confident that you have a reliable resource to help ensure your estate plan is prepared and ready to implement. If questions arise during the funding process, you also have an experienced team to help you.

IS IT EXPENSIVE TO CREATE A TRUST WITH AN ATTORNEY?

Hiring an attorney to help with your estate plan can usually cost between one and several thousand dollars, depending on your needs and the complexity of your wishes. People with non-taxable estates, currently nearly $13 million for individuals and $26 million for married couples, can expect fees towards the lower end of the spectrum.

Often, people who believe they will save a lot of money by drafting their legal documents are surprised to learn that working with an attorney is not as expensive as expected. This is especially so when you consider the costs of getting the correct information and tools needed and the risks involved for any mistakes made along the way.

It is also essential to remember that the legal fees cover not just the necessary legal documents but a professional evaluation of your family’s situation to ensure you have a plan that meets your goals and needs.

If you are considering drafting your trust or other estate planning documents or seeking guidance with this process, consider calling The McKenzie Law Firm. Initial consultations with an experienced attorney will allow you to discuss your situation. Find out whether working with an attorney makes sense for you by contacting us today.

What Next?

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

Call us at 720-821-7604 to schedule an "Attorney Evaluation Session" to determine whether our firm would fit your needs well. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos.

Wills and Revocable Trusts

Wed, 17 May 2023 14:20:47 GMT

WILLS AND TRUST LAW

Wills and Trusts are helpful estate planning solutions that specify who will receive your property and who will manage and direct these distributions. Almost everyone is familiar with the terms “will” and “trust,” but few fully understand how these documents work and the main differences between the two. An important distinction between a last will and a trust is that the will goes into effect only after you pass away, with any distributions taking place months or, in some cases, even years after the grantor has passed away. On the other hand, a trust can be effective from the day it is signed, and distributions can occur at any time during the grantor’s lifetime or after it.

These two documents can create a tailored succession strategy that fits your needs. Below, you will find other important information regarding Wills and Trusts.

ESTATE PLANNING

Estate planning means having a strategy to protect wealth during peoples’ lifetimes and preserving assets after they pass away. It also means naming trusted loved ones responsible for making decisions for you in the event of incapacity and managing the assets in your trust or estate after your lifetime. A comprehensive estate plan should also factor in other needs like protecting vulnerable beneficiaries such as minor children or persons with special needs.

It is better 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. Your estate plan is not only about your wealth and assets but can also reflect your values. You can devise a succession plan to benefit charities of your choice and establish lasting arrangements to help others.

LAST WILL AND TESTAMENT

A last will is a written declaration of who you want to receive your property and, if applicable, who you want to raise your minor children when you pass away. If you pass away without drafting a will, the default laws of the state where you live at the time of your passing will govern the distribution of your property. This means the probate court will divide the estate property without your input.

Only a probate court can administer a last will, and probate proceedings can be costly and lengthy legal proceedings that diminish the amount of funds left in the estate for the beneficiaries. That is why we recommend clients use a trust to manage their property. However, the last will provide important provisions in case any property has been left out of trust. It works with a Trust by instructing that your estate property be distrusted to your revocable living trust for management.

REVOCABLE LIVING TRUST

A revocable living trust is a written declaration of who you would like to receive your property at your passing. A revocable living trust is a private document that allows you to pass property without the delays, cost, and publicity of probate. You can change or revoke the revocable living trust anytime during your lifetime. As a grantor, you (and your spouse or significant other if you decide to form a joint Trust) can hold the trustee position. This means you can control and manage any assets in the trust as you see fit. When you pass, the trust will become irrevocable, and the person designated as successor trustee will take over the management of the trust property.

In general, trusts are a way to help in the orderly transfer of assets after one pass, such that the property can be passed down to the beneficiaries without the need for a court process and the accompanying fees, delays, and potential conflicts between heirs.

LIVING TRUSTS

A living trust is one of the most effective ways to avoid probate. A living trust does not go through probate because through the creation of the trust and funding it with assets, the trust becomes the legal owner of the asset. Thus, after the trust's grantor dies, the trust still lives on after they have passed.

To create a trust that can successfully avoid probate, the grantor draws up a trust agreement with the terms of the trust. This will include appointing a trustee to manage and administer the trust. The grantor will then move assets into the trust.

The trust then becomes its separate entity. The trustee technically owns the property since the trustee can decide how to invest and dispose of trust assets. While the grantor is alive, the trustee is a fiduciary to the grantor and must manage the property in their interest.

Probate is the process where ownership is transferred. Because the trustee owns the property, the trust maintains ownership after the grantor dies, and no probate process is necessary to complete any ownership transfer. A Colorado probate attorney can assist you in establishing a trust that can help assets stay out of probate.

DURABLE POWER OF ATTORNEY

A durable power of attorney grants someone the legal ability to make decisions on your behalf at certain times and for specified purposes. A durable power of attorney means that the power of attorney remains valid if you become incapacitated. Many people are familiar with the term “power of attorney”; it simply means a trusted person entitled to act in place of someone else. And while the person you name as power of attorney should know your wishes and expectations, they do not need any legal training or experience.

A durable financial power of attorney will enable another person to make financial transactions on your behalf if and when you can no longer make sound decisions. The person you appoint will control as many aspects of handling financial matters as the power allows. This can mean paying your debts, investing money, or taking steps such as depositing social security checks. In turn, the agent will have a fiduciary responsibility to act in your best interests when making financial decisions. This is extremely important given the widespread patterns of financial abuse of seniors. Older adults are vulnerable to being taken advantage of, and it is vital to institute safeguards to protect them. A durable financial power of attorney can act as an agent for whatever transactions are specified by the instrument that gives the agent the power.

A durable medical power of attorney will have a similar spirit and intent but will cover healthcare and medical decisions. Even if you cannot make informed decisions concerning your health care, your health care agent designated in the medical power of attorney is instructed to discuss with you the specifics of any proposed medical care or treatment. To be clear, your power of attorney can put some parameters on your agent's decisions, but they are ultimately making the choices for you. With a durable power of attorney, the agent will be in contact with your medical professionals and will work in tandem with them to make all necessary medical decisions as the need arises.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

The Ultimate Guide on How to Leave Cryptocurrency in Your Will

Wed, 17 May 2023 14:05:15 GMT

CAN CRYPTOCURRENCY BE INCLUDED IN YOUR WILL?

In recent years, cryptocurrency has become a popular form of financial investment as investors find high returns. With this increase in wealth, more people investing in cryptocurrency seek to pass these digital forms of currency ( e.g. , Bitcoin, Litecoin, Ethereum, Ripple, etc.) on to beneficiaries after passing in a will. Including cryptocurrency assets in a will is possible, but it is not as straightforward as adding traditional assets.

THE DIFFERENCE BETWEEN TRADITIONAL ASSETS AND CRYPTOCURRENCY ASSETS

Cryptocurrency as an asset differs from traditional assets one might include in his or her estate plan or will. Traditional assets have a physical currency record, such as a bank account. For example, if you were to leave the fiat money in your bank account in your will to a beneficiary, it is typically required that the person handling your estate (your fiduciary) produce an original death certificate and letters testamentary to take control of the bank account once you’ve died.

In the case of cryptocurrency, once you’ve passed, it is not required to show proof of death or power of attorney. Cryptocurrency requires the fiduciary to have the decedent’s passcodes to access and transfer the cryptocurrency account for estate administration purposes. It is essential that you trust who you name as your fiduciary because the fiduciary could use the cryptocurrency passcodes to access and manage your cryptocurrency account with very little oversight.

STEPS FOR LEAVING CRYPTOCURRENCY IN YOUR WILL

There are several steps you must take to leave cryptocurrency in your will that are much different than the steps you would take to leave traditional assets.

STEP 1: SECURE AN ATTORNEY

Secure a tenured attorney with the education and experience in incorporating cryptocurrency into estate plans and wills. Although cryptocurrency may be a new type of asset people want to protect and transfer after their death, there are experienced attorneys, such as the lawyers at The McKenzie Law Firm, who can guide you through this process to ensure all of your traditional and crypto assets are secure and inherited by your loved ones.

STEP 2: LIST YOUR CRYPTOCURRENCY

List your cryptocurrency in your will. This may seem like an obvious step. However, if the crypto assets are not listed in the will, they can be subject to forfeit or residue (meaning the remainder of the aggregate of all of the probate assets of your estate) after your passing. It’s important to clearly describe your cryptocurrency and where it can be found in your will.

STEP 3: LIST YOUR DIGITAL WALLETS

A cryptocurrency investment does not simply mean owning digital currency like Bitcoin or Litecoin. To purchase cryptocurrency, you must register your bank account with a digital currency exchange ( e.g. , Coinbase, Gemini, Coinbase, Paxful, eToro, Revolut and Robinhood) that accepts ACH bank transfers.

Once this is set up, through the exchange you can transfer fiat money using an ACH bank transfer to be able to buy cryptocurrency/digital currency like Bitcoin or Litecoin. Once you’ve purchased your digital currency it is not advisable to keep it in the exchange for a long period as it could be subject to a hack.

Because cryptocurrency investors take the security of their digital assets very seriously, they often create digital wallets. Digital wallets may be kept on a computer, a smartphone app, or a physical device. Common digital wallets are PayPal, Venmo, Google Pay, Android Pay, Samsung Pay, Alipay, Zelle, and Apple Pay, just to name a few. It’s important to list all and any digital wallets in your will for your beneficiary’s eventual access.

STEP 4: CREATE A MEMORANDUM WITH PASSCODES, PASSWORDS AND PINS

When a will goes through probate, it becomes a public record. Since digital assets are only accessed through passcodes, passwords, and PINs, for security purposes, this sensitive information should not be included in the will should the will go through probate. A memorandum is a document referenced in a will but not part of the will or subject to public record. Memorandums can also be changed at any point in time. So, should you change access information to your digital assets, this can be changed in the memorandum without going through the legal requirements of changing a will.
It is advisable to create a memorandum that includes:
A list of digital wallets and where they are stored (e.g., computer, smartphone app, physical device)
Website names and URLs to any exchange used for buying and selling cryptocurrency
Username, passcodes, passwords, PINs, and keys needed to gain login access to the digital wallets, exchanges, websites, accounts, and devices associated with your digital assets
Once the memorandum is complete, it can reside in a separate location with the will or your estate planning documents.

STEP 5: CREATE A CRYPTOCURRENCY ACCESS GUIDE

Next, you will want to create a cryptocurrency access guide so that no confusion is left to your beneficiaries. Cryptocurrency isn’t as common as a bank account. Many people are unfamiliar with or have never used digital currency. So, by leaving a detailed guide on how to access your wallets and exchanges and buy and sell cryptocurrency for fiat money, you allow for little guesswork on how to use and access your digital assets on your beneficiaries’ behalf after your passing. The guide can be updated, included, and stored with your memorandum.

WHAT IF THE BENEFICIARY DOESN’T WANT OR KNOW ABOUT CRYPTOCURRENCIES?

If your beneficiary doesn’t want or know about cryptocurrency, there are a few options. For one, choose an executor of your estate who is tech-savvy enough to be able to exchange your cryptocurrency investment for fiat money. The executor of your estate can also hire an estate administration attorney to do this exchange.

Second, you can place your digital assets into a trust. It is essential to hire an experienced estate planning law firm, such as The McKenzie Law Firm, to ensure your digital assets are secure when your beneficiaries have to access your investments. As an added layer of security, trusts are not subject to probate, so your sensitive information will be kept out of public record until your beneficiaries access it.

EXAMPLE OF A CRYPTOCURRENCY WILL PROVISION

When including cryptocurrency in your will, consult an estate planning lawyer to help. An experienced attorney, like the attorneys at The McKenzie Law Firm, will make sure the provision will include:

Name of the beneficiary
Mention of crypto-coins, tokens, digital currency, exchanges, and cryptocurrency wallets
A general list of where digital assets might be stored
Mention your memorandum and cryptocurrency access guide
Location of where your memorandum and cryptocurrency access guide are likely stored

TIPS YOU NEED TO KNOW BEFORE PUTTING CRYPTOCURRENCY IN YOUR WILL

There are a few key tips you need to know before and while you list cryptocurrency as an asset in your will:

Do not put your passcodes, passwords, and PINs to your crypto accounts in your will as they could be subject to probate, which means that sensitive information will become part of public records and could cause a security issue and be compromised.
When adding your cryptocurrency account or account information to your will, memorandum, and cryptocurrency access guide, trust your fiduciary completely, as that person will have access to your accounts.
Update your memorandum regularly when you change a password, passcode, or PIN to ensure your beneficiaries can access your accounts easily once you pass.
Make sure to write a thorough cryptocurrency access guide with step-by-step instructions on accessing your digital assets. Test the step-by-step instructions to ensure they are foolproof for when your beneficiaries use it.

CONTACT THE MCKENZIE LAW FIRM TO LEARN MORE ABOUT ADDING CRYPTOCURRENCY AS AN ASSET IN YOUR WILL

Adding cryptocurrency as an asset to pass down to a beneficiary in your will is a delicate and technical job and is best accomplished by an attorney well-versed in different types of cryptocurrencies, digital wallets, and exchanges, as well as estate planning and asset protection. This is where The McKenzie Law Firm excels. With the technical education and experience in the cryptocurrency investment landscape and asset protection.

The McKenzie Law Firm can assist you in incorporating your cryptocurrency into your existing will or create a new one with the digital financial and physical assets you would like to pass on. Contact us today , and one of our experienced attorneys will guide you.

what next?

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

Give us a call at 720-821-7604 to schedule an "Attorney Evaluation Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos .

How Does A Revocable Trust Avoid Probate?

Wed, 17 May 2023 13:50:51 GMT

If your estate plan has been on your mind lately, you may have come across the term “revocable trust” and may have heard that a revocable trust will often help you avoid the lengthy and arduous probate process. What you may not fully understand yet is what a revocable trust is, why probate is something to be avoided, and how a revocable trust helps you accomplish this goal.

WHAT IS A REVOCABLE TRUST?

At its very core, a revocable trust is a trust that can be amended or revoked by the trustor during their lifetime. Revocable trusts are staples of many estate plans because they are extremely versatile and because they can avoid the probate process.

WHAT DOES A REVOCABLE TRUST DO AND NOT DO?

Revocable trusts are most commonly used as an estate planning vehicle to avoid the probate process. It can be helpful to think of revocable trusts as contingent trusts; they do not provide a meaningful benefit during the grantor’s lifetime, but if the grantor is incapacitated or passes away, the revocable trust springs into action, becomes irrevocable, and provides the contingent planning that was anticipated by the grantor.

Revocable trusts provide springing protection against death or disability without inconveniencing the grantor. Because the trust is revocable, the grantor can revoke, amend, or terminate the trust at any time. Likewise, any assets that are placed in the revocable trust can be withdrawn at any time by the grantor with no tax consequences.

It is important, however, to note that because a revocable trust can be amended, revoked, or terminated at any time, assets held in a revocable trust are legally deemed to be held by the grantor of the trust. Therefore, a revocable trust does not provide asset protection benefits.

WHAT IS PROBATE?

Probate is a state specific legal process that takes place after someone’s death, with the purpose of properly administering and disposing of their estate.

Generally speaking, the probate process consists of the following steps:

Proving the validity of the deceased person’s will
Identifying, inventorying, and appraising the deceased person’s assets
Paying any debts and taxes owed by the deceased person’s estate
Distributing the remaining property as the will (or state law if the deceased died without a will) directs

Generally, after someone dies, the executor named in their will, or a court appointed executor if intestate, must initiate probate proceedings at the local probate court. The executor then must prove the validity of the will, provide a list of all assets, debts, and beneficiaries to the court. Then, all beneficiaries and creditors are notified that the probate process has been initiated. Depending on the nature of your assets and the size of your debts, the executor may need to have your property professionally appraised, as well as decide which assets, if any, to sell to pay creditors.

Each step in the process contains significant waiting and notice periods. For example, notice of probate must be given to creditors. In some states, creditors then have 30 days to file a claim with the estate if they received direct notice, 90 days if notice was published but not directly delivered, and 2 years if they did not reasonably receive notice. It is these waiting periods that can drastically extend the length of probate.

Meanwhile, as the probate process is ongoing, all assets that are part of the estate cannot be used or enjoyed by the beneficiaries named in the will.

It is easy to see why avoiding probate is such a priority for many estates!

ARE ALL ASSETS SUBJECT TO PROBATE?

Fortunately, there is good news: not all estates and not all types of assets are subject to probate. There are 3 broad asset categories that are not subject to probate, as well as a simplified probate process for small estates.

The first category of assets not subject to probate includes assets that transfer at death based on a beneficiary designation. Beneficiary designated assets commonly include bank or brokerage accounts that are designated “payable on death” or “transfer on death”, life insurance, and retirement plans. It is important to note that even though these types of assets can avoid probate, failing to designate a beneficiary under the account will cause it to be included in the probate process.

The next category of assets that avoid probate is assets that transfer automatically by process of law. This includes assets that are held in joint tenancy or community property. For example, a house owned in a joint tenancy by a married couple will automatically pass to the surviving spouse, entirely bypassing the probate process.

The last category of assets that avoid probate are assets held in trust. Assets that are held in trust generally are not subject to probate and will transfer according to the terms of the trust. This is exactly why a revocable trust is a key feature of so many estate plans!

HOW DOES A REVOCABLE TRUST AVOID PROBATE?

Assets held in trust are one of the categories of assets that by law enjoy the benefit of avoiding probate. This means that if you create a revocable trust during your lifetime, any assets in that trust upon your death will automatically avoid the probate process. So far so good, but what happens if you don’t transfer all your assets to your revocable trust prior to your death?

Fortunately, there is a legal vehicle specifically designed for this purpose: a pour-over will. In the absence of a pour-over will, any assets that have not been transferred to your trust and qualify for probate would have to go through the probate process.

A pour-over will helps avoid this particular complication. A pour-over will is a will created at the same time as your revocable trust, which directs that any assets you own outside the trust move into the trust at the time of your death.

ESTABLISHING A REVOCABLE TRUST

To establish a revocable trust, you need to draft a revocable trust agreement and sign it in the presence of a notary and possibly two witnesses depending on which state you live in. In order to ensure your revocable trust provides you the protection from probate that you need, you will also need to draft and sign a pour-over will in the presence of two witnesses.

Once your revocable trust is established, you will need to fund your revocable trust. To fund your trust, you will need to draft legal documents transferring ownership of assets you’d like to fund your revocable trust with. Often this includes a beneficiary deed (known as a ladybird deed in Florida) and retitling of certain financial assets.

Because revocable trusts, pour-over wills, and deeds are complex legal documents, and mistakes can be costly, it is highly recommended to consult your attorney before you engage in this type of estate planning.

Our team of experienced estate planning lawyers can help you set up a comprehensive protection plan that meets your needs and desires. Contact us to set up your estate plan today.

SETTLING A REVOCABLE TRUST

Settling a revocable trust is similar to the probate process in many ways. The trustee goes through substantially similar steps when settling the trust, but without the draconian restrictions imposed by the probate process. The trustee will have to take the following steps before terminating the trust:

Inventory the Estate: The trustee will need to inventory all assets and liabilities of the decedent, as well as gather all relevant documents and papers, including but not limited to the revocable trust agreement, any amendments to the revocable trust, the decedent’s pour-over will, a personal property memorandum, and any written instructions left by decedent for last rites and burial.
Determine Whether Probate is Required: In most cases, a well drafted estate plan will avoid probate. However, it is important to make a thorough determination whether this is the case each time. We advise that you consult an estate planning attorney for help with this step.
Value the Estate: Next, the trustee will need to establish the death value of all assets. This entails establishing the value of assets passing through the trust, as well as assets that pass outside the trust, such as beneficiary designated assets.
Pay Bills and Expenses: Once the estate has been appraised, the trustee will pay the decedent’s final bills and ongoing expenses related to administering the trust. At this stage, the trustee will also decide whether to sell any assets in the trust to pay bills, expenses, obligations, or taxes.
Pay Taxes: Once final bills and expenses are paid, the trustee will file the decedent’s final income tax return, as well as taxes on any income earned by the trust during the administration process. If the decedent’s estate is taxable for federal or state estate tax purposes, the trustee shall also be responsible for preparing and filing an estate or inheritance tax return.
Distribute and Terminate: The last step for the trustee is to distribute the assets remaining in trust to designated beneficiaries, and to terminate the trust.

WHAT REVOCABLE TRUSTS WILL AND WILL NOT DO FOR YOUR ESTATE

Revocable trusts are incredibly flexible and useful tools for your estate plan. However, they are not a tax planning or asset protection tool. The chart below gives you a broad summary of when a Revocable trust is and is not the right tool for your estate.

What next?

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

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.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Fiduciary Service

Wed, 17 May 2023 13:27:45 GMT

WHAT IS A FIDUCIARY?

A fiduciary is a person or firm with the power to act on behalf of another to protect their financial or medical well-being. A fiduciary duty requires the highest standard of care under the law. As one of the highest legal duties of one party to another, responsibilities involve finances and managing another's assets as the beneficiaries of an estate, trust, or in the event of incapacity.

WHAT WE DO

The McKenzie Law Firm manages your fiduciary needs professionally and proactively with comprehensive services for those with diverse legal fiduciary needs. We work with clients to ascertain their needs, develop a plan to achieve those goals and execute the plan while meeting or exceeding our clients’ expectations. We have years of experience acting as fiduciaries in areas such as managing estates; we also have access to a sophisticated network of partners to meet your needs and goals better.

FIDUCIARY SERVICES

Our services include:

Conservatorships & Guardianships
Executor or Personal Representative
Financial Power of Attorney
Medical Power of Attorney
Trustee
Trust Protector

ADVANTAGES OF HIRING A FIDUCIARY

A fiduciary must act in your best interests at all times. A fiduciary is expected to be highly loyal to the person to whom he owes the duty. When a fiduciary duty is imposed, it requires a stricter standard of behavior than the comparable duty of care. This is all for the protection and benefit of the principal and potential beneficiaries.

A fiduciary must provide full disclosure of relevant materials and facts. They are bound by the terms of the document(s), such as a Trust or last will, and will administer the assets as written.

Long-term planning . A fiduciary works with clients to set long-term goals and plans, taking the worry and guesswork out of the equation. No conflicts of interest. They must actively avoid conflicts of interest when making decisions on behalf of their clients.

A fiduciary can make decisions on your behalf. Beneficiaries can have peace of mind when dealing with a fiduciary instead of worrying if the trustee is making the right decisions.

Fiduciaries help navigate significant life events. A trustee can be faced with difficult choices that are not always popular with the beneficiaries of a trust or estate. When this involves family members, the named trustee is put in a situation that can cause conflict. A fiduciary does not face these personal issues among the family members. This allows the trustee to make the best possible decision, preserving harmony within the family.

A network of professionals . Fiduciaries have a network of professionals from whom they can get direct answers to difficult questions and use that knowledge on your behalf.

A fiduciary saves time, money, and headaches in the long run. With a working knowledge of laws and potential pitfalls, a fiduciary navigate them more capably, protecting your valuable time and money and addressing or avoiding problems that may arise.

A RELATIONSHIP YOU CAN TRUST

We work hard to build a relationship of integrity and trust with every client. Our specific fiduciary duties involve matters of great discretion, which we administer without fail. We provide sound, cost-effective advice that gives peace of mind to the principals and their families. We assist clients with their financial and medical needs by our client’s specific wishes and requests.

WE’RE HERE TO PROTECT YOU

The McKenzie Law Firm has the experience and excellent track record in matters where trust and loyalty are key factors. Whether you need a financial or medical power of attorney, a conservatorship, or a trusted fiduciary to administer your estate or trust, The McKenzie Law Firm can help. Use the questions below as a guideline to help determine whether you could benefit from fiduciary services.

FIDUCIARY FAQS

What is a fiduciary?

A fiduciary is a person or organization that acts on behalf of another person or persons to manage assets. Essentially, a fiduciary owes the duties of good faith and trust to that other entity. The highest legal responsibility of one party to another, being a fiduciary, requires being bound ethically to act in the other’s best interests.

What is the difference between a fiduciary and a financial advisor?

The most significant difference between a fiduciary and a financial advisor is the standard fiduciaries are held to when advising clients. Most financial advisors have to sell investments suitable for clients, but fiduciaries must act with a higher standard of care.

Should you use a fiduciary?

If you are looking for someone to handle an estate after the person passes away or would like to have professional assistance regarding medical or financial matters for someone who has become incapacitated, a fiduciary can work closely with you to help ease the burden during such difficult times.

What does a fiduciary do?

Fiduciaries can serve in any number of roles in your estate before and after your death. They’re hired to act in your best interests, and they must set aside their motivations in favor of your goals and well-being.
The fiduciary is responsible for settling your estate by the directions in your last will. If you die without leaving a will, the court will appoint someone to this position. You can nominate one or more individuals or an institution, such as an attorney or trust company.
A fiduciary is charged with gathering your assets and settling your final debts and tax obligations from estate funds, then distributing the remainder of your estate to your beneficiaries or, if you don’t have a will, to heirs set by state law. Their fiduciary responsibility is to your estate as well as to your beneficiaries.

What does it mean to have a fiduciary responsibility?

Fiduciary responsibility refers to the obligation that one party has in a relationship with another one to act entirely on the other party’s behalf and best interest. It is considered to be the standard of the highest care. The individual responsible for being a fiduciary is referred to as the fiduciary.

What is a trustee?

A trustee manages assets on behalf of the person who established the trust. A trustee is legally bound to protect the trust assets for the benefit of the beneficiaries. They hold the legal title to the trust’s assets and must not act in any way that could compromise them.

What is an estate?

Legally, a person’s estate refers to an individual’s total assets minus liabilities. Generally, an individual draws up a will explaining the testator’s intentions to distribute their estate upon death. A person who receives assets through inheritance is called a beneficiary.

How do I set up a free consultation?

We are an estate planning law firm located in Centennial, Colorado. Please get in touch with us today to schedule a personalized evaluation with an attorney.

What next?

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

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.
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.
Learn more by reading our blog or watching our videos .

Estate Planning

Wed, 17 May 2023 13:06:48 GMT

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:

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.
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.
Learn more by reading our blog or watching our videos .

DIY Living Trust: Should You Do It?

Fri, 28 Apr 2023 21:15:30 GMT

Many people decide to set up a revocable living trust to avoid probate, guard their family’s privacy, or empower a trustee to manage their assets if they become disabled. Since some online sources offer a free and quick trust document template, it’s tempting to forgo hiring an estate planning attorney and save money by setting up a DIY living trust.

Should you set up a living trust by yourself? The most likely answer is “no.” Let’s break down how living trusts work and why working with an estate planning attorney is the best option for most people who want to create a revocable trust.

WHAT IS A DO-IT-YOURSELF LIVING TRUST?

A living trust is a legal document that can transfer ownership of assets from an individual to a separate legal entity — the trust —which involves three parties:

The grantor, a.k.a trust creator
The trustee or trustees
The beneficiary or multiple beneficiaries

Once you transfer property or funds to a trust, you legally relinquish ownership of these assets, and henceforth, they belong to the trust. However, since a grantor can also appoint themselves as trustee, you may continue using the property as before. You can also change or rescind a revocable living trust anytime during your lifetime, provided you have the mental capacity to do so.

A DIY living trust is just what it sounds like: a grantor setting up their own trust without consulting an estate planning lawyer.

IS IT SAFE TO MAKE YOUR OWN LIVING TRUST?

The law doesn’t require you to hire an attorney to create a trust, so a DIY living trust is a legally valid option. However, many people who create their own living trusts, or the beneficiaries of these trusts, ultimately discover that working with an estate lawyer could have saved them a lot of time, hassle, and often also money.

In some cases, DIY trust creators have:

Accidentally used template documents designed for another state

Overlooked other legal documents they would need besides the living trust, like a new deed to transfer real estate assets

Made technical mistakes that would eventually invalidate their trust

Is the money you save by setting up a DIY trust worth the additional risk? Only you can decide that. Most professionals would say proper estate planning is too important to hazard mistakes by eschewing legal counsel.

Finally, it’s worth noting DIY living trust templates include a disclaimer stating that this type of document “does not substitute legal advice.”

WHAT CAN A LIVING TRUST DO?

Living trusts can accomplish several purposes. Namely, a living trust may help you:

Avoid probate. In most cases, any property you owned solely in your name will have to go through probate, a legal process that usually takes at least a few months. Living trusts can bypass this step, distribute property directly to a beneficiary, and avoid probate fees.
Control assets after your passing. Compared to wills, living trusts allow for more flexible control over asset distribution. You may stipulate that beneficiaries receive trust assets when they fulfill certain conditions — for example, when your adult child graduates from college.
Ensure smooth asset management if you become incapacitated. Your trust can allow a successor trustee to step into their duties immediately if you can no longer manage your own assets.
Protect young beneficiaries. If you have minor children, you can create a living trust to hold their inheritance until they become legal adults or until a certain age.
Keep your legacy private. Probate goes on public records, so theoretically, anyone could look into your property after your death. Trusts allow you to keep your affairs private.

WHY DO YOU NEED ONE?

Your reasons for creating a living trust may depend on what you want to accomplish by setting up the trust: avoid probate, financially safeguard your family, or make sure an adult child receives their inheritance at the right time. Your estate planning goals may also influence the trust structure.

Keep in mind that a revocable trust does not shield your assets from creditors or Medicaid, nor does it help avoid inheritance taxes or estate taxes. To shelter your assets from claims or reduce inheritance tax, you may want to look into irrevocable trusts. An asset protection attorney can help you decide what types of trusts to include in your estate planning.

WHO SHOULD GET A LIVING TRUST?

You may consider setting up a living trust if you:

Own many assets
Hold property in more than one state
Have a complex family situation, such as children from two or more marriages
Own a business
Want to release assets to heirs not immediately after your passing but at a certain future point

HOW TO CREATE A DIY LIVING TRUST?

As you prepare to set up a trust, make a complete and detailed list of all your assets, including:

Real estate
Vehicles
Stocks and bonds
Bank accounts
Insurance policies

You will also need to source certificates and deeds that confirm your ownership of these properties.

Some of your assets, like life insurance policies or IRA accounts, may already have a designated beneficiary. You don’t need to include these assets in the trust.

Then, draft a beneficiary list that may include your spouse, family members, friends, charities, or anyone to whom you may wish to leave property.

Finally, consider whom you choose to appoint as a successor trustee. It can be your adult child, sibling, business partner, or even a trusted close friend. You can also name a trust management company or another financial institution as your successor trustee.

Once you have all these details in place, you can proceed with trust formation, which includes the following steps.

TRUST DOCUMENTATION

Your Declaration of Trust, the legal document that forms a trust, should include your name and list anyone whom you name as a co-trustee, successor trustee, or beneficiary. You should also describe relevant assets and instruct your successor on how to distribute property after your passing.

An estate planning lawyer can review your trust documentation to make sure it’s legally valid and answers your purpose.

NOTARIZATION

In most states, you will need a notary public to endorse your trust to make it enforceable. After confirming your ID, the notary public will sign, date, and stamp the documents. Many attorneys also provide notary services.

PROPERTY TRANSFER

Once your trust becomes active, you can transfer assets into its ownership. Typically, these transfers will involve high-value assets like your house, stocks, and bonds. To transfer real estate assets, you will need a quitclaim deed and a new deed establishing the trust as the owner of the property.

If you own a company, you may also place it in a trust as part of your business succession plan.

HOW MUCH DOES IT COST TO CREATE A LIVING TRUST BY YOURSELF?

Creating a DIY living trust may cost under $100 if you use a ready template. Hiring an attorney makes trust setup more expensive.

However, although you can save money with a DIY trust, you or your family may eventually pay a lot more if incorrect trust documentation leads to a dispute or if a court invalidates a trust because of legal errors and trust property has to go through probate after all. And that’s not counting the additional time and energy your loved ones may need to invest to resolve a potential trust dispute.

LIVING TRUST TAXES

As a rule, if a trust has an income of $600 a year or more, the trust must submit a federal tax return as a separate legal entity. However, the income of revocable trusts under the grantor’s control belongs to the grantor’s personal return, and the trust doesn’t need to file separately.

After the grantor dies and the successor trustee distributes any remaining assets, the beneficiaries will have to pay taxes on the property they receive, unless it’s returned principal, i.e., property that already underwent taxation. Any capital gains on trust assets are subject to taxation.

Working with an estate attorney can help ensure that you comply with trust-specific taxation requirements and provide all the necessary IRS forms, chief among which are Forms 1041 and K-1.

RISKS OF SETTING UP YOUR OWN LIVING TRUST

When people establish a DIY living trust, they rarely consider how many issues may arise because a legal professional hasn’t revised their living trust forms. Potential problems with making a living trust on your own include:

Technical errors that may invalidate the trust document
Not following the right procedures when transferring assets or money to a trust
Unclear wording that creates an opportunity for trust disputes
Potential probate litigation that leads to ugly family conflict
An incomplete understanding of the trust’s purposes, like mistakenly assuming that living trusts may shield assets from debt claims

A skilled asset protection attorney can help you avoid common pitfalls and set up a living trust as part of your overall estate planning strategy, along with other documents like your last will and testament. For example, an attorney can advise you on which assets to transfer to a living trust and which property you may choose to protect by locking it in an irrevocable trust.

WHEN DO YOU NEED TO SEE A LAWYER?

In almost all cases, you will benefit from hiring a competent estate planning lawyer to create a living trust correctly. An experienced estate attorney will know how to create a trust document that helps protect your assets, safeguards your beneficiaries’ interests, and avoids various legal issues.

Working with an estate attorney is especially important if:

You have a high net worth or complex estate
You carry a lot of debts
You own property overseas or live abroad
You believe there’s a high chance of conflicts over legacy in your family
You aren’t sure whom to appoint as your successor trustee

what next?

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

Give us a call at 720-821-7604 to schedule a "Attorney EvaluationSession" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos.

Wills vs. Trusts

Fri, 28 Apr 2023 14:23:42 GMT

WHAT IS ESTATE PLANNING?

Estate Planning is arranging for the transfer of your property upon your death or incapacity. Succession planning is handled using either a last will, a Revocable Living Trust, or preferably both. In this article, you will find more information about the differences between a last will and a Revocable Trust.

WHAT IS THE DIFFERENCE BETWEEN A WILL AND A TRUST?

A last will is a written declaration of who you want to receive your property and who you want to raise your minor children when you pass away. A Will should also include the person nominated as Personal Representative, who will be responsible for managing the estate. After a person passes away, the original copy of their Last Will needs to be delivered to the county's probate court where they last resided. Any bequests made under a last will must be carried out under a court-supervised process called probate. The court must ensure that the Will exists, appears valid on its face, and follows the document's language. The court must also allow potential heirs, creditors, and other interested parties to join the case. For that reason, it is said that Last wills and testaments are public records once they are filed for probate.

Like a 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 allowing you to pass property without Probate's delays, cost, and publicity. A Revocable Living Trust protects your property from lawsuits against a beneficiary other than yourself. When a bequest is made using a last will, the beneficiary will eventually get the gift outright; any funds received can be saved, spent, or squandered according to the beneficiary’s wishes. A trust can allow for essential limitations on using and protecting any funds inherited so that the beneficiary is protected from lawsuits, creditors, divorce, etc.

Simply stated, a Trust can accomplish a lot more than a Last Will, such as allowing your family to avoid the probate process, protecting your family’s privacy, providing for your children, grandchildren, and pets, helping to plan for your incapacity; and safeguard your property from lawsuits. We recommend that many McKenzie Law Firm clients use a Revocable Trust instead of a Will to pass their property.

The chart below is a comparison of Wills and Trusts.

WHAT HAPPENS IF I DIE WITHOUT A WILL?

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, in which case it is essential to create a Will. However, even if you do not have a last will, the court will still need to probate your estate, a process known as intestate probate. During intestate probate, the court will require that a Personal Representative be named from the surviving family members, a process that could become contentious if more than one person wants the responsibility. Instead of ensuring the estate distributions are made according to the last will, the court will expect the estate to be divided following the guidelines found in the law.

WHAT ARE INCAPACITY DOCUMENTS?

Most people are aware of the importance of planning for their death. However, many people overlook planning for incapacity. This is unfortunate because most people are incapacitated at some point. Not having the proper documents in place can result in a costly conservatorship and guardianship proceeding. Incapacity Documents include a Financial Power of Attorney, Medical Power of Attorney, HIPAA Release, and a Living Will.

WHAT DOES AN ESTATE PLAN USUALLY INCLUDE?

We typically recommend that most clients have all seven primary estate planning documents. The seven primary estate planning documents are…

Will
Revocable Trust
Guardianship Designation
Financial Power of Attorney
Medical Power of Attorney
HIPAA Release
Living Will

WHY DO I NEED TO CREATE AN ESTATE PLAN?

Here are ten reasons to create an Estate Plan…

Minimize or Eliminate your Estate Taxes.
Reduce future medical, court, and legal costs.
Choose who will raise your minor children.
Choose who will make medical and financial decisions on your behalf.
Protect your family’s privacy.
Alleviate your family from having to make difficult end-of-life decisions.
Allow your family to avoid probate.
Decide who receives your property and when.
Protect your children’s inheritance from lawsuits or divorce.
Protect your children’s inheritance from their spending habits.

WHAT IS PROBATE?

Probate is the court process for distributing your 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. By working with the team at The McKenzie Law Firm, we can create a plan that will allow your family to receive your property without going through the Probate process.

WHEN SHOULD I CREATE AN ESTATE PLAN?

Many Estate Planning techniques are ineffective if employed too closely to one’s passing. The best thing to do is create an Estate Plan today so you can give your family the maximum benefit of your property, and you can stop worrying about needing to create one!

HOW OFTEN SHOULD I UPDATE MY ESTATE PLAN?

Anytime a significant life event in your family, such as a birth, death, divorce, or marriage, you should review your Estate Plan. Additionally, you should update your plan whenever there is a law change.

What next?

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

Call us at 720-821-7604 to schedule an "Attorney Evaluation Session" to determine whether our firm would fit your needs well. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos.

When Does a Joint Trust Become Irrevocable?

Fri, 28 Apr 2023 14:17:25 GMT

When a trust is established, the person or entity who provides the money or property to establish the trust is called the grantor. Some trusts are set up by one grantor. However, when it is both a husband and wife establishing the trust, each of them is considered a grantor. In this case, the trust is called a joint trust because of the two grantors.

STARTING WITH A REVOCABLE LIVING TRUST

Many trusts will start out as revocable, meaning that the grantor may change the terms of the trust. However, at some point a revocable trust can become irrevocable, meaning that the terms are immutable unless the beneficiaries agree to change the terms. When there is one grantee, the trust is transformed from revocable to irrevocable when the grantor dies. When there is a joint trust, the question arises as to what needs to happen for the trust to become irrevocable.

In most cases, when there is a joint trust, one of the grantors will die before the other. This presents various issues depending on the makeup of the family. For example, the surviving spouse could have different wishes than the deceased one had. Alternatively, the surviving spouse could have their own children not with the deceased. Additionally, the surviving spouse may have less than their full capacity and may not be able to make sound decisions. When one spouse does pass away before the other, there are questions whether the trust is still revocable.

TRIGGERING IRREVOCABILITY

The general rule of thumb is that both grantors must die before the terms of the trust become irrevocable. This is the default, but, as with many things legal, there are ways to change this. The terms of the trust are governed by the instrument that establishes the trust. In other words, those who establish the trust have the ability to set the operating ground rules so long as they are not contrary to law.

There are a couple of different solutions to these issues that can be incorporated into the trust at the outset. First, the estate planning attorney can put in specific language to overcome the general rule that both spouses need to die before the trust becomes irrevocable. If there is a provision that says that the trust becomes irrevocable when one grantor dies, this will become the rule of the trust. Couples often do this when there is a concern about undue influence as both spouses age. Seniors are often subjected to pressure both by their families as well as from other outside sources that may have nefarious intentions. However, there are large possible estate tax ramifications if the trust is made irrevocable on the death of one spouse. An estate planning attorney can help with measures that can mitigate or remove any possible income tax liability. Alternatively, the trust can remain as a revocable instrument with a host of other protections in the document to safeguard the trust after one grantor dies.

There is another option that can be used in order to provide some protections to trust beneficiaries in the event that one grantor dies first. The trust can remain in effect, but a successor trustee can assume responsibility for making the decisions regarding the trust. This successor trustee would be someone other than the surviving spouse. While this is ordinarily accompanied by language limiting a successor trustee to instances in which the surviving spouse is incapacitated, if there is concern over what the surviving spouse may do, then there could be language requiring a successor trustee regardless. There is nothing that says that couple must use a joint revocable trust. It does have benefits both in terms of convenience and administration. However, couples can also establish their own individual trusts. If there is a blended family, this may be an option if there is any concern as to how the money will be divided once one spouse dies. In some families, there may be a worry that the surviving spouse would either on their own or due to pressure from children, change the trust to cut out the interests of the children of the deceased spouse.

This is something that should be addressed when both spouses are alive and in control of all of their faculties. Since the usual rule is that both spouses must die before the trust becomes irrevocable, there is another type of trust that is suitable for blended families. An AB trust is a special type of trust that will protect the beneficiaries when one spouse dies and the trust is still revocable. What happens in this type of trust is that the trust is a joint revocable trust when both spouses are alive. When one of the spouses dies, the trust will then split into two trusts automatically. Each trust will have half the assets of the trust along with the separate property of the spouse. The surviving spouse is the trustee over both trusts. However, they cannot amend the terms of the trust with the deceased spouse’s assets to remove that person’s children as beneficiaries of the trust. There may still be issues with this type of trust arrangement if the surviving spouse uses the assets of the trust in a way that diminishes the beneficiaries’ inheritance. The beneficiaries will be keeping a close watch over the spending so it does not diminish what they will receive.

Given the high divorce rate and the number of people who remarry, each having their own children, families must be creative and proactive when it comes to devising solutions that can protect all of the parties, including the beneficiaries. An estate planning attorney can help devise trusts and insert language into their creating document that can make the trust work for you. When it comes to issues of money and inheritance, even people who had previously gotten along well can turn against each other in a hurry. Therefore, you should plan ahead of time to leave as little as possible to be decided after you can no longer control the situation.

WHAT TYPE OF TRUST IS BEST FOR YOU?

Whether you need a revocable or an irrevocable trust, or if you would like to learn more about what would work best for your particular situation, The McKenzie Law Firm can help. We have helped thousands of clients over the years use trusts to plan for their succession, protect their assets, apply for Medicaid, and more.

What next?

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

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.
Visit our estate planning page to learn more about how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and reduce or eliminate taxes.
Learn more by reading our blog or watching our videos .

What is Fair in a Second Marriage When It Comes to Estate Planning?

Fri, 28 Apr 2023 14:12:46 GMT

For many couples, estate planning in a first marriage can be stressful and difficult to plan out. However, in the event of a second marriage, the process becomes even more difficult. While in a first marriage both spouses generally have the same goals, a second marriage can produce differing goals on inheritances, financial planning, long-term care, and much more. Because of these factors, it is extremely important couples not only discuss their estate planning ideas with one another, but also use the services of an experienced and knowledgeable estate planning attorney when creating wills, trusts, or other legal documents pertaining to the estate planning process.

CHILDREN AND INHERITANCES

In a second marriage scenario, one or both spouses will likely bring new children into the family. Whether the children are still minors or adults, deciding on inheritances can be tricky. Since both spouses likely bring different assets to the second marriage, such as property, bank accounts, retirement accounts, life insurance policies, and more, it is important to make specifications very clear as to how these assets will be divided up after one or both spouses are deceased. In most matters, each spouse will want to make sure certain assets go specifically to their children, while also ensuring the surviving spouse will have enough income to live on for many years.

PRE AND POST-NUPTIAL AGREEMENTS

For many couples involved in second marriages, a pre or post-nuptial agreement is a crucial part of the relationship. Often put in place if one spouse has significantly more assets than the other, these agreements are seen as an excellent way to safeguard various assets should the marriage end in divorce. However, since these documents can contain many clauses and involve large amounts of money and other valuable assets, it is critical the documents be reviewed by an experienced estate planning attorney before they are signed. If either spouse fails to understand any part of the document, they should have it explained to them by their attorney in a clear, concise manner before signing.

NAMING BENEFICIARIES

Considered one of the most common estate planning issues in second marriages, naming beneficiaries for life insurance policies, IRAs, and other income plans can be difficult to come to a decision on. While often easy to do with a first marriage, the second marriage scenario can bring with it the possibility of children or others being bypassed in the process. For example, a new spouse will have the ability to name anyone they please to be a new beneficiary. Even if promises are made along the way, after one spouse is deceased, those promises can be broken, leading to tremendous conflict and even legal issues.

USING A TRUST AS BENEFICIARY

To avoid potential conflict when a spouse dies, it is often wise to name a trust as beneficiary for life insurance policies and other tax-deferred income plans. By doing so, a spouse can maintain control over how and to whom assets and income are distributed. For example, a trust can be established to provide a spouse with lifetime income, yet also allow other assets to be distributed in another manner. By using a trust, protection can be granted from not only irresponsible spending, but also from creditors, divorce, and estate taxes.

LONG-TERM CARE INSURANCE

While not pleasant to think about, long-term care must be a part of the estate planning process in second marriages, especially if there is a large age gap between spouses. If long-term care in a nursing home or other facility is needed for a spouse, the couple’s combined assets will be in play to pay for that care, which can lead to financial difficulties or even bankruptcy. To guard against this, long-term care insurance can be purchased as a form of asset protection.

By working with a skilled estate planning attorney and discussing your goals with one another, most if not all potential estate planning issues can be worked out to everyone’s satisfaction.

what next?

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

Give us a call at 720-821-7604 to schedule an "Attorney Evaluation Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What is a Beneficiary Deed?

Fri, 28 Apr 2023 14:09:44 GMT

A beneficiary deed, also called a transfer on death (TOD) deed, can transfer real estate ownership outside of probate upon the grantor's death. A beneficiary deed can provide an alternative to a last will to pass real property to a beneficiary on the owner's death. As of 2020, over thirty states recognize beneficiary deeds. In Colorado, beneficiary deeds are a legitimate means to pass real property at death; the legal requirements for a beneficiary deed can be found in the Colorado Revised Statutes section 15-15-401 et seq.

HOW DO BENEFICIARY DEEDS WORK?

The owner must sign a new deed during his lifetime that states who should inherit the real estate after the owner's death. The deed must be signed, notarized, and recorded with the county clerk recorder’s office where the real estate is located. After signing and recording a beneficiary deed, the grantor remains the real estate owner during their lifetime. Even after recording, a beneficiary deed will not transfer the property until the grantor dies. During the grantor’s lifetime, they can change their mind by recording another beneficiary deed naming a different grantor or simply selling the property to a third party.

WILL A BENEFICIARY DEED AVOID PROBATE?

A properly executed and recorded beneficiary deed will avoid probate for the specific piece of real estate covered in the deed. If there are more assets in the estate, a beneficiary deed may not be enough to avoid opening a probate proceeding for the estate. But if probate is needed, the deeded real estate would not be included as a part of the probate estate. Instead of obtaining an order from the probate court for the property to be transferred, a certified death certificate must be recorded at the county clerk recorder’s office. This serves as notice that the grantor has passed away, and the beneficiary listed in the deed has received the property. A beneficiary deed will not work to avoid estate taxes.

HOW DOES A BENEFICIARY DEED FIT WITH MY ESTATE PLAN?

A beneficiary deed can be used as an alternative to a Revocable Living Trust to transfer real estate to a beneficiary without going through probate proceedings. However, a trust is still preferable in many situations. A trust can provide specific instructions on how an inheritance is distributed, managed, and distributed and provide protection for the beneficiaries who will inherit the property. A beneficiary deed can work with a trust to create a comprehensive estate plan that avoids probate and protects all assets passed to the beneficiaries, not just real estate.

ADVANTAGES AND DISADVANTAGES OF BENEFICIARY DEEDS

A beneficiary deed can avoid the costs and delays of probate proceedings because the property is not part of the probate estate.
A beneficiary deed delays or avoids gift taxes because the property is not transferred upon signing and recording.
If the owner changes his mind, the beneficiary can be changed at any time before the death or incapacity of the owner.
Any creditors of the beneficiary creditors cannot reach that particular property because the beneficiary has no interest in the property until the death of the owner.
Using a beneficiary deed alone is generally less expensive than using a revocable living trust or last will.

Beneficiary deeds are not always recommended; some of the significant drawbacks include the following:

Individuals who draft these deeds without consulting an attorney or real estate professional may make mistakes that may cause the instrument to fail.
Any inconsistencies or ambiguities regarding the property transfer may cause a title company to refuse to issue title insurance.
If a beneficiary deed is challenged, a costly court proceeding may be necessary.
Beneficiary deeds generally offer no asset protection to the beneficiary.

IS A BENEFICIARY DEED RIGHT FOR YOU?

If your estate consists mainly of real estate held in your sole name without a co-owner and you would like to leave your inheritance to a single individual, a beneficiary deed could be the principal solution for your estate planning needs. Contact The McKenzie Law Firm today to schedule an attorney evaluation session if you want to discuss whether a beneficiary deed is right for you.

what next?

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

Call 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.
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.
Learn more by reading our blog or watching our videos .

How to Close a Revocable Trust After Death

Fri, 28 Apr 2023 13:59:54 GMT

Revocable trusts are a commonly used estate planning tool. The trust gets created by someone known as a “grantor.” This person places assets into the trust and is the beneficiary during their lifetime. When the grantor dies, the trust does not automatically go away. Some steps must be followed to close the trust after the grantor dies. The trust still operates until all of the closing steps have been completed.

The most important thing to know about what happens after the grantor’s death is that because it never dies, the trust does not have to go through the probate process. After death, the assets of the revocable trust are distributed in line with the grantor’s directions, as specified by the trust agreement. After the debts and obligations of the estate are settled, the assets are distributed to the beneficiaries. However, to do this, the following steps must be taken. A Denver estate planning attorney can help you execute these steps.

FAMILY NOTICE

The obligations that attach to a trust are assumed by the successor trustee after the grantor’s death. This trustee has to deal with the beneficiaries and has a specific responsibility to them to uphold. Each beneficiary has a financial interest in the disposition of the trust and will need to act to protect this interest during the trust's closing.

The successor trustee must notify the beneficiaries that the trustee controls the trust. This is done by sending a letter to each beneficiary. There may be legal requirements for the information in the letter. An attorney can help determine what must be in the letter because the notice may be invalid if the law is not followed, which can slow down the trust's closing. How soon the notice must be sent varies depending on state law. If there are no requirements for what must be in the notice, use your judgment about what you need to tell the beneficiaries to allow them to exercise their legal rights. Trustees only need to send one notice to the beneficiaries.

NOTIFYING THE CREDITORS

When the estate is settled, and the trust is closed, it is the last opportunity that creditors have to be paid back the debts that they are owed by the deceased. Death does not make the deceased obligations disappear; creditors can and will be paid back from the estate. Accordingly, they should also be notified that the trust has become irrevocable and that the trustee is now responsible for it and intends to close it. They will need the notice to look after their legal and financial interests and take the action necessary to protect themselves.

Whether notice to creditors is required is also a matter of state law. Many states will require the trustee to publish a notice of death in a newspaper or another publication. Some states do not require notice to creditors in the event of the grantor's death. However, creditors have the right to contest the estate distribution if they are not paid back, and if they challenge this, it will slow the process. Creditors generally have a limited period to file claims against the estate. However, if the creditors do have notice, in most states, it will give them a shorter period to file a claim than they would otherwise have.

SETTLING AND NEGOTIATING DEBTS

The deceased may have owed money. As mentioned above, the creditors can access the trust’s assets for repayment. It is essential to know that not all debts must be paid. Some debts do go away when the grantor dies. For example, student loan debts do not survive the grantor's death. Other loans, such as credit card debt, do continue to exist.

The debts must be paid before the trust property is distributed to the beneficiaries. If not, both the trustee and the beneficiaries may be sued by the creditor for repayment of the debt. The trustee can use the trust's liquid assets, such as bank accounts, to pay the debt or sell assets to raise funds. The beneficiaries may receive money or property, usually only after all the creditors have been paid. Another of these obligations and debts is income taxes, which must be paid out of the deceased’s assets. Some states have laws that require that estate taxes be paid before the beneficiaries can receive assets. The trustee must be careful about distributing assets before debts are settled to avoid becoming personally liable.

DISTRIBUTIONS

The first thing that must be done before distributing the assets is valuing them to know how to distribute them. After the bills, expenses, and creditors have been paid, the pool of assets will be known. Then, the trustee must follow the directions of the grantor in either selling or deciding what to do with the assets. After all property that must be sold is sold, the group of assets needs to be distributed. To the extent that the assets are liquid, checks will be issued to the beneficiaries. If the property is not sold, it will be retitled to reflect the new ownership by the beneficiaries. Note that the trustee may be liable for any future expenses if new expenses arise after the trust assets are distributed, so that this final step may take some time.

An estate planning attorney can advise on any issues relating to establishing or settling a trust. Many problems can arise in planning these trusts, and decisions made at this stage can affect what happens after the grantor passes away. Thus, it is essential to make sensible choices now to ensure that settling and distributing the trust goes as smoothly as possible and your family can better adjust after losing a loved one.

what next?

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

Give us a call at 720-821-7604 to schedule an "Attorney Evaluation Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos .

How Long Does Probate Take?

Fri, 28 Apr 2023 13:54:46 GMT

The word "Probate," like many other legal terms comes from Latin, meaning proof. Probate is the court process that determines whether a decedent’s Last Will and Testament is real, legally valid, and enforceable. The process has a reputation for lasting a long time, but this may not always be the case. Many factors can play into how long probate actually takes. Some estates may settle after several months, six to nine in shorter cases. Other cases may take a year or more.

There are many steps in the probate process, and all of them are necessary in order to transfer the assets from the ownership of a deceased individual into the ownership of one of their living beneficiaries. Taxes and outstanding debts must also be paid before this can happen. The process can be extremely slow when there are complications such as a Will contest, a multitude of debtors, or hard to find assets and/or beneficiaries. In addition, since the decedent’s as well as the estate income and other taxes need to be settled, this can often delay an already slow moving process. Since many tax forms are not generated and received until the end of the year, that means work on the tax returns cannot start until after several months have already elapsed.

WHAT MAKES PROBATE TAKE LONGER?

The laws established minimum waiting periods that the probate process needs to take. The legislators enacted these laws because they wanted to protect innocent debtors and potential beneficiaries and made sure that enough time would pass while the court case was open so as to allow people to come forward and state their claims. Generally, probate can take longer the more beneficiaries there are or the more complicated a person’s Will or family situation is. If beneficiaries live far from the probate court where the case is taking place, it could take longer to complete. Sending documents back and forth between multiple people located in various places can be tedious.

It’s worth noting that two beneficiaries may not agree on absolutely everything that must happen with an estate, let alone three, four, or more. Some beneficiaries also end up hiring their own attorneys to monitor the process. If the beneficiaries disagree with the work the executor is doing as far as managing the estate, the process can take even longer.

A WILL CONTEST MAY TAKE PLACE IN A NUMBER OF INSTANCES:

The Will was not signed with the proper legal formalities.

The Will was written as it was due to issues of fraud.

The Will was written as it was under duress and undue influence by a beneficiary.

The deceased lacked the mental capacity to create a Will.

Probate will be open for a long time if there is a Will contest. Issues will only usually be resolved after court mandated mediation or a long court trial.

WHAT IF THERE IS NO WILL?

Then, there’s the possibility that the deceased did not have a Will. The estate must still be probated in this case, and the court will still be involved in the process. It will be up to the judge to appoint an executor because the deceased did not do so. The law establishes a priority as far as the people allowed to step forward and request being named executor of the estate. State law will then determine which heirs will receive bequests from the estate and in what percentages. Steps that would have usually been simple could take much longer if there is no Will.

PROBATE IN COLORADO

Probate can take much longer depending on the state, too. Probate in Colorado can be a lengthy and costly process. If beneficiaries do not receive proper guidance, a dispute could arise among heirs and cause the probate process to take years. Common reasons probate can take a while include; waiting on a notice to creditors, resolving disputes among beneficiaries and creditors, completing an inventory, and delays that come with the court system.

An experienced Colorado Probate Attorney can help expedite the process and avoid common probate pitfalls. Contact an experienced Colorado Probate Attorney to help you navigate the Probate process.

What next?

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

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.
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.
Learn more by reading our blog or watching our videos .

Guardianship Proceedings in Colorado: What You Need To Know

Fri, 28 Apr 2023 13:40:01 GMT

Whether you need to care for an older special needs child or an elderly parent, here’s an essential guide about what you need to know regarding guardianship proceedings in Colorado so you will be prepared and ready to meet the process successfully.

First, to get your request for guardianship considered, you must file a petition with the District Court in the county where the subject of your guardianship request lives. Guardianship requests can be made for children and mentally and physically incapacitated adults.

You must pay the appropriate filing fees for your petition. That fee must be paid when you file the petition. Sometimes, the fee can be waived if you cannot pay it and submit the appropriate affidavit to support this request.

If you’re filing for guardianship over an incapacitated adult, you must accompany your petition with medical information on that adult’s condition, written and signed by a qualified doctor or psychologist.

A court visitor will then be appointed to meet with you, the candidate for guardianship, and anyone else with information potentially pertinent to the guardianship discussion. You must pay the visitor an hourly fee, which varies from county to county; typically, the rate ranges from $25 to $75 an hour. Based on information gathered from these interviews, the visitor will file a report with the court with recommendations regarding guardianship.

The court will then schedule a hearing on the petition, notice of which must be personally served to the potential ward. All other interested parties may be notified of the hearing by mail, although in-person serving is also allowable.

All parties to the petition must attend the hearing, including the potential ward, unless the court excuses them for a good cause, such as a medical emergency.

If the court grants the guardianship, the new guardian must give notice of the guardianship to the ward within 30 days of being appointed that person’s guardian.

The new guardian must file a personal care plan for the ward with the court within 90 days of being appointed. This plan must include financial arrangements for the ward and a detailed inventory of the ward’s estate.

A child who is 12 years old or older can file a petition for guardianship and request a particular adult to be named as guardian. The court will investigate proposed guardians for minor children to assess:

Their ability to provide care, physically and financially;
Their existing relationship with the child;
Their criminal background, if any.

The court will consider this investigation's results and the child’s wishes before the judge rules. Generally, the older the child, the more the court will consider their personal preferences.

The court typically decides most cases within six to eight weeks after filing. It may grant a temporary guardianship if the prospective ward needs care during the court process.

In the case of adult wards, a guardianship arrangement is usually permanent. However, the court will likely periodically review the case. In the case of child wards, the guardianship arrangement ends when the ward gets adopted, becomes legally emancipated, becomes financially self-supporting, joins the military, or turns 19.

For insight and practical help with your Colorado guardianship questions, please call or email our legal team today to schedule a confidential consultation about your next steps.

What Next?

If you are in a situation where you might need to become a guardian or a conservator for someone else, you can:

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.
Visit our estate administration 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.
Learn more by reading our blog or watching our videos .

'Great Wealth Transfer' Is Passing from Baby Boomers to Gen X, Millennials

Fri, 28 Apr 2023 13:34:52 GMT

The baby boomers generation of people born in the first two decades after World War Two are the greatest earners of all time, but the majority are now retired or edging ever closer to retirement age and, inevitably, death.

While nobody wants to think about the latter situation, financial responsibilities need to be respected, not least because we are entering the most significant era of wealth transfers ever. As far as financial planning is concerned, families simply don’t have time to waste.

THE LARGEST TRANSFER OF WEALTH IN HISTORY

It is reported that the next 25 years will see a colossal $68 trillion handed down across 45 million U.S households. Due to this sheer volume of money, there will inevitably be a lot of administration to consider. Furthermore, in an era where families are spread out across the globe, international transfers are sure to play a role with funds and assets moving in both directions.

Even when medical care expenses throughout the retirement years are taken into account, large sums of money will be passed down to beneficiaries primarily from the Generation X and millennial demographics, although forecasts show that Gen Z will receive a lot of this money over the next quarter-century too.

While nobody wants to lose a loved one, the financial rewards set to be gained are huge. Unfortunately, without the right support and planning, those good intentions of the benefactor could merely show that money can create chaos in a family.

PROBLEMATIC TIMES AHEAD

Due to the situation revolving around the baby boomers generation, we are about to witness the largest wealth transfer in history. It is going to be a complex one.

Many baby boomers have blended families, whose heirs and beneficiaries will have disagreements about how their parents’/spouse’s assets should be distributed. Many people from Gen X and millennials will spend years fighting with their siblings over an inheritance because their parents did not plan properly.

Money is the root of major disagreements and has the potential to rip families apart at the seams. Personal greed coupled with conflicting views about how the deceased would want their assets to be distributed – to charitable organizations as well as family beneficiaries – makes it almost impossible for surviving family members to reach a point of universal agreement.

So, while the deceased’s intentions are to please everyone, the transfer of wealth for many will cause more trouble than good.

THE SOLUTION

To mitigate the problems that are created by the transfer of wealth, baby boomers need to take immediate and proactive action. The McKenzie Law Firm specializes in Wills and Trusts, Asset Protection, and Probate matters to help reduce ambiguity and ensure that your estate is distributed as you desire.

This is in the best interests of the beneficiaries too, not least because it gives them the best hope of receiving wealth and assets with reduced taxations. Frankly, it’s never a bad idea to take control of these issues, even if you’re still in great health.

To learn more about how to help plan for your family or administer an estate, please contact us today at 720-821-7604.

what next?

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

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.
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.
Learn more by reading our blog or watching our videos .

Estate Planning Checklist

Fri, 28 Apr 2023 13:14:20 GMT

WHAT IS AN ESTATE PLAN?

An estate plan is a collection of legal documents that help manage a person’s assets and medical decisions in case of incapacity or death. Depending on your wealth level and family situation, your estate plan can be very simple or more complex.

Sophisticated estate planning solutions can significantly save gift, estate, and generation-skipping transfer taxes for high-net-worth individuals and families. But estate planning is certainly not just for the very wealthy. Middle-class families can benefit from effective estate planning to facilitate the transfer of their assets during their lifetime and at death.

Several critical legal documents are a crucial part of any estate plan; these include a last will, incapacity documents, and, in most cases, a revocable living trust. Whether you are considering an estate plan for yourself or a loved one or want to ensure your current estate plan meets your needs, learning more about these essential legal documents should prove valuable.

In this article, Let’s create an estate planning checklist, the role of these joint estate planning documents, and why you want to make them part of your estate plan.

WHAT IS THE GOAL OF YOUR ESTATE PLAN?

The specific purpose of your estate plan might vary depending on the particulars of your situation and your stage in life. Your main goal might be to ensure your spouse and children are cared for after you are gone.

Amongst the most common benefits of effective estate planning are minimizing or eliminating gift and estate taxes, reducing future medical, court, and legal costs, deciding who will continue to raise your minor children if you are not able to do so, and deciding who will make medical and financial decisions on your behalf.

Additionally, estate planning can protect you and your family’s privacy, help your family members when facing difficult end-of-life decisions, and decide who receives your property and when.

In general, your estate plan should determine what will happen to your assets after you pass away and simplify the transfer process when the time comes. In addition, a well-drafted estate plan should also anticipate what should happen if you are ever incapacitated.

Your incapacity documents should name an agent who can make financial and medical decisions on your behalf in case you are ever incapacitated. That means your agent will have the authority to decide on your behalf without petitioning a court to confirm your incapacity and name an agent of their choosing.

Well-drafted incapacity documents should also include your wishes and instructions to provide your agent with much-needed guidance when faced with significantly challenging choices.

Revocable Living Trust

Establishes a plan for the administration and distribution of assets after death.
Names a person who will manage the trust assets in case of death or incapacity.
Property must be transferred into the trust to take effect.
Can provide asset protection to beneficiaries if inheritance is left in trust.

Last Will

Names the beneficiaries who will receive any assets remaining after death.
Determine an executor who will be responsible for the handling of the estate.
Original document needs to be presented to the probate court.
Probate court will oversee the handling of the estate and hear any potential claims.

Financial Power of Attorney

Select a person who will handle financial transactions in case of incapacity.
The principal can decide how much authority to grant the agent.
Commonly used to pay bills on behalf of the principal, access bank accounts, and gift assets.
Bypass the need to request the court to grant this authorization.

Medical Power of Attorney

Select a person who will handle medical decisions in case of incapacity.
Incapacity is often defined as the opinion of two physicians or a court order stating incapacity.
Can work together with a living will that outlines a person’s wishes in case of incapacity.

Guardianship Designation

If you have minor children, this document establishes who should care for them in case you are incapacitated or pass away.
Guardianship Designation can be written into a last will or be a standalone document.

Beneficiary Designations

Financial accounts, insurance policies, and pensions can often be transferred at death via beneficiary designations filed directly with the financial institutions.
Accounts with valid beneficiary designations pass outside of probate.

HIPAA Release

Allows your physician and other medical professionals to share your confidential medical information with your family, medical professionals, or others.

Living Will

An advance care directive that contains instructions if you are critically ill.
Some individuals may not want to be put on life support or have resuscitation measures taken if necessary.

Insurance and Financial Documents

Create a list of financial accounts, insurance policy documents, credit cards, mortgages, and other loans.
Allows family members or others to pay loans and avoid foreclosure, lapses in insurance coverage, etc.

Last Wishes and Funeral/Burial Directive

Wishes for the funeral can be set out in a directive to guide people.
Many people make decisions about whether they wish to be buried or cremated.

DOCUMENTS YOU WILL NEED

At the very least, your estate plan should include a last will and incapacity documents. A last will determines what will happen to your belongings after you pass away. When a person dies, the original will must be sent to the local probate court with a death certificate. This puts the court on notice that the person has passed away and that a legal case will likely begin soon.

The administration of the last will happens under the supervision of a probate judge in a process known as probate. The probate process is meant to protect the creditors and beneficiaries of the estate by ensuring everything happens under the watchful eyes of the court. Still, the result is a lengthy and costly process where experienced attorneys are almost always needed to help navigate the process. Since probate is a long and often expensive process, it is best avoided.

On the other hand, if you do not have a last will, the court will still need to probate your estate, a process known as intestate probate. The government decides who gets the property when an estate goes through an intestate probate proceeding.

The default laws of the state you live in at the time of your passing will govern the distribution of your estate. Unsurprisingly, these default state laws often do not reflect peoples’ wishes. Instead of having the power to name the executor of your estate, during intestate probate, the court will require that a Personal Representative is determined from the surviving family members according to a priority spelled out in your state’s laws.

This process can turn contentious if more than one person wants to take on the responsibility. If probate proceedings seem inevitable, whether you have a valid last will or not, how do you avoid probate? The answer is using a revocable living trust.

WHY YOU SHOULD CONSIDER A TRUST

In most cases, you will want to use a revocable living trust to manage the bulk of your estate instead of relying on a last will. A revocable living trust is a legal contract that can be used to hold title to numerous assets and can be amended or revoked by the trustor during their lifetime.

Trusts can be used to hold real estate, bank accounts, shares of businesses, cryptocurrencies, and other financial instruments. A trust can be settled by an individual or together by a couple, known as a Joint Revocable Trusts.

While a last will is an important document, having a revocable living trust can give you more control over what happens to your assets after passing away. It can also provide the beneficiaries with asset protection if their inheritance remains in trust.

It is common for trusts to state that beneficiaries will receive their inheritance in staggered sums after age of thirty to protect children from potential mishaps during their youth, although there are compelling reasons to keep assets in trust for a child's entire lifetime.

A well-drafted trust also helps prepare your family or other trusted contact persons to manage the trust assets in the event of incapacity. The terms of the trust include naming a successor trustee who will administer the trust after you are incapacitated or pass away.

The successor trustee can be a responsible family member or a professional fiduciary. This means you will know who will be in charge of the trust assets.

More importantly, assets transferred through a trust pass outside of probate and without the involvement of a court. This makes revocable living trusts robust estate planning solutions that can benefit almost all families.

ESTATE PLANNING AND ASSET PROTECTION

During the grantor's lifetime, a revocable living trust can be amended almost at any point and for any reason, as it is considered a mere extension of the person who created the trust. Because of this, revocable living trusts do not provide any asset protection until they become irrevocable. When the grantor passes away, a revocable living trust automatically becomes irrevocable.

A revocable living trust can also become irrevocable if the trustor decides to amend the trust to make it so. At that point, it becomes a more rigid structure that is considered an independent legal entity, and it is harder to amend the terms of the trust.

When assets are kept in an irrevocable trust, the beneficiaries can enjoy asset protection on their trust assets. If an independent third party manages the trust, the beneficiaries have no direct control of the trust assets and thus cannot be forced to distribute assets out of the trust in case of a lawsuit. Your estate plan can gain additional benefits for your future heirs through revocable and irrevocable trusts.

MAKING A LIST OF YOUR ASSETS AND LIABILITIES

In addition to your signed estate planning documents, having a list of your assets can let your beneficiaries know the extent and details of your estate after you pass away. Property titles and deeds can make it easier for your trustee or executor to administer your estate.

Bank and financial statements can help beneficiaries locate where funds are held and determine if any accounts were held individually, in trust, or if accounts had transfer-on-death instructions. Financial institutions are often reluctant to share any information with third parties until they have received a death certificate, which can take time.

If you created a revocable living trust, the property documents allow the trustee to verify the assets transferred to the trust. The mortgage and other loan documents can help clarify what payments should be paid on your behalf or behalf of your estate and avoid having to deal with impending foreclosure proceedings, repossessed assets, or unpaid property tax bills. If the estate needs to go through probate, statements can help identify potential creditors.

You should store these documents safely accessible to your loved ones. If you plan on using a safe deposit box, ensure someone else knows of it and can access it without you being present. Similarly, if you are using a safe in your home, ensure someone knows where it is and how to open it.

In short, while not technically part of your estate plan, these documents can undoubtedly make a significant difference to your beneficiaries, but only if they can access and locate them when the time comes.

WHY SHOULD YOU GET AN ATTORNEY?

While there are numerous resources you can rely on to draft your estate plan, there is no substitute for working with an experienced estate planning law firm. The estate planning process requires knowledge of your assets, retirement plans, family situation, personal goals, etc.

Too often, estate planning professionals face common mistakes people make when drafting their documents. People often fail to remember that estate planning documents need to be easily understood by the surviving family members and should also be unambiguous to the judges and attorneys who might be responsible for interpreting them in the future.

An experienced estate planning attorney can work with you to develop a strategy and identify potential gaps in your estate plan. As your situation changes over the years, having an attorney you can consult can help you make informed decisions regarding whether your estate plan needs any changes or updates.

Finally, an estate planning attorney can keep you updated if any legal changes in the relevant legislation might alter your plans.

what next?

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

Call at 720-821-7604 to schedule an "Attorney Evaluation Session" to determine whether our firm would fit your needs well. Or fill out our contact form to have us call you.
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.
Learn more by reading our blog or watching our videos .

Most Common Causes of Inheritance Disputes in Colorado

Mon, 10 Apr 2023 18:05:00 GMT

Most Common Causes of Inheritance Disputes in Colorado

Losing a loved one is often difficult enough, but when disputes arise over the contents of their estate, the grieving process can become even more complicated. In Colorado, a variety of inheritance disputes have the potential to arise, from the validity of a will to the distribution of assets. Understanding the most common causes of inheritance disputes in Colorado can help you be better prepared for the future, ensuring that your family can avoid potentially costly and time-consuming legal battles.

Lack of a Valid Will

One of the primary causes of inheritance disputes in Colorado is the absence of a valid will. When a person dies without a will, their assets will be distributed according to the state's intestacy laws. This can result in family members contesting the distribution of assets, particularly if they believe that they were unfairly left out. To prevent disputes from arising after your death, it's important to work with an experienced estate planning attorney to create a valid will that accurately reflects your wishes.

Disputes over Beneficiary Designations

Another common cause of inheritance disputes in Colorado is disagreements over beneficiary designations. For example, if a life insurance policy or retirement plan names one person as the beneficiary, but a family member believes that they were wrongly excluded or that the beneficiary designation was made under duress, disputes can arise. Additionally, if the named beneficiary has since passed away, there may be questions over who should receive the assets.

Blended Families

Blended families can often lead to inheritance disputes, particularly when there are children from previous marriages. In these cases, the surviving spouse may be entitled to a portion of the assets, but children from previous marriages may dispute this arrangement. Couples in blended families need to ensure that their estate plan clearly reflects their wishes, and that they work with an estate planning attorney to create a plan that is legally enforceable.

Undue Influence

In some cases, family members or others may exert undue influence over a person's estate plan, leading to disputes after their death. If a will appears to have been created under duress or if there are concerns that the deceased was not of sound mind when they created the will, family members can contest the will's validity. These disputes can be particularly complex, as they often involve testimony from experts, physicians and others.

Ambiguities in Language

Finally, inheritances disputes can arise when estate planning documents contain ambiguities or unclear language. This may occur when a person creates their own will or trusts, with the intention of saving money on legal fees. However, if the language in these documents is unclear, it can lead to disputes between family members and legal battles that can last for years.

In the end, inheritance disputes can be both emotionally and financially draining for all involved. To avoid these problems, it is important for Colorado residents to work with an experienced estate planning attorney who can help them create an effective estate plan, clearly outlining their final wishes. The McKenzie Law Firm, LLC, can help you navigate the complexities of Colorado estate planning law and ensure that your assets are distributed according to your wishes. Don't wait until it's too late--contact us today to start planning for the future.

Disclaiming an Inheritance. Why and How Would I Do It?

Sat, 11 Mar 2023 22:23:00 GMT

Believe it or not, there are circumstances in which you may not want to receive an inheritance. At The McKenzie Law Firm, we understand the complexities that come with inheriting assets. One option that some individuals may consider is disclaiming an inheritance. In this post, we will provide a comprehensive guide on how to disclaim an inheritance, the benefits and drawbacks of doing so, and the legal implications involved.

What does it mean to disclaim an inheritance?

Disclaiming an inheritance is when a potential heir renounces their right to inherit any assets or property left to them. This decision must be made before the heir takes any possession or control of the inheritance. There are no reversals. If you have already received the asset, you cannot give it back to the estate and disclaim it. Even receipt of indirect benefits, such as directing the estate's executor as to who should receive the asset instead of you, can take away your option to disclaim. On the other hand, all refusals are final, so it is essential to weigh the consequences before taking any action.

Benefits of disclaiming an inheritance

There are several benefits to disclaiming an inheritance. One of the most significant benefits is avoiding any potential tax liabilities associated with the inherited assets. Depending on the value of the inheritance and the individual's financial situation, the tax burden could be significant. If you have a taxable estate, for example, the receipt of additional assets will result in taxes that may not have to be paid if they go to a beneficiary who does not have a taxable estate. Another benefit is that disclaiming an inheritance could help protect the individual's eligibility for government benefits. Certain government programs have income and asset limits, and inheriting assets could push an individual above those limits, making them ineligible for the benefits they need.

drawbacks of disclaiming an inheritance

Although there are benefits to disclaiming an inheritance, there are also drawbacks to consider. One significant drawback is that the individual would be giving up any control over the inherited assets. Once the inheritance is disclaimed, the assets would pass to the next eligible heir, as determined by the laws of intestacy. This means that the individual would not have any say in how the assets are distributed or used.
Additionally, if the individual who disclaims the inheritance is married, the inheritance may be considered marital property in some states. This means that the inheritance would be subject to division in the event of a divorce.

how to disclaim an inheritance

If you decide to disclaim an inheritance, there are specific steps you must follow to ensure that the process is legally valid. First, the disclaimer must be in writing and signed by the potential heir. The disclaimer must also be delivered to the executor of the estate or the trustee in charge of the assets.
As noted above, it is essential to note that the disclaimer must be made before the individual takes any control or possession of the inherited assets. If the individual has already taken possession of the assets, it is too late to disclaim the inheritance.

conclusion

Disclaiming an inheritance is a significant decision that should not be taken lightly. It is important to weigh the benefits and drawbacks carefully and consider the legal implications involved. If you are considering disclaiming an inheritance, it is always a good idea to consult with an experienced estate planning attorney to ensure that you understand your options fully.

what next?

If you are administering or inheriting from an estate and think you might benefit from , you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about 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.
Learn more by reading our blog or watching our videos .

Estate Planning: Trusts vs Wills in Colorado

Wed, 08 Mar 2023 01:07:00 GMT

Estate Planning: Trusts vs Wills in Colorado

When it comes to estate planning, there are several different legal instruments that you can use to protect your assets and provide for your loved ones. Two of the most common types of estate planning tools are trusts and wills. But what are the differences between the two? How does a will work? How does a trust work? What type of assets can I include in my estate plan in Colorado? Let's take a look.

How Does a Will Work?

A will is a legally binding document that allows you to determine how your property and possessions should be distributed upon your death. This includes items such as cash, real estate, investments, personal belongings, and even digital assets like online accounts or cryptocurrency. Your will also outlines who should serve as your executor—the person responsible for carrying out the wishes laid out in the document—and who should receive guardianship of any minor children in your care.

How Does a Trust Work?

A trust is similar to a will in that it allows you to provide directions on how you want your property and possessions distributed upon your death. However, unlike a will, which only goes into effect upon your death, a trust goes into effect immediately upon its creation—allowing you to manage certain assets while you're still alive if needed. A trust also offers greater privacy than a will because it doesn't have to go through probate court like a will does (which means all of its contents become public record). Additionally, since trusts don't need to be probated by the court system they usually save time and money when compared with managing an estate using just a will.

What Type Of Assets Can I Include In My Estate Plan?

The type of assets that you can include in your estate plan depends on where you live and whether or not those assets meet certain eligibility requirements (such as real estate). Generally speaking though, most people can include items such as cash savings, investments/securities/stocks/bonds/mutual funds, real estate holdings, vehicles (cars/boats/planes), artwork/antiques/jewelry/furniture, life insurance policies/annuities contracts/IRAs/401ks , business interests (sole proprietorships or partnerships), digital assets (websites domain names) social media accounts (Facebook Instagram etc.), cryptocurrency (Bitcoin Ethereum etc.), copyrights patents trademarks royalty agreements intellectual property rights etc., charitable gifts charitable organizations donations charities etc., pets (dogs cats horses etc.). It's important to note though that laws vary from state-to-state so it's best to consult with an experienced attorney when creating an estate plan.

Creating an effective estate plan is essential for protecting yourself and providing for loved ones after death or incapacitation. When designing yours it’s important to understand the difference between trusts and wills; each has advantages over the other depending on the situation at hand. Additionally, depending on where you live there may be certain financial restrictions regarding what types of assets can be included in these plans so it’s important to speak with an experienced attorney before drafting either document. Doing so can ensure that all of your wishes are carried out exactly as intended whether now or after passing away. By understanding how trusts and wills work in Colorado residents can make sure their estates are managed efficiently and effectively regardless of circumstances.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Have Fun With Your Estate Plan!

Mon, 06 Mar 2023 04:25:00 GMT

transcript

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An Old Estate Plan Is Worse Than No Estate Plan

Sun, 05 Mar 2023 01:13:00 GMT

Transcript

Hey, everyone. I'm Dan McKenzie, with The McKenzie Law Firm. We are an estate planning, estate administration, and small business counsel law firm in the Denver, Colorado area. And I thought I'd make a video about an issue that we're running into lately. It might just be coincidence, but I think it actually is something that is out there for a lot of people, which is that they've got old estate plans. They've got estate plans that are sometimes 20 or more years old. We've got one right now that came in that is actually more than 30 years old and it's still in effect. It is still the trust. That will that they did at that time as the will.

And so, you know, some of these documents, the will especially, they're in effect until you actually revoke them. So you can actually end up with some very old documents. But we get a lot of people in here who have kids, you know, who are in their 20s or even older. And the parents say,"Yeah, we did a will and it was, you know, appointed guardians for them when they were, you know, under five years old." So very old documents. And you might think, "Well, you know, documents. At one point they made sense and it probably isn't too far out of line with what I'd want anyway. And it's OK that they're a little bit old. At least I did it at one point. So I'll get around to getting it up to date at some point."

Out of date documents can cause big problems

But we're really running into some very big problems that are because the documents are old. And yeah, there's a few reasons for that, obviously. One is that circumstances change within families, right? There might be more members, there might be fewer members, people might have gotten married, people might have gotten divorced.

There can be births, there can be deaths. So just having a document that was designed for a totally different family structure obviously can have some bad effects if people are accidentally getting left out or getting too much or whatever else. But people really underestimate how often the law changes and especially around taxes. I mean, as you probably are aware, every time we get a new administration in here and the Presidency, the approach to taxes can change. Quite dramatically.

And then retirement accounts, that is usually people's first or second biggest asset depending on how much equity they have in their home. And so it is really important. And just in the last, oh, five years, less than that even, retirement accounts are taxed. But even beyond that, there's the estate tax. So we get a lot of people in here asking, well, I really want to avoid the estate tax. Well, right now the estate tax really doesn't affect.

Many people, right, you have to have, as I'm recording this video, almost 13 million bucks, Even having a state tax issue, married couples can combine so they get almost $26 million to give away before they have estate tax issue. Well, the problem with those older plans that I mentioned some going back 20 or 30 years is back then everyone had the state tax problem. Back in 2000, you could only give away $600,000 before you started having an estate tax problem. So obviously, you know even adjusting for inflation, a lot more people had problems at $600,000 than they do at $13 million.

Creating new problems by avoiding problems that no longer exist

So there's just a lot of planning done around avoiding estate tax back then, which is kind of irrelevant now. And if it was just irrelevant, that would be great. But people did things like putting stuff into trust for kids, or transferring assets into other people's names, or putting one spouse on one thing and one spouse on the other thing, doing all kinds of things that would have other consequences. But it was worth it back then.

Because, uh, the estate tax took such a bite. I think it was, you know, $600,000 and then everything above that was taxed at 55% or something like that. And they had state taxes too. It could really get oppressive, right? So it was worth it to go through some hassle, potentially have probates going on for spouses and all kinds of stuff that just doesn't make any sense anymore because we don't have that issue.

So we've really seen some stuff where it has really caused some problems and families that have step kids or again, just, you know, kids that are now 20 or 30 years older than they were when we did the plan last time. So if you have an old plan in place, do not assume that it actually is OK and it's just, you know, you'll get around to it when you get around to it, it might cause problems that you would not have if you had no plan at all because at least with no plan at all, you you'd be an intestate estate and you go by the state law as well. Those are not totally out of whack with who you know, where state estate taxes are and the other issues that I just discussed.

So in some circumstances I would tell people, "Jeez, just get rid of that plan." And we've seen that where people will actually come in and we'll actually just, you know, "Yes, we can get this plan done within maybe the next few weeks or so. In the meantime, let's revoke the plan that you currently have. So you have no plan and we're just going to run the risk and hope you know we're going to get through those next few weeks."

Yeah, there can be circumstances where no plan is better than your old plan. And so just be aware of that. And if you have a plan that is, you know, more than five years old, you should definitely look at it. If it's more than 10 years old, the chances that there are no updates needed is very minimal. And if we get much further than that, it probably is getting increasingly urgent that you really look at it and start coming up with a plan that makes more sense for today's laws, your family today, and the dynamics that you're dealing with now.

So hope that helps and hope that kind of lights a fire. If you've been kind of thinking, you know, I gotta get back to that and think about that again. So again, I'm Dan McKenzie of The McKenzie law firm. We're in Denver, Colorado. Our phone number is 303-578-2745. You can find us at themckenziefirm.com. If we could be helpful on helping you update a plan, we would be happy to have that conversation. So feel free to contact us. I hope this was helpful. Thanks.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

How Often Should An Executor Communicate With Beneficiaries

Sun, 12 Feb 2023 00:18:00 GMT

Transcript

Hey everyone, Dan McKenzie here with The McKenzie Law Firm. We are an estate planning, estate administration, and small business counsel law firm in the Denver, Colorado area. And I wanted to make a video about a very common question we get about estate administrations. That means probates and sometimes trust administrations. And that question is: how often should the person who is administering the estate communicate with the estates beneficiaries? So the person who is administering the estate, that could be the executor, the personal representative in a probate process or the trustee of a trust. And I just thought I'd go through a few things here. You know, we always start on questions like this with the statute and what does it require?

You can see that there are a number of provisions here dividing things up and explaining the duties. And down here is a " Duties of and Powers of Personal Representatives ." That's probably a good spot to start. And if we go down, you'll see in this section a number of things related to what has to be told to beneficiaries of a probate estate. And so here we see that the " Duty of Personal Representative - Information Heirs and Devisees ." And so in Colorado, when a probate process is started, within 30 days, there is information that is supposed to be sent to them about that probate case.

So here's a long list of all the items that need to be included, and you can see down below it says if they fail to give this, that is viewed as a breach of duty to the persons concerned. So this is kind of a big deal. If you've seen this, it's a document called the " Information of Appointment ." It honestly helpful, obviously, for them to know what's going on, but it doesn't contain a bunch of specific information about the estate.

So I'm in Colorado. Your state certainly has a probate code too. If you Google your state's name followed by probate code, you'll probably find it, and it'll be something similar to this. Colorado uses what's called the Uniform Probate Code, which is it's uniform. So some states have adopted that, quite a few actually. And so you might also be in a state that has a very similar statute to this one. But that should be really your first point of reference when you're trying to figure out what you need to do. And so if we go here, I'm looking at the Colorado probate code.

That really starts with the next step. So if we go back here and we see " Duty of Personal Representative - Inventory and Appraisement ."

You can see that within three months in Colorado, after an appointment, a personal representative is supposed to create an inventory for the probate estate , listing all the assets with reasonable detail and indicating fair market value as of the date of the decedent's death and any encumbrances that may exist on that item. So that is kind of the first duty is to provide this inventory. And so you get 3 months because sometimes it does take a while to actually track down assets of the estate.

And you know, figure out what you got and then after that, there's a lot less clarity, frankly, in the statute about exactly what needs to happen. If we go back here and actually go back another step, we'll get down to " Closing Estates ." How do you close it? Here's a list of things that need to be done. And if we go here, you can see that in Colorado, a lot of estates are just closed by the personal representative signing a what's called a sworn statement confirming that they've done everything they need to do. And you can see down here that among the things that they need to provide is a copy of an account in writing of the administration. And that just really is a chronological list. I probably have that open somewhere, but if you actually Google again, probate accounting or something like that. In Colorado we have forms for this and it's not fancy. I describe it as basically a checkbook register and a chronological list of all money that went in and went out to the estate over the time.

And so really, that's the answer to the question, "What do you have to provide?" It is in the statute. And like I say, after those first couple of steps it gets pretty hazy as to how often a personal representative needs to do anything as far as disclosing information. They at least have to do it at the end.

So knowing that, knowing that eventually you are going to have to account, my usual advice to clients is, you know, let's do it more often. I think the rule of thumb is generally if the administration is taking more than a year, you should at least do an interim accounting, which is obviously different than a final accounting, just telling people, here's what I've done so far. So maybe at least annually. And the reason that that's the rule of thumb is that if you have a supervised estate, that's kind of what happens if, for some reason, the court is supervising the personal representative. They are supposed to account at least once a year.So that's kind of your baseline rule. But there's nothing saying you can't account more.

You account every time you spend money, or you receive money. You could actually send out an alert, I guess, to the beneficiaries. But that probably gets to be a little too much, right? But you could consider, I've had some personal representatives who basically, they have an estate account or a trust account and they're running all the transactions through, which is a really good idea because it keeps you organized, and they just send that bank statement out every month when they get it. And again, they don't have to. They're not legally required to do that. So why would they do that?

Given that you know that, eventually, you are going to have to provide the information, it's probably easier for you and for everybody else involved in this thing if you uncover issues sooner than the end, right? You'd rather know earlier on if somebody's going to have a problem with something. So maybe every month is a little excessive too. But I can't say it's a bad idea. You know, I think disclosure, I usually tell people to err on the side of disclosure because, again, you know it's easier to fix something if the transaction is relatively recent and somebody does, make a good objection then if it's a year later and you're trying to close the estate. Now somebody is objecting to something you did nine months ago, that's going to be harder to correct.

Of course, you providing an interim accounting does not necessarily get you off the hook if there are errors on it. Yyou might be tempted to say if somebody does complain down the road, like, "Hey, I gave you that accounting six months ago. You never said anything." You still have to do the right thing. Even if nobody's really paying attention. But I I think it would be a stronger case if you are the personal representative and you have been telling people or respond to an objection and you're able to tell the court, "Look, I've been telling these people the whole time, here's what happened. They knew about this transaction for months and never said anything." So that's probably a stronger case for you.

If you are the beneficiary of estate, sometimes this can be frustrating, kind of the lack of details on you know or the lack of responsibilities for what the personal representative has to tell you. There are some provisions in here about being able to request a status, and if you are a personal representative, you are supposed to respond to reasonable requests. So again, if somebody is calling you every week and saying, "Hey, where's my money? Where's my money? Tell me what you're doing." You know, that probably is not reasonable,

But if it's been some number of months and they haven't really heard anything, and they request information, you are supposed to provide it. As the personal representative, you have a duty to disclose information, right? So again, these are listed as duties . You are a fiduciary for these people. You're supposed to be telling them what's going on. Again, you'd rather catch mistakes earlier than later, or find out about disputes earlier than later. But if you are the beneficiary of an estate, there are some provisions in here where you can submit a request to get a status update.

And the court might require that if it seems like it's reasonable and you know, you're not being overbearing about it. So a court actually will say, "OK, now an order has been entered. You have to provide information beneficiary." So there are some ways to get things you know, because sometimes estates can take years to administer, depending on what's in them.

So you don't want to wait years to find out what's going on. And even one year might feel like a really long time. So if there's some reason that you need to find out and the personal representative is not really sharing the information with you, there are ways to submit a request to the court to order them to do so. So hope that is helpful. If you are administering a state or a trust in the Colorado area, we would be happy to have a conversation with you.

If you feel like you're not sure about information to provide, our phone number here is 303-578-2745. Again, we are The McKenzie Law Firm. Our website is themckenziefirm.com . Thanks so much. I hope this is helpful.

what next?

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

Give us a call at 720-821-7604 to schedule a one-on-one meeting with an attorney. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Understanding Colorado's Trust Decanting Statute

Fri, 10 Feb 2023 04:20:00 GMT

Trust decanting is a powerful tool for estate planners and beneficiaries alike. It allows the creator of a trust (also known as the "grantor," the "settlor," the "trustor," or the "trustmaker") to modify the terms of the trust in order to better align with his or her goals and the needs of the beneficiaries. With the passage of Colorado's trust decanting statute in 2016, decanting is more accessible and flexible than ever before.

What is Trust Decanting?

Trust decanting is the process of pouring the assets of an old trust into a new trust. The new trust may have different terms, a different trustee, or a different distribution schedule than the old trust. This allows the grantor to make changes to the trust that better reflect their goals, the needs of the beneficiaries, or changes in the law.

The Benefits of Trust Decanting

Trust decanting offers several benefits to estate planners and beneficiaries. First, it allows the grantor to modify the terms of the trust to better align with their goals and the needs of the beneficiaries. For example, the grantor may want to change the age at which a beneficiary begins receiving distributions or change the distribution schedule to better suit the beneficiary's needs.
Second, decanting allows the grantor to take advantage of changes in the law. For example, if a new tax law is passed that would increase the tax liability of the trust, the grantor may decant the trust into a new trust that is structured to minimize the tax liability.
Finally, decanting can be used to correct errors or omissions in the original trust. For example, if the grantor forgot to include a provision for a beneficiary, the grantor can decant the trust into a new trust that includes that provision.

Colorado's Trust Decanting Statute

Colorado's trust decanting statute, found in C.R.S. § 15-16-901 et seq . , provides a flexible and streamlined process for decanting trusts in Colorado. The statute allows the grantor or the trustee to decant a trust, provided that the new trust complies with the requirements of the statute.
One of the key features of the new statute is that it allows the grantor or trustee to decant a trust without court approval. This eliminates the time and expense associated with obtaining court approval and allows the grantor or trustee to decant the trust more quickly and efficiently.
In addition, the new statute allows the grantor or trustee to decant a trust even if the original trust prohibits decanting. This provides greater flexibility to the grantor and the trustee and allows them to make changes to the trust even if the original trust was written in a way that does not allow for changes.

How to Decant a Trust Under the Statute

To decant a trust under the statute, the grantor or trustee must follow the following steps:

Determine whether the original trust can be decanted.
Prepare a new trust agreement that complies with the requirements of the statute.
Transfer the assets from the old trust to the new trust.
Notify the beneficiaries of the decanting.

It is important to note that the grantor or trustee must ensure that the new trust complies with the requirements of the statute and that the decanting does not violate any other laws or the terms of the original trust.

Conclusion

Colorado's trust decanting statute provides a flexible and streamlined process for decanting trusts in Colorado. It allows the grantor or trustee to decant a trust without court approval and provides greater flexibility to make changes to the trust. If you are considering decanting a trust, it is worth a close look.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What to Know About Contesting a Will in Colorado

Thu, 09 Feb 2023 21:25:00 GMT

What to Know About Contesting a Will in Colorado

Contesting a will is a serious legal matter that should not be taken lightly. If you believe that you were unfairly left out of an inheritance or disinherited altogether, it is important to know your rights and how the legal process works in Colorado. At The McKenzie Law Firm, LLC, we understand this complex process, and are here to help. Let’s take a look at what you need to know about contesting a will in Colorado.

Grounds for Contesting a Will

The most common grounds for contesting a will in Colorado include mental incapacity, undue influence, and lack of capacity. Mental incapacity means that when the will was signed, the testator (person who created the will) did not have sufficient mental competency to fully understand what he or she was signing. This can be hard to prove since mental competency can vary from day-to-day. Undue influence means that another person exerted pressure on the testator so much so that they changed the contents of their will for their own benefit—not necessarily for the benefit of the testator. Lack of capacity is similar but slightly different in that it refers to whether or not the testator had all of the necessary information needed in order to make informed decisions about their estate plan.

What You Can Expect From The Process

Contesting a will can be a long and drawn out process with no guarantees as to outcome. When you file your petition with the court, expect various hearings where evidence and testimony are presented by both parties before any decision is made regarding contested wills or estates. You may also see motions filed by either party asking for certain pieces of information or documents related to the case prior to any trial proceeding taking place. It is important to remember throughout these proceedings that everything must be done according to Colorado law in order for any judgment or decision handed down by the court system to be valid and enforceable in this state.

Contesting a will can be an intimidating legal process with no guarantee as to outcome; therefore, it is important to have experienced legal representation on your side during these proceedings. At The McKenzie Law Firm, LLC we understand this delicate process and are here ready and willing to assist those who wish to contest wills within Colorado borders. Contact us today if you have questions about contesting a will in our state!

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

One Trust for All Kids? Or Separate Trusts for Each Kid?

Wed, 18 Jan 2023 04:27:00 GMT

Transcript

Hey everyone. I'm Dan McKenzie here with the McKenzie law firm. We are an estate planning, estate administration, and small business law firm in the Denver, Colorado area. And I thought I'd make a video today answering the question that we get a lot. When people come to us for estate planning, they are usually focused on a couple of things. One of those is, "Who's getting my stuff if I pass away?" That's usually a primary area of focus. And then, "How am I getting stuff to kids?" And I thought I'd kind of focus on that second point in this video.

And a lot of times people want to leave stuff to kids in trust. There are a number of circumstances where that's almost required. Obviously, if we're leaving stuff to little kids or kids who haven't gotten to adulthood yet, you really can't leave money directly to kids who are under the age of 21 in Colorado. There's got to be an adult appointed to handle that money for them, and that's a trust. If you don't set up a trust, and money somehow is going to people under that age, a court will appoint a conservator for them.

So you would much rather set up a trust and, you know, set the terms and identify the person who's going to do that, handle that responsibility for your kids.

Obviously, even with adult kids, anybody with, you know, spending issues, substance abuse problems, in a marriage that seems maybe like it's headed for an end. Any situation where a kid just has some risk of like, you know, people coming after them for money. And frankly you know that all of us have that risk. You know, all of us can, you know, get in a situation where we could be the targets of a lawsuit at any point.

So sometimes even with very responsible. Kids who are well into adulthood have good careers, are financially stable. We still set up trusts. So at any rate, as far as structuring a trust goes, a question that we get a lot is, is it supposed to be one trust for all my kids, or is it supposed to be a separate trust for each kid? And that usually depends on the age of the kids. Actually, when we're dealing with people who have little kids, and again, that could be kids as old as high school, frankly, we usually recommend the the first option. We usually recommend setting up one trust for all the kids and the reason for that is you want your trustee to be able to handle things for your kids just like you probably do.

One trust for minor kids

Usually when people have kids who are still in grade school or high school, they're not keeping track of which kid is costing the most money. They're not running spreadsheets and trying to equalize. You know, as kids need things, they just pay for them. So I have 4 kids myself. They all have very different interests. Some of those interests are more expensive than others. They have different medical bills. They have different needs for school or for support. They eat different amounts of food. I am not keeping track of any of that.

I'm just paying for things. When a bill arrives, I pay it and I'm not really keeping track. And I think that's how most people are. So setting up one trust for all your kids gives your trustee the ability to replicate that. And our when we set up that kind of trust, you might see the term "common trust" or you might see the term "pot trust." Those are those are both terms for this kind of trust. And when we set those up we specifically tell the trustees and our documents.

Your goal at this point is not to equalize, it's just to get the kids through childhood and into adulthood.

Separate trusts for adults

When kids reach adulthood, that usually does change, actually. So you kind of get, you know, one of the benefits of setting up a trust is you get to define what adulthood means. And our kind of default definition is either the kid, your youngest kid, has reached 25 or has graduated from college. That's the point where we feel like OK, now they're not kids anymore.

As they get into adulthood, they're doing different things. They might be doing things that are very expensive. And you really do feel like if you're going to do something to help a kid out who's in adulthood, you might say, "Look, I'll do this, I got to do the same thing for your siblings." Or, you know, I am going to help, but there is going to be an accommodation for this in my will or my trust or whatever else. Like this is coming out of your part of my estate. Because again, those things can become very expensive, right? If you've got a kid who's going to graduate school, starting a business, or getting married.

Then buy a house. With all those things, sually people are feeling like, "Yeah, OK, gotta do the same thing for everyone else." So what we will typically say is once they have reached adulthood, then we do split it into separate trusts. And if one of the kids wants to do one of those things and use their trust for that purpose, and the trustee agrees and it fits in with your instructions, and they spend their money and they run out of money from their section before their siblings do, that's adulthood, right? That's how that works.

You used your trust funds on that house, or you use your trust funds to go to that Graduate School, or start that business, or whatever else. Your siblings have not and they still have money and, you know, that is how it works. So usually when we're talking about adult kids, we are talking now about separate trusts that could have different outcomes. When they're little kids, we really don't want that.

Ensuring similar treatment for kids of different ages

And the other thing about the common trust I didn't mention is it also just gives your trustee the ability to make sure that your youngest kid gets the same benefits and, you know, money for the same purposes as the older kids. So again my kids span quite a wide spectrum. My oldest kid as I'm making this video is 19 years old. My youngest kid is 9. So right now the oldest kid is in college and we are spending money on that. We want to make sure we don't spend all our money getting him through college and then his younger brother comes up and we have to tell him, like well, you know sorry. We know your older brother did receive money and his college paid for. We spent it all on him and we don't have enough money to do that for you.

So again that's another instruction of the trustee. Just make sure we're not blowing all the funds on the oldest kid and the youngest kid doesn't get the same advantages. So these, you know, these are pretty sophisticated concepts and hard to build into a willif you haven't been trained on how to do this and all that, it's not usually what we see. We don't usually see this level of nuance in like, you know, simpler online packages and stuff like that so.

If you want to have this discussion with us, we'd be happy to do it again. We're in Colorado. Our phone number is 303-578-2745, and our website is themckenziefirm.com. Thanks for watching. I hope this is helpful.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What Is A Power of Appointment?

Sun, 15 Jan 2023 17:33:00 GMT

One of the most difficult parts about planning an estate is dealing with the pressure that comes from knowing that you are putting plans in place that might affect people decades in the future, who are in circumstances that could turn out to be far different than we had expected for any number of reasons. One way to build some flexibility into your estate plan is with powers of appointment. Powers of appointment allow certain people to redirect where your estate's assets eventually go.
In the context of estate planning, a power of appointment is a legal authority granted to a person (called the "donee" or "holder" of the power) to choose the recipients of certain property or assets. The donee of a power of appointment can either be a general power of appointment or a limited power of appointment, depending on the scope of their authority.
A general power of appointment gives the donee the authority to appoint the property or assets to anyone they choose, including themselves. The donee has broad discretion to make the appointment in any way they see fit, subject to the terms of the document creating the power.
On the other hand, a limited power of appointment restricts the donee's authority to make appointments to certain designated individuals or classes of individuals. The donee cannot appoint the property or assets to themselves or to anyone outside the designated class. Limited powers of appointment are often used to ensure that the property or assets are distributed in a certain way or to achieve specific estate planning goals.
Both general powers of appointment and limited powers of appointment can be either "springing" or "durable," depending on when they take effect. A springing power of appointment takes effect only upon the occurrence of a specified event, such as the donee's death or incapacity. A durable power of appointment, on the other hand, takes effect immediately and remains in effect until it is terminated or the donee dies.

Potential Tax and Asset Protection Issues

So between limited and general powers of appointment, why would you choose one over the other? Because the donee of a general power of appointment can potentially direct the estate's assets to themselves or their creditors, the IRS treats those funds like their yours, even if you don't exercise that power in your favor. That means those funds become part of your estate and could be subject to your creditors or could create or increase an estate tax problem.

What Next?

If you are involved in the estate administration of an estate that includes a power of appointment, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about 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.
Learn more by reading our blog or watching our videos .

What to Expect When Selling Your Business

Tue, 10 Jan 2023 14:30:00 GMT

What to Expect When Selling Your Business

Business owners spend most of their time focusing on increasing the value of their business. So when the time comes to sell, getting the best price is often very important, but it's only one aspect of the transaction. You need to take specific legal steps to ensure the process goes smoothly.

Luckily, most business sales follow a well-defined set of steps, and you can enlist the help of an experienced lawyer to ensure that you and the buyer meet all requirements and legal obligations.

Here is what to expect when you sell your business.

The Six Legal Steps for Selling a Small Business

Deciding to sell your small business marks the end of your efforts to build a valuable company. However, it is only the start of the legal process. Here is what you can expect to happen after you decide to sell and start discussions with the potential buyer.

1. Initial Valuation and Declaration of Intent

The first step to selling a small business is the declaration of intent. This is normally done through a letter or advertisement in which you announce your intention to sell a business. This step begins the sales process and turns the negotiations from casual discussion into serious deal-making.

Often, a seller has already discussed the sale with potential buyers before drafting the letter of intent. However, the publishing of this declaration makes the negotiations more formal.

Basically, the letter of intent outlines the terms for the sale. Though there is room for negotiation, it is important to have a reasonable valuation in mind before starting this process.

A professional business appraisal can be worthwhile. Appraisers may find additional value in your company. While they will count assets, sales, and projections, they can also measure intangibles. For example, the expertise of employees or the efficiency of processes in the business can give the company an edge in the marketplace.

In addition to the purchase price, the letter of intent outlines other steps needed to complete the sale.

A letter of intent is not legally binding. The sale does not take place until both parties sign a legal purchase agreement. However, you cannot advertise the business or negotiate to sell it to anyone else.

The Due Diligence Process

After the initial letter of intent, you must give the buyer access to your business records. The buyer can then perform their due diligence and get a clear picture of what they are buying. They can use this information to decide whether or not to continue with the sale and negotiate a different final price, if necessary.

As the seller, you must produce financial records, including sales reports, profit and loss statements, current business contracts, loan and debt information, and other documents relating to existing business agreements and expenditures.

Depending on the type of business, the due diligence process can also include inspecting any physical sites and observing operations.

In addition to helping with decisions about the final sale, due diligence protects you from future lawsuits. Providing full access to records means the buyer has all the information necessary to make a decision about the sale. You can then prove that any errors happened because of the buyer's mistakes, not your lack of transparency.

Meeting Local and State Requirements

In addition to general steps for the sale of a business, some local and state governments have additional requirements for the sale of a company. These steps can vary from place to place. In some cities, you may need to transfer a license or permit or prove that the buyer has qualified employees to handle specific regulated tasks. You can meet these requirements at the same time as you work on the due diligence and purchase agreement phases of the process.

Again, professional legal advice can be valuable during this part of the sales process. Failure to meet local requirements can delay the sale or cause additional legal issues after the transfer of ownership.

Some industries also have financial or regulatory reporting requirements. You may need to notify the regulatory agency that gets these reports of a change in ownership.

Signing the Purchase Agreement

After the buyer has all the information they need, you can begin negotiations and write a final purchase agreement. This document sets the actual sales process in motion.

Most business owners rely on a lawyer to draft the purchase agreement because it is a legally binding document.

Purchase agreements go into great detail. They include the price and a complete list of what is being sold. It also transfers any liabilities and commitments associated with the business from the seller to the buyer.

You can also include any agreements about current employees and relationships with clients, suppliers, and other third parties.

Once both sides are happy with all the details, you and the buyer sign the purchase agreement. This step makes the sale official and sets the final phase of the transaction into motion.

Receiving Payment or Arranging Financing

The purchase agreement will include details about payment. Buyers may obtain financing, pay for the business in installments, or use cash or loans to make a one-time payment for the business. Ideally, the payments will happen smoothly and quickly. You will likely need to enlist the help of a lawyer to deal with any payment delays or issues.

Final Transfer of Ownership

The final round in the process is the actual transfer of ownership. If you have handled the previous steps correctly, the actual transfer of ownership is a formality that involves signing official documents.

Additional documents you usually have to sign at this time include the following:

A confidentiality agreement that keeps both sides from disclosing privileged information that could compromise future business dealings
A personal financial statement from the buyer that shows their ability to make the agreed-upon payments
A financing agreement that details the payment plan for the transaction
Any local or state-required registration, name change, reporting, or licensing documents

With the right type of legal advice and a methodical, step-by-step approach to the sale of your business, you can enjoy a smooth (and hopefully profitable) process.

What Is A Medical Power Of Attorney And When Do I Need One?

Tue, 20 Dec 2022 15:15:00 GMT

What Is a Medical Power of Attorney, and When Do I Need One?

If you become incapacitated, or otherwise unable to make rational choices, someone else needs to make medical decisions and care for your medical needs. A medical Power of Attorney (medical POA) is a document that allows you to name the person you trust to make these life or death decisions on your behalf.

Every adult over the age of 18 needs a medical Power of Attorney to ensure your wishes are followed. College-aged kids aren’t under their parents guardianship anymore, and have the right to name the person they trust to make health care decisions. Even healthy adults may experience an unexpected illness or have an accident.

Who Can Create a Medical Power of Attorney Document?

You need to be a competent adult to draft a power of attorney. Be sure to finalize this important document before the onset of mental health issues like dementia or Alzheimer’s, as these conditions may impact validity.

Free Medical Powers of Attorney are available online, and most doctor’s offices and hospitals have a version they provide to new patients. Powers of Attorney signed at a doctor’s office may or may not be effective in other situations – be sure to sign the right kind of Power of Attorney to achieve your specific goals.

Who Can You Name in Your Medical POA?

The person who signs a POA is the principal. The person named in the document who will make decisions is known as the agent, agent for the principal, or attorney-in-fact. Agents must be an adult (18 years or older) and they have the right to disclaim their appointment if they do not feel capable of serving at the time you are incapacitated.

Despite names like attorney-in-fact, the person you name as an agent in your medical POA is not an attorney and will not have unlimited rights to make all decisions for you. Other documents can impact the power of the Agent in a Power of Attorney. A DNR, for instance, or directive in a Living Will, may supersede the decision of an Agent in some circumstances. A trained attorney can guide you through these documents to ensure no discrepancies or conflicts emerge.

Most people name a family member as their medical POA. This person could be an adult child, a parent, a trusted sibling, or another relative. You can also name someone else if you feel that a family member would not be able to make objective decisions or would not follow your wishes.

What Qualifications Does an Agent Need?

You should make sure your agent has the qualities necessary to handle the job:

Availability. First of all, you should choose someone who is able to be there when needed. Someone may have family or professional commitments that could make it difficult for them to come to a hospital or respond to requests for decisions from physicians.

Emotional stability. Your agent should be able to make difficult decisions and follow your wishes. If they are grief-stricken by the situation, they might be unwilling to make the necessary choices or think clearly about following your desires.

Care. The agent should care enough about you and your wishes to make the necessary decisions with proper thought and attentiveness. This is why many people choose family members.

You need to ask the person to be your agent and ensure they understand the nature of the responsibilities before you name them in your medical POA.

When Do You Need a Medical POA?

A medical power of attorney is often associated with decisions made after a catastrophic accident or a life-changing health event, such as a heart attack or stroke. It could also come into force if you are in a coma, sedated, or intubated. Even routine events, such as childbirth, planned surgery, or medical tests may result in a situation where you cannot make decisions.

A medical POA can also cover conditions like Alzheimer's disease or dementia. The principal could still be fully conscious while suffering from one of these conditions, but because they cannot make rational, informed decisions, they need their Agent’s help.

Finally, your agent could be called upon to make decisions when you are under anesthesia during surgery. It can be a good idea to create a medical POA before surgery, even if you are undergoing a routine procedure.

What Decisions Does the agent under a Medical POA Make?

Your chosen agent may have questions about the type of decisions they could have to make:

Type of care. Doctors may ask your agent to make decisions about surgeries, treatments, medications, and home health services.

Living situation. An agent could have to decide about putting the principal in a nursing home, assisted-living facility, or memory care unit.

Provider and Location. The attorney-in-fact in a medical POA could need to decide which physicians you see and where you receive treatment.

End-of-life care. An agent could decide on the measures doctors take to keep you alive if you lack a living will.

You can also use a living will for end-of-life wishes. A living will outlines your choices in relation to the measures physicians can take to keep you alive. For example, you can use a living will to state that you do not want to be resuscitated if there is no chance of recovery.

How to Create a Medical POA in Centennial, Colorado

The steps you need to create a medical power of attorney document depend on where you live. States can have different rules, but all follow a similar process:

Choose an agent. Once you have selected someone who you think has the necessary qualities, you need to ask them if they are willing to handle the responsibility.

Create the document. Most states have online forms that you can download. Retirement homes, hospitals, skilled nursing facilities, and elder care providers may also provide Medical Powers of Attorney. Be sure whatever forms you use come with complete instructions, or use a qualified attorney to walk you through each decision. You don’t want to put documents in place that aren’t properly filled out or worse, contradict your wishes as stated elsewhere. .

Notarize the document. Most states require that you sign the document in the presence of a notary public. Others may require one or two witnesses to your signature and capacity to make the decisions. One of the most common mistakes people make is in the incorrect execution of the document, so be sure to have it supervised by someone who knows how to ensure the document is legally binding.

Secure copies. You can give copies to your agent and successor Agents so they are ready to be accessed in an emergency. If you do this, be sure to keep a list of who has a copy and be careful that if you sign new documents in the future, the old ones are destroyed. You should keep the original with your other estate planning documents, such as your Will. Online storage, if it is protected and accessible by your Agent, can be a great solution.

You should always keep your medical POA up to date. If your Agent moves, your relationship changes, or they themselves become incapacitated, you will need to choose a new Agent and update your medical POA.

Contact our law offices in Centennial, Colorado if you would like our professional assistance in creating a medical power of attorney or other incapacity documents. We would be happy to help you through this process.

By The Time You Need Asset Protection, It's Too Late

Sat, 17 Dec 2022 18:52:00 GMT

I woke up to two news stories this morning about famous people suffering the worst consequence possible for improper attempts to protect their assets.
The first story was about all-time great tennis player Boris Becker being released from prison after serving 8 months of a two and a half year sentence. Becker’s prison sentence arose out of his effort to hide assets after being declared bankrupt as a result of a large unpaid loan against a property that he owned in Mallorca, Spain.
Although bankruptcy is an experience that most of us hope desperately to avoid, it actually is a protection for you. It wipes away your debts. But in exchange for that release, you are agreeing to give up control of your assets to a bankruptcy trustee who determines who gets what. A critical part of this deal is full disclosure of all assets. Attempting to gain the benefits of bankruptcy without telling your bankruptcy trustee about certain assets can be a felony, as Mr. Becker learned the hard way.
The other asset protection story in my feed concerned reality TV stars Todd and Julie Chrisley, who were sentenced to 12 and 7 year prison sentences , respectively, also arising out of an attempt to hide money from a bankruptcy and income from the IRS.
We have a number of clients ask us about both asset protection and tax minimization. There is nothing inherently wrong about doing either. Most of us take at least a few steps to lower our tax bills and to protect our assets from being lost to lawsuits, divorce, or other unexpected financial disasters.

But in the wrong circumstances, this kind of planning not only won’t work, but could be a crime! By “wrong circumstances,” I am referring to situations where someone retitles assets, or tries to get rid of them by giving them away to someone close to them, quickly because a problem has already arisen. There can be lots of reasons to move assets out of your name, but doing so for the sole purpose of avoiding creditors can be “fraudulent conveyance.” Your best outcome in a fraudulent conveyance situation is that the transaction gets reversed and the assets get “clawed back.” The worst outcome is a criminal conviction.

when is it too late?

Determining when you know you have creditors, and asset protection has crossed over from prudent planning to potential crime, can be more difficult than you might think. Let’s consider the sequence of events that take place when you get in a car accident:

You get in the accident.
You realize there might be property damage or injuries.
The police file a report and maybe issue you a ticket.
You get notified that the other driver has made an insurance claim.
You receive a demand letter from a lawyer.
A lawsuit is filed against you.
You lose the lawsuit and have a judgment entered against you.

When, in that sequence of events, should you have reasonably become aware that you might have someone coming after you for money? Arguably, it was the moment you got in the accident, and taking steps to get assets out of your name even immediately after that, before any of the other events happen, could draw suspicion, if not constitute a crime. As you progress through that sequence of events, it only gets more and more suspicious, and more and more likely to be criminal. There is a similar progression, from “maybe” to “definitely happening,” for an impending divorce, a messy business breakup, a contract dispute, etc.
Taking steps to protect your assets is like buying insurance. Once you need it, it’s too late. You can’t buy insurance after your kitchen has caught fire, and you can’t move assets around after you have become aware that someone might be coming after you for money. The best time to consider asset protection is when you are least motivated to do it – when no problems seem to be on the horizon. Well before that if possible.
Even if started before problems arise, your chance of successfully proving that an asset protection structure was in place for reasons other than evading creditors is a lot more likely to hold up if it has been in place for years once a problem does arise, than if it was just implemented. Going back to our car accident example, even though you had no idea you were going to be in a car accident, having moved assets into asset protection trusts or business structures the day beforehand just doesn’t look good, and it is easier for a judge to feel okay about undoing it. Asset protection strategies are much likelier to work as intended after they been in place for years.
Supposedly, there is a Chinese proverb about how the best time to plant a tree was 20 years ago, but the second best time is now. That wisdom applies to asset protection too. If you find yourself tempted to start taking steps after a problem has already arisen, remember My. Becker and the Chrisleys.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What the FTX Scandal Can Teach Us About Trusts

Sat, 10 Dec 2022 22:26:00 GMT

Depending on how plugged into the world of crypto you are, you may have heard a lot about the recent collapse of a company called FTX. FTX provided an exchange market where people who wanted to buy and sell crypto could connect with one another. FTX’s customers gave it money for two reasons: (1) to put into the customer’s account for trading with other FTX customers; and (2) to pay FTX’s fee for providing this exchange service.

O.P.M. -- other people's money

The critical distinction to understand is that the money in the first category was not FTX’s. Yes, its customers had given that money to them. Yes, that money was held in an account owned by FTX. But FTX was merely holding it for the customers. It was not FTX’s. So when FTX “borrowed” that money without taking the customers and used it to make speculative investments in other cryptocurrencies via its Alameda Research entity, it was stealing money. From a legal perspective, what they did was exactly the same as if they had physically broken into their customers banks and stolen money out of their accounts. This kind of arrangement – where someone can steal money that is under their control – is more common than you might think. A CEO of a company, for example, is in the same situation. They have control of the company’s money. They decide where it gets stored and how it gets spent. But if they use that money for any purpose other than furthering the company’s interests, they are at least breaching their fiduciary duty to put the company’s owner’s interests first. If they use the company’s money for their own interests, now we are starting to engage in something that looks like theft. There have been numerous CEOs over the years who have gone to jail for spending their employer’s money on lavish birthday parties, fancy to vacations, and elaborate home remodels.

The estate's money is not your money

When you are the personal representative of an estate or the trustee of a trust, you are in the same position. You are in control of the estate’s money, but unless and until it gets distributed out to you, it isn’t yours. You are merely shepherding it for the estate’s beneficiaries and creditors.
The confusing part about this is that you might be in one or both of those groups too. Just like it is very common for a CEO of a company to also be one of its founders and owners, the executor of an estate can also fill multiple ties. But even in that situation, until the money is distributed to you from the estate, it is not yours, and treating like it is can get you in a lot of trouble.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about 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.
Learn more by reading our blog or watching our videos .

What’s the Difference between Revocable and Irrevocable Trusts?

Mon, 28 Nov 2022 18:40:00 GMT

What’s the Difference Between Revocable and Irrevocable Trusts?

A trust is a type of account for your assets. Most commonly employed as an estate planning tool, it is governed by specific rules and agreements. A third party, called the trustee, oversees the account and manages or distributes the assets according to the rules you establish for the trust.

Typically, you place assets in a trust to distribute them to your beneficiaries. For example, you can create a trust for your heirs if they are still minors, with directions to distribute the assets to them when they reach adulthood.

Technically, you transfer ownership of the assets to the trust. However, you can retain some control over the account depending on the type of trust you choose.

These accounts fall into two categories: revocable and irrevocable trusts. Both types hold assets, and a trustee manages them. However, one vital difference exists: you can easily change one variety, while the other has fixed terms you cannot alter without court approval.

Here is a closer look at how to use revocable and irrevocable trusts in Centennial, Colorado.

Why Should You Use Trusts?

Trusts are an estate planning tool. Why would you use them instead of simply writing a will?

With a trust, you can give the assets directly to the heir, meaning you avoid confusion when reading the will, and they are not subject to the probate process.

Unlike a will, a trust goes into effect as soon as it gets created. This feature could be useful if you become incapacitated but are still alive or cannot make decisions for yourself because of a medical condition, such as Alzheimer's.

Also, because trusts go directly to your heirs, they can be effective in avoiding estate taxes.

Finally, the assets in your estate are subject to taxes, and any outstanding taxes or debts get removed before the distribution of the remaining wealth. Furthermore, creditors cannot collect from assets contained in a trust. However, this protection is only available for irrevocable trusts.

What Are Revocable Trusts?

Revocable trusts are accounts for your wealth. A trustee manages the assets, and the benefactor establishes rules to govern the trust. If you are the benefactor, you can change this trust or cancel it at any time. In addition to altering the rules of the trust, you can add or withdraw assets, add or remove beneficiaries, or remove all the assets and close the trust.

These actions have only one requirement: you must be competent when making changes to the revocable trust. Typically, competence means having a rational and factual understanding of what you are doing.

Revocable trusts offer the flexibility to make changes during your lifetime. However, they become irrevocable when you pass away. After your death, the trust cannot change.

There is one significant disadvantage to revocable trusts: creditors can pursue the funds and assets in this type of account to cover outstanding debts you had at the time of death. If you want debt protection, you need to establish an irrevocable trust.

What Are Irrevocable Trusts?

Irrevocable trusts have the same features as revocable trusts. When you establish an account and deposit your assets, you transfer ownership to the trust. A trustee manages the assets according to your rules, and the beneficiaries access or receive the assets according to the rules you establish governing the trust.

The more important feature of irrevocable trusts is that they are extremely difficult to change once established. You can alter these trusts, but any changes require the approval of all named beneficiaries and the trustee. You can also go to court and try to get a judge to approve the changes. This typically requires presenting a legal argument about why the changes are necessary.

Irrevocable trusts have one significant advantage. Creditors cannot pursue the assets in these accounts as payment for outstanding debts, meaning all the wealth contained in these trusts goes to the beneficiaries.

The lack of flexibility is a drawback, so you must be certain about your beneficiaries and allocation of assets when establishing this type of trust.

Which Type of Trust Is Best for Estate Planning in Centennial, Colorado?

An estate planning attorney can review your needs and help you decide which type of trust is best for your situation.

If you want to retain control over your assets and estate, a revocable trust is a better option.

If you plan to accumulate more assets for your estate, you can select a revocable trust.
If you expect your family to grow with more children, grandchildren, or other dependents, a revocable trust makes adding more beneficiaries simple.
If you do not have excessive debts, you may not need the protection of an irrevocable trust.
If you do not have a high-value estate, you will not need the tax protections of an irrevocable trust. Currently, federal taxes only cover estates worth more than $12.9 million . If your estate is worth less than this threshold, you can enjoy the flexibility of a revocable trust without needing tax protections.

If you need specific protections against estate taxes or debt collectors, then an irrevocable trust is a better choice. In some cases, an irrevocable trust can reduce the value of your estate so that it falls below the federal threshold.

Irrevocable trusts are also a good option if you do not want the trust changed for any reason. You could have personal reasons for creating this type of trust.

Do You Need an Attorney to Establish a Trust in Centennial, Colorado?

An estate planning attorney can help you select the correct trust for your needs and financial goals. They can also help you create the rules governing the disbursement of assets in the trust. For example, you may want to add requirements related to the age, education, or marital status of the beneficiaries. An attorney can help you choose the language to ensure these desires are met before the beneficiary can access the assets.

Contact our estate planning lawyers today if you need assistance establishing a trust.

How Cryptocurrency and NFTs Fit into Your Estate Plan

Wed, 16 Nov 2022 04:45:00 GMT

Five years ago, cryptocurrency was probably not on your radar. Today, it may be an important investment in your portfolio. You could even own some nonfungible tokens (NFTs), which are powered by the same blockchain-based technology. Despite the dizzying fluctuations in the value of these assets, you should ensure that they are included in your estate plan so you can preserve them for your heirs.

Preserving Cryptocurrency: Now and Later

Cryptocurrency, which is digital money, is exhibiting stability as part of the global financial landscape, even though the value of individual coins (units of cryptocurrency) has been notoriously volatile. The overall market hit $3 trillion in value in 2021, only to lose $2 trillion in value so far in 2022. Emerging from the ashes of the 2008 financial disaster, cryptocurrency is likely to retain its status as an investment option because its holders enjoy freedom from government and bank control. This advantage can become a drawback when it comes to preserving cryptocurrency. Before you consider including cryptocurrency in an estate plan, it is imperative that you hang on to your digital cash on a day-to-day basis. This involves preserving the passwords and digital wallets (storage units) connected to your cryptocurrency. This will avoid a disastrous situation like the one that befell a Welsh man who accidentally threw away half a billion dollars’ worth of Bitcoin . Consider the following options to preserve your cryptocurrency:

Hot wallet: An online app that provides convenience but is vulnerable to being hacked or stolen
Cold wallet: An offline storage device that avoids hacking but is a small item and easily misplaced
Custodial wallet: A third-party crypto exchange that holds your coins, avoiding the risk of losing the device, although the company could freeze your funds or be the target of a cyber attack
Paper wallet: A printed list of keys and QR codes that is safe from hackers but easily misplaced

Tax consequences to consider

Another important consideration is that the Internal Revenue Service (IRS) considers cryptocurrency to be property rather than currency. That means it is subject to capital gains tax. Whether the owner holds it for longer than twelve months determines whether the IRS will assess short-term or long-term capital gains tax. Exchanging cryptocurrency for fiat currency (a country’s official money) is a taxable event, as is exchanging one kind of cryptocurrency for another (e.g., exchanging Bitcoin for Ether). If you are in the business of selling or creating cryptocurrency (called “mining”), ordinary income tax rates will apply.

what about NFTs?

NFTs are unique digital collectible items. They are based on the concept “I own this.” It does not matter what “this” is, just that it is valuable or may gain value someday. That is why various digital collectible assets, such as the following, can be characterized as NFTs:

Digital artwork
Video clips
Social media posts
Memes
Gaming tokens
Digital real estate

While being the owner of the virtual Pyramid of Giza may seem silly today, who knows how much it will be worth tomorrow? This makes a little more sense when we think about emerging technologies like virtual reality, augmented reality, and metaverses. While the NFT market seems to have collapsed recently , you never know when it will bounce back or if something similar will take its place.

How Crypto and NFTs Fit into Your Estate Plan

Talk to an estate planning attorney about cryptocurrency and NFTs, even if you have not yet purchased your first Dogecoin or CryptoKitty. They can help you keep taxable events to a minimum and preserve your digital assets as part of your overall estate plan while maintaining your privacy.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Planning for Your Digital Legacy

Tue, 15 Nov 2022 04:30:00 GMT

An estate plan often focuses on tangible property such as jewelry, artwork, money, and vehicles. However, in this age of technology, it is important to remember to include your digital assets. Digital assets consist of everything we own online. Because we spend more time on computers and smartphones than we ever did before, you may not realize how much digital stuff you own, from photos and videos to online accounts, cryptocurrency, and nonfungible tokens (NFTs).

Why Is It Important to Plan for Digital Assets?

Planning for digital assets is important for several reasons. First, without a plan, digital assets may get lost in the Internet ether and not pass to your loved ones after your death due to the simple fact that their existence is unknown. Second, planning now means your family will not have to worry about hunting for these items upon your death while also grieving a beloved family member. Third, like most adults ( roughly 70 percent of them ), you want certain aspects of your digital life to remain private. If you do not create a plan, your loved ones may learn things that you wish to keep secret. Finally, planning now can minimize the risk of identity theft, which happens to 2.4 million deceased Americans each year. Keep reading to learn more about why it is important to include digital assets in your estate plan and how to account for them.

Digital Assets: What Are They?

Instead of existing in photo albums and on videotapes and DVDs, most of our family photos and videos are now digital. Even if they lack commercial value, they certainly have sentimental value that you want to preserve for your family and friends. Social media accounts containing your photos and videos can also have value to your loved ones when you are gone. For example, a Facebook account can serve as a memorial after you pass away. When you consider all of the other accounts that you log into ( more than 130 on average), the list becomes quite lengthy.
Digital assets that you may own include the following:

Social media accounts (e.g., Facebook, Twitter, LinkedIn)
Financial accounts at brick-and-mortar and online institutions
Business documents and other files stored in the cloud
Cryptocurrency
NFTs
Databases
Device backups
Internet domain names and uniform resource locators (URLs)
Streaming service accounts (e.g., Netflix, Peacock, Hulu)
Merchant accounts (e.g., Amazon, Etsy, eBay)
Gaming tokens
Virtual avatars
Points-based loyalty programs (e.g., for groceries, gas stations, airlines, and hotels)
Rights to intellectual property, artwork, and literature
Online betting accounts
Monetized video content

Including Digital Assets in Your Estate Plan

Taking inventory of your digital assets may take some time, but it is worthwhile. If something were to happen to you, your estate planning attorney or another trusted person should have complete access to your online footprint. This includes usernames and passwords for all accounts. Tools such as Dashlane or the password manager integrated in your browser can be used to simplify the storage of usernames and passwords. In addition, you should continuously back up all digital assets, including photos and important documents, to the cloud, and ensure that your attorney and trusted person can easily access them when the time comes. Because they are not controlled by governments or banks, cybercurrency and NFTs must be handled carefully. You do not have the option of calling customer service to reset your password if you forget or lose it. NFT and cryptocurrency passwords should be stored online in a “hot wallet,” or in an offline device known as a “cold wallet.” Either way, someone needs to know how to access your passwords when you cannot. Other estate planning considerations for digital assets include the following:

Your estate plan can provide that your digital possessions be handled by one or more cyber successors who can distribute your digital assets like tangible property.
One cyber successor can control your Instagram account, for example, while another can take possession of your Bitcoin.
Keep in mind that passwords should not be memorialized in your will, especially regarding cryptocurrency, as they could be made public if the will is submitted to probate court.
Consider how technologically savvy a person is before appointing that person as your cyber successor.

Next Steps for Your Digital Assets

Talk to your estate planning attorney about your digital assets and cyber successors. Have a conversation with potential cyber successors about how they would handle your assets, and make sure that they would carry out your wishes before appointing them. Digital assets can be placed into a trust or distributed through your will, or you could grant access to them through a power of attorney. With the help of an experienced estate planning attorney, you can feel relieved that your digital assets will be easily located, managed, and passed to your loved ones.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Estate Planning For Your Pets

Mon, 14 Nov 2022 04:00:00 GMT

While pets are cherished members of every household they inhabit, they can often get lost in the shuffle during estate planning and administration. Although animals may not inherit portions of an estate, most people wrongly believe that they cannot provide for their pets in their trusts or wills. In Colorado, that is not the case. Colorado law explicitly authorizes the creation of trusts that care for designated pets ( Colorado R evised Statutes § 15-11-901 ). This means that individuals can include language in their will or trust designating a caretaker for their beloved dog, cat, horse, etc. and put funds in a trust to be used exclusively for their health, well-being, new toys, skateboard, or other indulgences. Additional instructions can be provided concerning their quality of life, food preferences/requirements/etc. and successor caretakers can be designated in case the original caretaker cannot care for the pet. These trusts are relatively simple to administer as they generally terminate when the designated pet passes away, with any remaining trust assets being re-distributed to other beneficiaries as laid out in the trust or will.
Your pet will no doubt be devastated to lose you and change can be difficult on them, so helping ensure their stable care after your death can really help them enjoy the rest of their years in a loving home. If you do not establish a plan for your pets after you pass away, either formally through a pet trust or informally through conversations with relatives or friends, they could end up at an animal shelter where they may or may not end up being adopted again, or an unsuitable home. For most people, this is not how they want their pet to live following their death.

If you would like to discuss estate planning for your pet or family at large, please give us a call to schedule an appointment.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What are Powers of Attorney and Do You Need Them?

Sun, 13 Nov 2022 03:45:00 GMT

Very few people go from being perfectly healthy to passing away. In reality, there is often a period of declining cognitive abilities and physical condition that require special attention to properly prepare for. One of the most common situations concerns when an elderly individual begins to suffer the early symptoms of dementia. Who will be there to step in to handle financial responsibilities such as paying taxes and bills, or make sure that accounts are not drained from fraudulent purchases? Obviously, if the individual is married and shares joint accounts, then their spouse can manage those situations without any special authority. Absent additional authority, however, the spouse cannot manage property owned solely by the other spouse with declining cognitive abilities. They also cannot sell jointly owned real estate on behalf of the other spouse if they are truly incapacitated.

To perform these actions, a financial or general durable power of attorney is needed. This document can greatly facilitate financial management in end-of-life situations where an individual is rapidly losing their mental faculties and physical health by allowing a designated individual to make payments, deposits, transfers, etc. from your accounts. This may seem like an awful lot of trust to put in another person, but they have a fiduciary obligation to you to act in your best interests. To this end, an agent acting as financial power of attorney should never commingle funds from the individual’s accounts with their own.
One of the most important questions concerning the appointment of a financial power of attorney (aside from who is to act as agent) concerns when the power of attorney goes into effect. Individuals have the option of having the power of attorney taking immediate effect, or only upon a determination of their incapacity, with such a determination being made by a written declaration signed by an independent physician.

There are benefits and risks to both options. Putting the power of attorney into immediate effect would allow your designated agent to access your accounts, and to the extent they have bad intentions, could allow them to perform damaging transactions that you may not be able to recover at a later date. They would be violating their fiduciary duty by performing those transactions, but oftentimes it can be difficult to make a person or account whole after the damage has already been done.
On the other hand, allowing the power to take effect immediately will allow that individual to step in if there are any short-term incapacity situations (such as if they are missing, unconscious for surgery, or otherwise indisposed) and avoid the sometimes difficult evaluations and medical conclusions that have to be made in the early stages of dementia and other degradation of mental faculties. What you may think represents an incapacity to manage one’s financial affairs may not match what a doctor thinks.

A financial power of attorney is fully amendable and revocable and can be changed at any time, so you are not bound to your choice. If you are interested in setting up or updating your financial power of attorney please reach out to our office to discuss your options.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

When Do Out-of-State Parties Need to Open a Probate in Colorado?

Sat, 12 Nov 2022 03:18:00 GMT

Generally, a probate is opened in the state in which an individual resided. However, when an out-of-state decedent owned real estate in Colorado, an ancillary probate proceeding must also be opened in Colorado to give the personal representative authority to transfer or sell the Colorado real estate.
Before an ancillary probate can be opened in Colorado, the personal representative seeking to open the probate in Colorado must obtain certified, authenticated, or exemplified copies of the filings in the original probate action from the first state. These filings must include the court order appointing the individual opening the ancillary probate as personal representative or executor; the Letters of Administration/Testamentary; and a copy of the original will, if one exists.

Certified, exemplified, or authentic copies generally include an additional seal from the clerk of the court, however the actual form may vary from state to state. These documents are required to be submitted with the initiating documents and failure to provide them will prevent the ancillary probate action from being opened.
The personal representative opening the ancillary probate in Colorado must be the same person who was appointed as personal representative in the first state. Similarly, the probate case in the first state must still be open in order for a Colorado court to be able to approve an ancillary probate. If the matter is closed in the first state, it may need to be re-opened before the ancillary probate can be opened. If there are properties located in multiple Colorado counties, the signed Certificate of Ancillary Filing must be filed in each county where the real estate is located.
Although the extra step of opening a Colorado probate may be a nuisance, it is necessary to properly transfer title from a deceased out-of-state resident’s estate, and can prevent title and fiduciary issues from springing up down the line.

If you have questions about ancillary probates or need to open an ancillary probate to finish administering an estate in another state, please give us a call to schedule an appointment.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

How Do Minor Children Receive and Manage Inheritances?

Fri, 11 Nov 2022 01:27:00 GMT

How do minor children receive and manage inheritances? The answer is, they don’t. Practically speaking, your 8-year old daughter and 12-year old son are in no position to manage their own finances, and, legally speaking, they aren’t permitted to either. Absent any estate planning, a court would have to appoint a conservator to manage the child’s inheritance until they came of age. The conservator could be an individual that the child knows, a trust company, bank, or other responsible entity. A conservator is tasked with managing the estate of a protected person and would manage, distribute, invest, and otherwise manage any inheritance received by a minor child. You may be familiar with the term “guardian,” which is the individual or party appointed by a court to raise and make decisions on behalf of a minor or vulnerable adult. A conservator is more or less the financial version of a guardian. Ideally, a parent would like to have a say in who was managing the money that they are passing down to their minor children, however, absent proactive steps, this decision could be left entirely to the court’s discretion.

Options for leaving inheritances to children

There are a number of ways to dictate how your minor child’s inheritance should be distributed and managed. The simplest way is to draft a will that includes a provision asking the court to appoint your chosen individual as conservator. While the court would still need to formally appoint your chosen individual, absent problematic circumstances, your will will generally be respected.
A much better way is to create a testamentary trust in your will. This provision will create a trust for your minor child’s share of the estate to be managed and distributed as you state in your will. You can choose a trustee, who will manage the assets and be in charge of distributions; decide under what conditions funds can be spent on your minor child (for education, healthcare, athletics, etc.); and establish a timeline for distributions of the estate. This trust is created through the probate process, however, so a probate must be opened in order to establish operation of the trust.
A more efficient, albeit slightly more complicated option, is to put your estate into a living trust. The upfront effort to establish the trust usually pays off after your passing because the trust is already operational and does not need to go through probate to be established. Your trustee does not have to receive the authority to administer the estate from the court, they simply continue operating as trustee and follow the rules of the trust document.
The living trust operates essentially like a company, designed to manage and distribute your assets according to the rules that you law out in the trust document. You can make all of the above-discussed choices, as well as others, such as keeping funds for multiple minor children in a common pool of assets until they reach a certain age. This can be an extremely effective way to manage assets intended for minor children, and provide for them in a worst case scenario. Depending on the construction of the trust, there can also be significant asset protection benefits for your children as well.
If you have any questions about how best to conveniently and efficiently transfer your assets to your children, or would simply like to begin drafting your estate plan, please give us a call .

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What Will Happen to My House When I Die?

Tue, 08 Nov 2022 04:08:00 GMT

For most Americans, the most valuable asset that they own is their home. This is especially true in light of the rapid appreciation in real estate values over the last 5 years. Do you know to whom your home would transfer to upon your death? What if you and your spouse both passed simultaneously or in quick succession?

joint ownership

For married couples, most homes that they purchased are owned “jointly.” This means that both spouses are listed on the deed and it is specifically stated that they are taking the property as “joint tenants.” If that is what you intend to happen, it is extremely important to make sure that the “joint tenancy” language is on the deed because, in Colorado, the default interpretation of a deed with multiple owners is that the property is owned as a “tenancy in common.” This may seem like a negligible difference; however it can have enormous impacts as to who can occupy the residence after your death and who will receive the house or proceeds from the sale of the house after you pass.

tenants in common

Joint tenancy includes a right to survivorship, which means that the surviving spouse would fully own the home after the first spouse passed away (subject to any mortgages or other liens on the property, of course). Spouses who own the property as tenants in common, however, each own ½ of the home. There is no right of survivorship, meaning that the ½ ownership held by the deceased spouse could be subject to distribution under the terms of their Will, and those may provide that a child is to receive the house. This can create sticky situations whereby children (or step-children) could be trying to get the surviving spouse out of the home, or obsessing over upkeep and maintenance in order to preserve their future inheritance. It is true that surviving spouses have the right to elect to take an “amount equal to fifty percent of the value of the marital-property portion of the augmented estate” (if they have been married for 10 years). Depending on the assets in the estate, however, this may not allow for the surviving spouse to receive full ownership of the house (in Colorado, spouses are entitled to an elective share equal to 5% per year of marriage, up to 50%). Furthermore, while family relationships may be cordial in the moment, they are always subject to change, and money can often bring out the worst in people.

passing real estate to kids

What if you want your children to own the house after you pass? Co-ownership of real estate can present enormous challenges and often results in damage to both familial relationships and the property itself, so it is essential to make the ownership and operation of the property as clear as possible. For example, who is responsible for the taxes? Maintenance? Improvements? What happens if one of the children stops contributing their fair share? Also, if you have children from a prior marriage, and want them to share in the proceeds, does your plan guarantee that they can’t be disinherited?

Conclusion

Passing on your home to your surviving spouse and descendants can be much more complicated than it appears at first glance. It would be a good idea to make sure that your home is titled how you intend it to be and that your current estate plan transfers your home the way you want it to. It is not uncommon for individuals to think their property was deeded a certain way, only to find out that the actual deed says something very different after one of the owners passes away. The best way to prevent that situation is by being proactive. The effort up front to set a clear line of succession will pay dividends for your loved ones and make administration of your estate far simpler and less contentious.
If you have any questions about how your home is titled, or would like to create or amend your estate plan, please give us a call.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What Happens if You Die Without A Will in Colorado?

Mon, 31 Oct 2022 17:00:00 GMT

An individual who dies without a will is deemed to have died “intestate.” In such a situation, the state’s intestacy law apply to the distribution of estate assets. In Colorado, those statutes are found in Title 15, Article 11 of the Colorado Revised Statutes . The allocation of estate assets under the intestacy rules depends on the structure of the decedent’s family and who the surviving relatives are. Generally speaking, the family member with first priority as a beneficiary is a surviving spouse. If an individual has a surviving spouse and no kids separate from the surviving spouse, the surviving spouse will inherit everything. This is true even if the couple has adult children. If an individual has children, but no surviving spouse, then the children would inherit everything. If any of those children are under 21, a conservator would need to be appointed to manage the funds being distributed to them.

Beyond this, things can become complicated. For blended families with children from prior relationships, spouses are only able to inherit a portion of the estate, with the children from the previous marriage granted a smaller portion of the estate. The following table outlines some of these more complicated family situations and the allocations that would occur under the intestacy laws found in Title 15, Article 11 of the Colorado Revised Statutes:

Surviving relatives are … Resulting distribution

-Spouse, but no children -Everything to the surviving spouse

-Children, but no spouse -Everything to the children

-Spouse and children between you and your spouse, and -Everything to your surviving spouse

your spouse has no other children

-Spouse and children between you and your spouse, -Surviving spouse receives the first $279,000, plus 50% of the

but your spouse has children from another relationship remaining estate. Your children get the remaining 50%, by representation.

-Spouse and you have children from a prior relationship or marriage -Surviving spouse receives the first $186,000, plus 50% of the remaining estate. Your children get the remaining 50%, by representation.

- Spouse and parents, but you do not have any children -Surviving spouse receives the first $300,000, plus 75% of the remaining estate. Your parents get the remaining 25%, by representation.

-Parent(s). No spouse or children. -100% of the estate to your parent(s), by representation.

-Sibling(s). No spouse, parents, or children. -100% of the estate to your siblings, by representation.

* Values up to date through 2022 based on the Colorado Department of Revenue Cost of Living Adjustment Schedule (https://www.courts.state.co.us/userfiles/file/Self_Help/Probate/COLA.pdf).
As you can see, these distributions can become quite complicated. It is important to note that “children” (as used above) can sometimes include grandchildren if your children have predeceased their children. Some other important information to note:
- Legally divorced spouses do not have a right to inherit from your estate through the intestacy rules; - Children born outside of marriage have an equal right to inherit from both parents; - Legally adopted children are treated like biological children are; - Biological children who were formally adopted by another family would not receive a share from their biological parents;

If you want to have control of how your property is distributed beyond the provisions discussed above, it is essential to have a will and/or other estate plans in place. This is the only way to decisively prevent unwanted relatives, or the state, from potentially collecting an inheritance from your estate after you pass.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Are Mobile or Manufactured Homes Considered Real Property for Probate Purposes?

Fri, 28 Oct 2022 18:15:00 GMT

Mobile and manufactured homes can often feel or appear as though they would be counted as real property. In Colorado, however, the default classification for a mobile or manufactured home is that it is personal property. This classification is significant because a probate case must be opened in Colorado for any estate that includes real property (also any estate with over $74,000 in assets, as of this writing).
The exception to this classification is if a Certificate of Permanent Location is recorded for a manufactured home at the county Clerk and Recorder’s office where the home is located. This process is discussed in the Colorado Revised States in Section 38-29-202 and transforms the property from personal property into real property attached to the land. This has the consequence of forcing the estate to participate in the probate process and also opens it to taxation as it is now taxable real estate.

When the cumulative value of personal property is below $74,000 as of this writing and there is no real estate that is part of the estate, a “ Small Estate Affidavit ” may be used instead of having to go through either the formal or informal probate process. This can save time and money and is much easier to administer than either a formal or informal probate. Even if your estate is larger than $74,000, there are ways in which you can distribute the assets so as to allow loved ones to use this simpler affidavit to administer your estate instead of filing and administering a probate. Some potential options include jointly titling assets, designating beneficiaries, transfers on death, and the creation of trusts.

If you are administering an estate that includes a mobile or manufactured home, or would like to plan a way to transfer your assets outside of the probate process, please contact our office to schedule a discovery meeting.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

How the Estate Tax, Gift Tax, and GST Apply to Your Estate Plan

Thu, 27 Oct 2022 22:45:00 GMT

“ The United States has taxed the estates of decedents since 1916 .” The form of this tax has changed over the years, but currently, the estate tax is only levied against the value of an estate (subject to certain deductions) that exceeds the “estate tax exemption.” For 2022, the estate tax exemption amount is $12,060,000. This exemption amount has increased exponentially over the last 10-15 years, with the estate exemption sitting at only $1,000,000 in 2007.
Not all estate transfers are included in the value of the estate for estate tax purposes. For example, transfers to a surviving spouse, charity, or to support a minor child are not included in that total. Additionally, estates may deduct debts, funeral expenses, legal and administrative fees, charitable bequests, and estate taxes paid to states. The taxable estate equals the gross estate less these deductions.
Any value of the estate above $12,060,000 is generally taxed at 40%.
The exemption level is portable between spouses, making the effective exemption for married couples double the exemption for singles. For example, if the first spouse to die bequeathed $5 million to children and grandchildren, the survivor’s exemption would increase by the unused $7.04 million, and they would have $19.12 million to transfer estate tax free.
There are some special provisions that reduce the estate tax, or spread them over time, for family-owned farms and closely held businesses. For example, family-owned businesses can claim valuation discounts if the business is to be divided between many heirs. When farms or family businesses make up at least 35% of a gross estate, taxes can be paid in installments over 14 years with interest only due during the initial five years.
Certain estates may also benefit from a stepped up basis on real estate assets that have appreciated since their acquisition. qualify to substantially reduce the taxable value of their real estate.

state death or estate taxes

Only thirteen states levy their own estate taxes in addition to the federal estate tax. These states have a wide range of minimum thresholds, with Massachusetts at $1,000,000 and the District of Columbia at $5,600,000. Colorado does not levy its own estate tax.

gift tax

Congress enacted the gift tax in 1932 to prevent circumvention of the estate tax simply by gifting assets away just before death. The gift tax has the same limits as the estate tax, and any gifts that count towards your gift tax exemption also apply to your estate tax exemption. Currently, the gift and estate tax exemption is $12.06 million for an individual and $24.12 million for a married couple. Beyond these exemption amounts, donors pay gift tax at 40%, just like the estate tax.
One noteworthy difference between the estate tax and the gift tax is that an individual is permitted to gift $16,000 each year (indexed for inflation in $1,000 increments), with the exclusion granted separately for each recipient. Therefore, a married couple with four children could give their children a total of $128,000 each year ($15,000 from each parent to each child) without owing tax or counting those amounts toward the lifetime exemption amounts. Gifts received are not taxable income to the recipient.

Generation skipping tax

The Generation Skipping Tax, or GST tax, like the gift tax was enacted to stop individuals and families from dodging the estate tax by simply devising their assets directly to grandchildren or great-grandchildren, or using successive life estates in property to avoid taxable transfers. The GST prevents this by taxing gifts above the exemption at the 40% rate applied for the estate and gift taxes.

Conclusion

Even if estate, gift, or GST taxes won’t apply to your estate, there are still a number of benefits to diligently planning the distribution of assets upon your death. These benefits include easing the burden of managing your estate for loved ones (including by avoiding probate court), ensuring that assets go to whom you want them to, protecting assets from creditors, and establishing structured distribution plans for young children or grandchildren.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

A Guide to Understanding Personal Representatives and Trustees: Commonly Asked Questions

Wed, 26 Oct 2022 22:45:00 GMT

Part Three of our series on Personal Representatives and Trustees concludes with some common questions.

1. Can i be sued or be held personally liable?

Part of being a fiduciary means that any errors or mismanagement on your part can open you up to being held personally liable. This often happens with fiduciaries who are new to the position. Many people don’t fully understand the ramifications of not paying taxes or filing returns on time, making the wrong kind of investments or engaging in self-dealing without express permission. Other common mistakes include allowing property or casualty insurance to lapse, or failing to collect rents on time, both of which can result in a loss to the estate.

We cannot overemphasize the benefit of having a professional by your side as early as possible in the process. Be sure to communicate regularly with the beneficiaries, treat everything with appropriate formalities, and fully document your actions and decisions.

2. what happens if someone complains?

No one wants to think that one of their relatives will be angry with them for carrying out the wishes of the deceased, but it happens all the time. Even professional fiduciaries get complaints. The best way to avoid complaints is to carefully follow the instructions in the estate plan, consulting with an experienced attorney if necessary. Most of the time, complaints can be avoided by keeping the beneficiaries up to date about the process and making sure that all money in or out is accounted for in a precise manner. You will be protecting yourself, as well as giving the family a clear picture of what is happening. It’s also a good idea to handle all matters with appropriate formality. If, despite your best efforts, you do encounter a complaint that requires court involvement, consult with an attorney who specializes in trust and estate matters who can guide you through the process.

3. where should i hold the estate or trust assets?

A good option is to open an investment account with a bank, trust company, or brokerage company in the name of the estate or trust. It is essential to keep all the estate assets separate from your personal accounts. All expenses and disbursements must be made from the estate accounts, and you should keep track of your statements and receipts.

4. how do i title bank and other accounts?

If you are a Trustee: Not all types of assets can be held by an entity. Retirement accounts, for instance, have to be titled to a person. In these cases, you might want to name the Trust as the Designated Beneficiary (the rules for who can be designated as a beneficiary of a tax deferred retirement account are complex, and you should consult with a lawyer about it, especially if you plan to name a minor or a trust).

For assets that can be owned by the Trust, check first with your bank, financial institution, or investment firm, as many companies have their own requirements. Basically, you usually want to name the Trust and yourself as the Trustee (in Colorado, the practice for titling real estate is slightly different and should be done by an attorney.) So you might use “Cleopatra VII Philopator, Trustee of the Ptolemy Caesarion Living Trust dated June 23, 47BC.”

If you are a Personal Representative: To title assets to the estate of the deceased, you should use “Gaius Octavius, Personal Representative, Estate of Julius Caesar, Deceased.”

5. how do i sign my name in a fiduciary capacity?

A trustee will sign as: “Cleopatra VII Philopator, Trustee”

A Personal Representative will sign documents as: “Gaius Octavius, Personal Representative of the Estate of Julius Caesar, Deceased.”

6. can i get paid?

Yes! Serving as a fiduciary is not only time-consuming and difficult, but it carries with it a great deal of personal risk. So it is absolutely appropriate to be paid for your services. The Will or Trust should have provisions that address how much you can be compensated, and where the funds may be withdrawn. If the document does not specify this information, consult with an attorney. Usually, an agent is allowed "reasonable compensation," which usually takes into account the size of the estate, the complexity involved, and the amount of time the fiduciary has put into the job.

If you are related to the deceased, it may seem as though you should do the job without any payment as a gift to your loved ones. But don’t be too hasty to waive compensation. You should consult with an experienced estate planning and trust attorney to make sure you understand the full scope of your duties and any ramifications of your decision to waive fees. If you need to rent a storage unit to hold the deceased’s personal property, will that be at your personal expense? Say you need to take a leave of absence from your day job — will the loss of income be something you are willing and able to forgo?

7. what if i want to resign?

Whether you stop acting as a fiduciary because the estate has been closed, or you wish to resign before the conclusion of the process, you must be formally discharged. This can be accomplished either by the local court or by the beneficiaries. If you are resigning prior to the conclusion of your administration, check the Will or Trust to see what the process is to accomplish this, and who may succeed you as fiduciary.

Serving as a fiduciary is an important job, not just a special honor or empty gesture of respect. If you are creating a will or trust, choose wisely the person you name as Personal Representative or Trustee. And if you are named as an agent in someone’s Will or Trust, be sure to research carefully the responsibilities of your position and hire help if it’s needed.

what next?

We are a full-service estate planning and administration law firm and can help you in every aspect of the process. If you think it might be time to think through your estate plan, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about 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.
Learn more by reading our blog or watching our videos .

A Guide to Understanding Personal Representatives and Trustees - Part II

Wed, 26 Oct 2022 00:30:00 GMT

In part one of this series, we explored the basic terms related to fiduciary duties, and now we are ready to step deeper into what the role of Personal Representative or Trustee entails. What do these people actually do?

1. Read the estate plan

The deceased has named their Agent in one or more of the documents they signed while they were alive. Whether the deceased left a Will or a Living Trust, the estate plan documents will have further instructions as to how to proceed, so reading those and becoming familiar with their contents is an important first step.

Most people named to this position are not lawyers or financial planners. People usually appoint someone in their family who they trust to serve as their Agent.

So, many Personal Representatives and Trustees come into the position without any background that would help them read a legal document. If an Agent needs to hire professional help, they can do so. Many estate plans have specific provisions allowing the Trustee or Personal Representative to hire professional help and charge this cost to the estate. Getting a lawyer to explain the terms of the Will or Trust and assist throughout the process is one of the best ways to ensure an Agent’s duties are carried out in the most effective manner.

2. file appropriate paperwork with the county and notify relevant individuals

As the individual in charge of settling the deceased’s estate, the Agent will need verifiable proof of the person’s death, as well as proof of the right to act in their stead. This can be accomplished in some cases by presenting a Death Certificate and, if the deceased had a trust, a copy of the Certificate of Trust naming the Trustee. In other cases, the Agent will need to open a probate and attain Letters Testamentary to do business on behalf of the estate. Filing fees and other requirements may be necessary depending on the type of document.

Beyond government agencies and financial institutions, there may be a requirement to notify all natural heirs that the deceased has passed away. Even if a family member is not named in the Will, they may have the right to learn of this fact so they have the opportunity to contest the will or file other legal claims. This part of the process also involves notifying potential creditors, so that anyone with a reasonable claim to part of the deceased’s estate has the chance to come forward.

3. take control and manage all assets

All the deceased’s assets must be accounted for before the final distribution takes place. Maintaining an inventory of all transactions may seem unnecessary and painstaking work, but it is vital to ensure transparency and protect the Agent from claims in the future. Depending on the type of asset, the Personal Representative may need to renew licenses, pay a mortgage, or collect rents while administering the estate. The Personal Representative will also need to value the estate, possibly hiring a professional appraiser for valuable collections, jewelry, or unique assets.

If the deceased had a Trust, all outside assets need to be titled to that Trust before the Trustee can manage them (hopefully, this was already accomplished during the trustmaker’s lifetime). Administration of a Trust involves more than sim ply keeping the asset in good standing. A Trustee may need to invest principal to maximize income, or transfer assets from a liquid state into a long-term investment. As with reading and understanding the terms of the estate plan documents, professional advice is indispensable for someone without a financial background who finds themselves in this position.

4. pay debts, creditors, final bills, and taxes

An estate is considered settled when all debts have been paid, and all assets either sold or transferred to those who should receive them. If a Personal Representative fails to account for a creditor or an outstanding debt, they can be personally liable for that debt. Therefore, it’s vital that the Agent proceed carefully and follow all applicable laws and regulations concerning the payment of bills and debts.

5. Dispose of assets

Within the framework created by the decedent, it is the duty of the Personal Representative or the Trustee to decide what happens to each asset. For instance, a piece of property may be sold or rented out for ongoing income. A valuable piece of jewelry may be distributed to a family member or sold and the proceeds added to the residuary of the estate. The manner in which the Trustee and Personal Representative dispose of certain assets is usually at their personal discretion, as long as it is done in accordance with the terms of the Will or Trust. Best practices recommend having beneficiaries sign a document acknowledging receipt of their inheritance.

6. close the estate

An estate is considered settled when all debts have been paid, and all assets either sold or transferred to those who should receive them. Be aware that there are certain proofs and clearances that may be required by law before the Personal Representative or Trustee is entitled to declare publicly that they have completed their duties. Often, a Trustee will continue managing assets into the foreseeable future, but these will be assets that are held in a Trust, and not assets that are part of the deceased’s estate. In some cases, the estate remains open for a year after this point for any creditors or other potential beneficiaries to come forward. It is also wise to keep a reserve for payment of any future taxes which may come due within the year.

Please keep in mind this is a general list of duties, and should not be taken as an exhaustive list of instructions. You may also want to see the Colorado Bar Association’s pamphlets on the duties of Personal Representatives and Trustees .

Coming up next: Frequently Asked Questions (and answers!) in Part Three of our Guide to Understanding Personal Representatives and Trustees.

What next?

If you are serving as someone's Personal Representative or Trustee and have more questions or are struggling to make sense of your responsibilities, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about 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.
Learn more by reading our blog or watching our videos .

A Guide to Understanding Personal Representatives and Trustees

Tue, 25 Oct 2022 02:15:00 GMT

Most people consider it an honor to be named the Personal Representative or Trustee of a person’s estate. That’s true: it means someone considers you responsible, trustworthy, organized, and clear-headed, as these are all critical traits in a fiduciary. However, it’s more than an honor. It’s also a great responsibility.

Naming a Personal Representative or a Trustee (or both!) is possibly the most important part of estate planning. This is the person who will carry out your wishes, as stated in your estate plan. Naming the wrong person, failing to properly direct assets under their management, or providing inadequate instruction can all result in disaster.

So, let’s learn some more about these important roles, starting with common legal terms everyone should know.

common estate planning terms

Beneficiary – The person who benefits from the assets distributed by a Will or Trust; also the person who is to receive property, either outright or in trust, now or later.
Fiduciary – An individual or institution that acts on behalf of, and for the benefit of, another. Trustees, agents with power of attorney, and personal representatives are all fiduciaries. This is the highest responsibility under the law, and requires putting the needs of the beneficiary or principal first at all times.
Personal Representative – (In other States known as an “executor”). An individual or entity that settles the estate of a testator according to the terms of the Will. If an individual dies intestate (meaning, without a Will), or if the existing Will is found to be invalid, the Personal Representative will act in accordance with state laws. (In this instance, a person acting in intestacy may be called by a different name, such as administrator.)
Principal and Income – These terms refer, respectively, to the property or capital of an estate and the returns from the property. Returns can be in the form of interest, rents, dividends, etc. This may sound like a boring topic, but distinguishing principal from income can be the source of fierce combat when one beneficiary of a trust is entitled to receive its income and another is entitled to receive its principal.
Testator – The person who makes a valid Will (when that person is a woman, she is referred to as the “Testatrix”).
Trustee – An individual or entity that holds assets under the terms of a Trust Agreement. The Trustee always holds the assets for the benefit of the Beneficiary and must act according to the terms of the Trust.
Trustmaker – (Also called “settlor” or “grantor”) The person who transfers property to a Trustee by using a Trust Agreement. The Trustee is instructed to hold or own the assets subject to specific terms, usually for the benefit of the Beneficiary (see below.) For income tax purposes the same term is used to mean the person who is taxed on the income from the trust. This can be somewhat confusing, so keep in mind that the same term is being used to refer to different concepts in different circumstances.

With these terms as a background, we can now explore in more depth what a Personal Representative or Trustee actually needs to do. Stay tuned for part two of this three-part Guide to Understanding Personal Representatives and Trustee.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Life Isn't Fair: Unequal Inheritances

Mon, 24 Oct 2022 18:30:00 GMT

Do you know how to pick out the villain in a fairy tale? They either don’t care about their children or they play favorites. So why would a loving parent ever write an estate plan with unequal inheritances?

Seek equity, not equality

If you haven’t yet seen this comic , it’s a great way to illustrate the point.

Your heirs likely have different needs. Providing each of them the exact same portion of your estate may seem like it’s fair, but it might not be. There are plenty of examples of situations where giving three different kids the same inheritance is not only unfair, but possibly harmful to their well-being and future happiness.

For instance, let’s explore a couple of case examples.

Family 1: The Smiths

Background

Joe and Terri Smith were married in the mid-60s. Terri worked as a teacher in the public school for 35 years before retiring in 1999 and serves on the board of several local charities. Joe worked in finance, and with smart investments and some occasional risk taking, built a comfortable life for his family.

They have an estate of 3 million, with a primary home, two retirement accounts, several investment accounts, and life insurance. They have three grown children: two sons and a daughter, all of whom graduated from college. Their daughter married a professional hockey player and currently lives in Lithuania with their two children. Their eldest son is a teacher and has three kids with his wife, who is also a teacher. Their youngest son just finished his residency in neural surgery and got married a few months ago. Joe and Terri have always supported education, and were happy to pay for all their kids’ degrees, including medical school.

When they contacted their lawyer for an estate plan, they thought they would divide their estate equally in thirds. After discussing their options, however, they decided that providing their children with unequal inheritances would do more to honor their legacy and promote their values.

Decision

Having supported their youngest son through medical school, and knowing that his sustained earning potential exceeds the other kids’, Joe and Terri optioned to leave him a monetary gift of $400,000. Due to the high liability inherent in his profession, they are leaving him this money in trust to protect it from creditors. Their daughter does not have any financial needs right now, as she is living in a foreign country with a husband who earns a high paycheck.

However, her husband’s salary will change when he gets too old to play professional hockey. Moreover, it’s likely that he will have significant medical expenses as he gets older due to the trauma his body is undergoing. Joe and Terri decided to leave a third of their estate to their daughter, also in trust. Should she get divorced, they want her inheritance protected for her and their grandchildren. Their son who works as a teacher is the child who needs the most financial support right now, and likely will continue to need support well into the future. Joe and Terri believe strongly that teaching is a noble profession, and would prefer that his salary reflected that. However, they are thankful that they have the ability to help their son.

They are generous with annual gifts to him and his wife, and also place money in trust funds to pay for their grandkids college educations. Half of their estate is being set aside in trust for their eldest son, his wife, and their children. The trustee is directed to invest in assets that will generate income, with the intent that their son can draw on this annually to supplement his teacher’s salary. The remaining 1/6 of their estate will be divided among three local charities whose causes they support.

Family 2: The Johnsons

Background

Bill and Catalina Johnson are in their late 60s and already have a will in place that leaves their estate in equal shares to their two daughters: Heather and Amanda. Bill owns his own business. Catalina, who is an accountant, manages the books and does tax preparation on the side. They meet with an attorney in late-April, when Catalina has had time to gather the list of their assets.

Their primary concern is their eldest daughter. Heather was in an unfortunate skiing accident a few years ago. A ski instructor, she had been guiding a group when an out of control teenager came barreling down the slope and crashed into her. Her insurance covered her medical care, but since the accident she has intense pain whenever she sits or stands for prolonged periods. The insurance company filed a suit against the ski school, which they won, and Heather filed for disability so she could attend trade school to learn how to code. She works as a consultant out of her own home, providing her the flexibility she needs to take frequent breaks and stay active to manage her pain. She relies on Medicaid for health insurance and spends out of pocket for weekly chiropractor and massage appointments. Bill and Catalina don’t want the money they leave her to affect her disability benefits or eligibility for Medicaid. Bill mentions that Heather is probably addicted to pain meds, but Catalina quickly corrects him.

Catalina says that watching everything that Heather has gone through has given her some anxiety about her health, and Bill’s. He has been experiencing some irregular heart issues for a while, and his doctor has been telling him to reduce his stress level and work less. But since their income is tied up in a family business, it hasn’t been easy.

Their other daughter, Amanda, is married with two kids and expecting a third. She has a degree in business and her husband works in real estate. They have a very comfortable life, but are not saving much, and have made no provision for their kids’ educations. Bill and Catalina agree that they want to leave some money directly to their grandkids for them to use to pay for school. They also want to be sure that Heather doesn’t end up begging Amanda for money if her medical costs exceed her income. Catalina says that Amanda and Heather get along pretty well, but expects that Amanda would cut all contact with her sister if there was any financial tension between them.

Decision

After further discussion, it becomes clear that the best course of action is for the Johnsons to create a Living Trust and divide their estate into unequal inheritances. The Living Trust gives them with a place to hold all their assets, including the business, and provides a trustee to manage things in the event of incapacity. Heather will receive 1/2 of the estate. It will be held in trust and managed by a third-party professional.

Directions to the trustee state specifically that the trust must be formed in a way that does not disqualify Heather for federal aid, and stress that the funds should be used for medical care outside what is covered by Medicaid, and to help with taxes and other living expenses. Bill is satisfied to know that if Heather’s addiction progresses, she will not be able to use trust money to buy drugs, and Catalina is relieved that there should be no need for Heather to ask Amanda for anything. Amanda will receive 1/4 of the estate, also in trust, but they decide her financial background makes her qualified to run the trust herself, so they allow her the option of naming herself as the sole trustee. Bill points out that if she does name herself sole trustee, she’ll probably spend the entire trust in a few years. The remaining 1/4 of their estate is to be split between the grandkids, in trust, to be used either for education, forming a business, or investing in one. They name Bill’s niece, an attorney living in Texas, as the trustee for the grandkids’ trusts. Bill also decides to take out an additional life insurance policy and hire a financial advisor to manage his investments, relieving him of some stresses and establishing a relationship with a professional that his trustee can rely on if it becomes necessary.

Takeaways to consider

Treating children fairly does not have to mean everyone receives the same treatment.
Creatively dividing your estate may more accurately reflect your values and allow you to do even more good than an “equitable and outright” distribution.
Placing assets in trust can help protect them from irresponsible spending, divorce, predators, and creditors.

Each family is unique and each child is an individual. There is no substitute for talking with a knowledgeable professional about your situation.

What next?

If you’re interested in creating an estate plan that reflects your chi ldren’s best interests, even if that means unequal inheritances, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Tips to Reduce Conflict After Death

Fri, 21 Oct 2022 17:45:00 GMT

Estate administration difficulties are a frequent source of letters to advice columnists. Recently, the "Dear Prudence" advice column in Slate included a letter about a mom deciding to leave her house to one of her children. "Prudie" let her know that there was nothing wrong with this decision. Read the column here .

Nothing about this advice is incorrect: the mom absolutely has the right to leave the house to the daughter who gave up her dreams to take care of her, and the daughter absolutely has the right to accept the house despite her sister’s potential objections. We’ve written before about unequal distributions, and how in some cases they can be the more loving decision than an equal division of assets.

That being said, this situation is a prime example of the complex emotions that are embodied in family inheritances. It is extremely rare that everyone in a family is on board with the division of assets; and money can cause otherwise friendly family members to turn on each other, especially while they are grieving the loss of a loved one.

So, how can this sort of conflict be avoided?

Be Proactive

The best defense is a good offense, and a validly executed estate plan is the best way to ensure that your wishes are carried out. In the above example, the mom has “changed her will” to reflect that the daughter who lives with her should get the house. Without this important legal step, her wishes might not be enforceable and the disgruntled sister might prevail in contesting the estate. Don’t wait for your family to “work things out” among themselves if you have anything of great value – emotional or monetary.

It is also a good idea to name a professional fiduciary to administer your estate after you’re gone. Not only does a professional have the knowledge and experience to handle the process properly, but it will drastically reduce the chance that one kid feels like another kid has taken advantage.

Be Clear

A primary cause of difficult probates is when the instructions are contradictory. If the mom in the above example signs a beneficiary deed to all three kids, but her Will instructs that the house go to only one of them, which instruction should prevail? It might seem obvious to the letter writer that the most recent directive should be followed, but the law in Colorado could actually honor the beneficiary deed above the Will.

Whatever you decide, it’s vitally important that your instructions are clear and consistent. We’ve written before about how Estate Planning is more than just a Will, so make sure your beneficiary designations, operating agreements, deeds, titles, and notes all correspond to your Will or Trust documents.

Be Open

Honest communication is always the best way to prepare your family for what is to come. Make sure everyone involved knows ahead of time what you have decided and why. For some families, sharing the plan over Thanksgiving dinner or providing a copy of the estate plan is appropriate. For others, a statement like, “Your sister’s share will reflect the many gifts we’ve given you over the years,” might be enough to alert your beneficiaries that they shouldn’t expect equal shares.

Sometimes direct communication is impossible. We have clients who disinherit one or more of their children, or who create a trust to avoid conflict with a particularly greedy or irresponsible family member. In that instance, a Statement of Intent to be read with the Will or Trust may be the best way to share your values and explain the situation. If the distribution is not exactly what your kids expect, at least they are aware that you deliberately, and thoughtfully, designed it that way.

what next?

If you’re interested in meeting with us to discuss ways to avoid conflict among your heirs, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Your Divorce Is Final: Now What About Your Estate Plan?

Thu, 20 Oct 2022 16:37:00 GMT

Most people don’t plan to get divorced. Unfortunately, it’s a process that many find themselves having to go through, sometimes more than once. By the time you are done with your divorce, you may be sick of the legal system and sick of lawyers. There are, however, several critical estate planning tasks you should address as soon as possible after your divorce is complete.

For many people, a divorce filing is the first significant legal event of their lives. So follow along and let us try to help you traverse the many pitfalls of estate planning after divorce by either bringing to attention your unforeseen issues or reinforcing known concerns, and the priority status you should attach to finalizing their details.

do your designated beneficiary instructions need to be updated?

First, and maybe most important, you need to review your designated beneficiary instructions on your retirement accounts and life insurance policies. While there can be state laws and federal requirements that limit or prohibit your ability to change beneficiaries until your divorce is complete, it is important to know where and when you can make these changes. Most states have some form of prohibition specifically against making changes during the divorce process, and then changes can be made after the divorce have been finalized.

Your designated beneficiary instructions are contracts with the companies to which you have provided them, the purpose of which is to get this money out to those you have listed almost immediately. They do not care about your divorce or how much animosity you may now have for your ex. Although many states, Colorado among them, have statutes that authorize an insurance company or stock brokerage to treat a spouse from whom you got divorced as though they pre-deceased you even if you never removed them from your instructions, many companies ignore those statutes and follow the instructions as written, even if they clearly should have been updated.

do your power of attorney documents need to be updated?

Second, after any divorce, you must review and revise your power of attorney documents. Your financial power of attorney likely gives your now ex-partner access to accounts, safe deposit boxes, retirement funds, and even your mail. You need to find those documents and ensure that they list the people to whom you mean to give these powers. Limiting your exposure to emotional people in emotional times who might have access to all of your liquidated assets or to choices concerning your end of life decisions, is always important and should be first on your list of concerns.

Similarly, if you were in an emergency medical situation, would you want the hospital to be waiting for guidance from your ex-spouse, or taking guidance from that ex-spouse over other family members, because your medical power of attorney says that is what you want?

Does your will need to be updated?

Third, do you have a will that predates your marriage? If so, then you should consider revisiting the document to assess what assets you have linked, and who is in charge of your financial affairs in the case you become incapacitated or pass away during the divorce process. The process of divorce should be viewed exactly the same as after the divorce has become final. All documentation linking the two of you needs to be severed exactly the same way that it would be had you never been married in the first place.

would your kids need a trust to hold their money for them?

Fourth, you need to review the terms of any trust agreement that you put into place for your kids. If you have trust, it likely says your ex will manage your kids’ funds for them as their trustee. Although a court will likely assign all day-to-day parenting duties to your ex if you pass away, it does not mean that your ex has to be put in charge of the money that you left your kids. Giving those purse strings to someone for whom you may have more trust can be one of the most effective ways to ensure your kids are raised with your values, even if you are not available to personally ensure that happens.

do you have any instructions regarding your memorial service?

Finally, you should account for who will be in charge of your memorial services. Would you want a funeral home waiting on confirmation from your ex-spouse that the plan to which your family has agreed is acceptable?

Estate Planning after divorce: let us help you

The McKenzie Law Firm stands ready to help you with any questions, concerns, and organizing of your estate plan for your life now and the lives of your loved ones going forward. After finishing all the necessary legal changes to your estate plan, you will then be able to provide, through the best of your ability to, any children, any business relationship , any charity, any pets caught in the crosshairs of your divorce, and for yourself, in your post marriage life.

What next?

If you would like to know more about minimizing risks in your estate plan:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What should I know about when a power of attorney goes into effect?

Mon, 10 Oct 2022 21:01:00 GMT

What should I know about when a power of attorney goes into effect?

Power of attorney (POA) is the authority given to one or more persons, called agents, to act on behalf of another person, known as the principal.

POA transfers decision-making to the agents for different reasons. It could cover instances when the principal is traveling or ill or if they are temporarily or permanently incapacitated.

Agents can be attorneys, family members, partners, financial managers, or anyone else named in the power of attorney contract. The POA agreement can also specify the level of decision-making powers and the areas that the agent gets to control.

Most POAs cover healthcare decisions or financial matters. Here is what happens once a power of attorney contract goes into effect.

When does power of attorney go into effect in Centennial, Arapahoe County, Colorado?

Once the parties sign a power of attorney agreement, it goes into effect immediately unless the contract declares a different start date. The powers are limited to the duties stated in the contract. It is also important to explicitly state the duration of the agreement. For example, someone can grant financial power of attorney while they undergo a medical procedure. In this instance, they may only want to power to last until they recover and leave the hospital.

Power of attorney can be an important choice. If you become incapacitated, and you have not named someone as your agent, a court may select someone to make decisions on your behalf. If you want to be sure that you choose an agent who you trust to respect your wishes, it is best to draft a power of attorney contract early and ensure it goes into effect immediately. It will cover you if you get into an accident or have a sudden illness and are unable to make medical or financial decisions for yourself.

You should understand that decisions about POA agents are not final. You can cancel power of attorney at any time and select someone else to represent you.

When and how does power of attorney end?

You can set up power of attorney so that it has an expiration date, or you can name a specific action or set of actions an agent can take that will cause them to lose power.

In most cases, however, you revoke power of attorney by creating another document. If you wish to completely end POA, you can create a revocation of POA document, which ends the agent's powers. You can also create a new POA contract, which nullifies the previous one and grants POA to a different agent.

In some cases, durable power of attorney can last until the principal dies unless it is explicitly revoked. This can occur when you want someone to handle your estate as you grow older.

How To Set Up Power Of Attorney

The steps for setting up a POA can vary depending on the details of your plans and your location. However, in most cases, you will follow the same general steps:

Choose an agent. You should opt for someone you can trust to be calm, and impartial, and follow your wishes.
Download the POA template or get it from an attorney's office. It can be good to consult an attorney to ensure you have the correct documents because requirements vary by state and type of POA.
Fill out the document, ensuring you explicitly state any details about decision-making powers and duration. Attorneys can be helpful during this step. They can help you use correct terminology that cannot be misinterpreted by agents or a court.
In almost all cases, POA agreements require notarization. That means you need to sign the document in front of a notary before they stamp it.
Some states allow verbal power of attorney. Even if this option exists in your location, a written document is better to avoid confusion and ensure clear directions.
Fill out duplicate copies of the power of attorney document and give one to your attorney, one to the court, and keep one for yourself. Some states require that power of attorney be filed in court before they are made legal.

Healthcare And Financial Powers Of Attorney

For individuals, there are typically two areas that could require power of attorney: healthcare and wealth. Here is a look at these two categories.

Healthcare power of attorney

A principal can choose to have a durable power of attorney for someone to make health-related decisions on their behalf. This type of POA agent is also called a health proxy.

The decision-making powers usually start when the principal can no longer make their own medical decisions. In most cases, you cannot give a direct caregiver, such as your physician or nurse, healthcare POA. It must be someone else.

You can replace an agent or draft a new healthcare POA at any time, but it is always good to have one in case of an unexpected accident or illness.

Financial powers of attorney

Someone with financial powers of attorney can make money and estate-related decisions for you. In cases involving incapacitation, an agent can pay your bills and taxes and manage your assets.

You can have multiple financial POAs. This is common if you own a business. In some cases, an agent can simply make day-to-day business decisions for a business owner when they are on vacation or have a short illness.

You can have different powers of attorney for financial and healthcare matters, and these will typically be separate documents.

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what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Did I Pick the Right Guardian?

Sun, 09 Oct 2022 21:29:00 GMT

We try to keep abreast of estate planning advice that’s given online. Two letters featured in the “Dear Prudence” advice column brought up issues with guardianship.

The first , both heartbreaking and uplifting, concerned a letter writer who had recently been given guardianship over the young children of close friends who had died in a car accident. The new guardian was seeking advice on how to explain death to young children, and how to address potential differences in the religious outlook between the new guardians and the deceased parents.

The second is from the wife of a man whose biological son passed away, leaving him the guardian of his teenage granddaughter. The letter writer is seeking to have the teen move in with her birthmother so that the fun activities they planned for their retirement are not compromised.

These letters dramatically illustrate the difficult issues surrounding the selection of guardians, and the importance of making this selection in a thoughtful way.

While the first letter represents the best of what we hope for when we choose guardians - trustworthy people who want to preserve our values as they raise our kids with love – the second letter represents our deepest fears – putting our kids in a traumatic situation where they are not welcomed or loved as they ought to be.

If you have picked a guardian, or are considering naming one, the following questions should clarify your options:

Is the guardian stably employed and in a stable relationship?
Does the guardian share my religious beliefs, or is he or she willing and able to teach my religious beliefs to my children?
Are my kids emotionally invested in their community, or can I choose someone who lives far away?
How important is it to me that my children are raised by a biological relative?
If the guardian is not a member of my family (or even if he or she is), is he or she going to be willing and able to help my children maintain relationships with the rest of their family?
Does the guardian have room in his or her house for my children, and if not, is he or she willing to move?
Am I going to be able to leave the guardian a sufficient amount of money to raise my children until they are at least 18, and if not, is he or she capable of overcoming the shortfall?
If your child has special needs, does the guardian have the patience, knowledge, and resources to deal with that situation?

This list likely could go on much longer, and in all likelihood, you are not going to be able to find anyone who meets all of your criteria. The difficulty of choosing a guardian causes many people to procrastinate. If you don’t make the decision, however, and disaster strikes, the decision is going to have to be made by someone entirely unfamiliar with you and your family.

Don’t forget! This decision needs to be revisited frequently. Friendships fade. People get divorced or move. People age and develop health problems. Again, the list can go on. This is not a “set and forget” decision. You might be surprised, however, at the sense of relief that you feel once you do thoughtfully work your way through this decision and made the best possible choice of guardian for your children.

If you are struggling with this big decision, the McKenzie Firm’s Guardianship Guide may be of help (please contact us for a complimentary copy). It will ask you a series of questions designed to help you evaluate your priorities and rank each potential guardian based on his or her character and suitability.

What Next?

If this process seems too complex, or if it uncovers financial practicalities that need to be addressed, come see us! We provide a professional, warm, and committed atmosphere in which to work out these difficult decisions and leave you with peace of mind.

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Disinheriting: An Extreme Step For Rare Occasions

Thu, 06 Oct 2022 04:01:00 GMT

One thing that can motivate people to create an estate plan is a desire to reduce or eliminate the share of their estates that some family members will receive relative to others. There can be lots of different reasons for disinheriting somebody. Some rooted in animosity — a desire to ensure that a family member that you don’t like doesn’t get any part of your estate. Others based on concern — not wanting a child struggling with a drug addiction to suddenly have access to thousands of dollars. Sometimes, it can even arise out of a desire to help — cutting a disabled child out of a will so that he or she doesn’t get disqualified from receiving government benefits.

Whatever the reason though, disinheriting a close family member is an extreme step that can have many unintended consequences, even when the decision seems justified and the motives pure. As this article illustrates, disinheriting should be treated as a deep fallback option, utilized only after you have considered other ways to accomplish your goals. There are almost certain to be at least a few. If you do think you want to disinherit a family member, consider the following issues.

is disinheriting an option?

If the person that you are trying to disinherit is your spouse, your state may have laws that prevent it. A lot of states require a certain portion of your estate to go to your spouse, regardless of what your will says. This often becomes an issue in two situations.

First, when the deceased and his or her spouse were living separately from one another at the time of death, but hadn’t completed a divorce.

Second, when the deceased was married at the time of death, but wanted his or her estate to go to kids from a prior relationship. If you want to cut a spouse out of your will, you probably either need to get that spouse’s written permission, divorce that spouse, or create a trust to disburse your assets in the way that you want.

Is disinheriting going to cause family strife?

Even if you have a bad relationship with certain family members, those family members still might get along with other family members that you don’t mean to punish. Disinheriting some family members while lavishly rewarding others is almost certainly going to at least lead to some awkward Thanksgiving encounters after you’re gone, if not worse. It may feel cathartic to imagine the looks on the faces of family members who you haven’t gotten along with when they realize that they aren’t getting anything, but you should also consider the awkward position into which you may be putting the family members who do receive your assets.
Are they going to feel guilty every time they see their disinherited siblings? Worse yet, are they going to get sucked into litigation with their own family members? Disinheriting a close family member substantially increases the chance that your estate plan is going to get challenged in court. Estate and trust litigation is a mushrooming industry. While litigation is never fun, it tends to be a particularly ugly, drawn out, and expensive experience when it’s not just money involved, but family emotions too.

Do you really know the financial situations of those who you are cutting out of your estate plan?

Sometimes, people decide to disinherit a child because they assume that the child doesn’t need the help, and maybe there are other children that do. That can be a dangerous assumption to make. Even if you’re right about your children’s financial situations at the time that you’re planning your estate, those situations may change dramatically in ways that you couldn’t possibly have foreseen after you’re gone.

If control really is needed, consider a trust

If your reason for disinheriting someone is based on a legitimate need for control — such as preventing a drug addict from receiving unfettered access to substantial funds or not wanting to disqualify a disabled child from receiving government benefits — consider setting up a trust instead. Trusts are flexible and often give you a way to accomplish your goals without the permanence that disinheriting someone entails.

If you do disinherit a family member, revisit that decision frequently

As bad as being disinherited can be, it’s worse if the decision was based on a situation that changed while the deceased was still alive. Finding out that your brothers and sisters are receiving money and gifts that you aren’t because of a drug problem that got solved or because of a frayed relationship that got mended can be a particularly bitter pill to swallow. If you do decide to disinherit a family member, it is critical that you reevaluate that decision frequently.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Checklist For After Death

Wed, 05 Oct 2022 19:45:00 GMT

If you’ve been appointed an executor of a loved one’s estate, or a successor trustee, and that person dies, your grief – not to mention your to-do list, including tasks ranging from planning the funeral, coordinating relatives coming in from out of town and (eventually) meeting with a trust administration or probate lawyer – can be quite overwhelming. First and foremost, take care of yourself during this emotional time.

To help you with the “business” end of things, here’s a quick checklist of crucial details that will make the trip to our office to handle the legal affairs easier. I know it can be difficult, but some of these things have a deadline, so make sure that you reach out sooner rather than later:

Secure the deceased’s personal property (vehicle, home, business, etc.).
Notify the Post Office .
If the deceased wrote an ethical will or legacy statement (https://www.everplans.com/articles/how-to-write-an-ethical-will), share that with the appropriate parties in a venue set aside for the occasion. You may even want to print it and make copies for some individuals.
Get copies of the death certificate. You’ll need them for some upcoming tasks.
Notify the Social Security office.
Take care of any Medicare details that need attention.
Contact the deceased’s employer to find out about benefits dispensation.
Stop health insurance and notify relevant insurance companies. Terminate any policies no longer necessary. You may need to wait to actually cancel the policies until after you’ve “formally” taken over the estate, but you can often get the necessary paperwork started before that time.
Get ready to meet with a qualified probate and trust administration attorney. Depending on the circumstances, a probate may be necessary.
Cancel your loved one’s driver’s license, passport, voter’s registration, and club memberships.
Close out email and social media accounts, and shut down websites no longer needed. Depending on circumstances, to take these steps, you may need to wait until you’ve “formally” taken over the estate, but you can often learn the procedures and be ready to take action.
Contact your tax preparer for advice on filing the last taxes of the deceased.

Even if a probate is not needed, there is work that needs to be done to administer the trust properly. Here’s what you need to gather:

The deceased’s will and trust. If the original of the deceased’s will or trust can’t be located, contact us as soon as possible and bring any copies you do have.
A list of the deceased’s bills and debts. It’s often easier to bring the statements or the actual credit cards into the office rather than try to write out a list, but do whatever is easiest for you.
A list of the deceased’s financial advisors, insurance agent, tax professional, and other professional advisors.
A list of the deceased’s surviving family members, including their contact information when available. Even if they’re not named in the trust, the attorney will need to know about everyone in the family.

You may be thinking about handling all the paperwork yourself. It’s a tempting thought. Why not keep things as simple as possible? But a “DIY” approach to this process might cost you and your family dearly. Read on to understand why.

consequences of mishandling an estate: examples from real life

Example #1 : Failing to disclose assets to the IRS. Lacy Doyle, a prominent art consultant in New York City, inherited a large estate when her father passed away in 2003. He allegedly left her $4 million, but she only disclosed fewer than $1 million in assets when she filed the court documents for the estate. Per the Washington Post article : “She opened an ‘undeclared Swiss bank account for the purpose of depositing the secret inheritance from her father’ in 2006 — using a fake foreign foundation name to conceal her identity… [she also] didn’t report her interest in the hidden accounts — nor the income they generated — from 2004 to 2009.” As a result of these alleged shenanigans and Doyle’s failure to report the accounts to the IRS, she was arrested and brought to trial. Although she avoided prison by pleading guilty, she paid over $250,000 in restitution, and was placed on home arrest for almost a year.

Example #2 : Misusing power of attorney. Another famous case of an improperly handled estate involved the son of famous New York socialite, Brooke Astor. Her son, Anthony Marshall, was convicted of misusing his power of attorney and other crimes. Per his obituary : “In 2009, Mr. Marshall was convicted of grand larceny and other charges related to the attempted looting of his mother’s assets while she suffered from Alzheimer’s disease. He received a sentence of one to three years in prison but, afflicted by congestive heart failure and Parkinson’s disease, was medically paroled in August 2013 after serving eight weeks.”

Some key takeaways

Seek professional counsel to avoid even the appearance of impropriety when handling an estate.
Bear in mind that errors of omission and accident can be costly – even if your intent was good. An executor who makes distributions from an estate too soon can get into serious trouble if, for example, the estate ends up with too little to pay its creditors. An executor’s personal assets can wind up in jeopardy if his or her actions cause an estate to become insolvent.
Even if you’re well organized and knowledgeable about probate and estate law, it’s surprisingly hard to anticipate what can go wrong. There are many ways to end up in hot water when you’re handling the estate or trust of a loved one. Do not assume that having good intentions will be sufficient to keep you safe.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Good Communication

Tue, 04 Oct 2022 15:37:00 GMT

Here’s a surprisingly common scenario: A couple decides to draw up a will. They split their estate evenly between their three kids, and name the husband’s youngest brother as Personal Representative. Then, after both have passed away, it’s discovered that the designated beneficiary forms on their bank accounts and retirement assets also point to the brother. So the money in those accounts is passed directly to him, bypassing the terms of the will, which stated equal shares to the kids. When the kids approach their uncle for their share of the assets, he says that those assets don’t belong to them. Without the ability to talk to their parents, the kids are left wondering what they really wanted.

the other side of the story

Now, maybe the uncle spent all the money on funeral arrangements and administrative costs of his brother’s estate. Maybe there was only a few thousand dollars in those accounts by the time both spouses had passed away, and the uncle really is honest and would be happy to split the money between the three kids, except there isn’t any left.

But the chances are, the kids don’t believe that, and they suspect him of having siphoned off some of the money for his own interests. And maybe, he actually did, because he figured that the job of Personal Representative is a big responsibility and the money his brother left him was intended to be compensation for his work.

It’s possible they even verbally told him that back when they asked him to serve as Personal Representative. Maybe he remembers a conversation from 25 years ago when the couple told him that he’d always been there for them, and they were going to leave him a substantial sum as a thank you. Perhaps the couple never intended that the accounts would belong to their kids, figuring that the sale of the house would provide enough for the three of them to share. Maybe the uncle has developed an expensive medical problem or struggles to get by on social security that isn’t ever enough, and he knows that the kids are young and able to earn their own money. Maybe he feels he needs it more.

Maybe all of this is true, or none of it. It doesn’t matter, because the end result is the same: discord. Fighting. Resentment. Bad feelings. Possibly a rift that affects not only the kids and their uncle, but their cousins and other family members, too.

Good Communication is the key

It’s tempting to look at the situation and decide that the couple’s mistake was not updating the designated beneficiary forms. The core of the issue, though, is a lack of communication. Whatever the couple’s intentions were, they needed to make them abundantly clear to all the parties involved. They might not have all agreed, and talking through a decision doesn’t guarantee that no one will be upset about it, but at least they could have made their intentions clear.

As estate planning professionals, we often see lack of communication causing rifts in families. Usually, it comes about when a child is disinherited. No matter how obvious or necessary the choice may be, many children will still say, “I thought they’d at least leave me something.” Whether or not we intend it that way, the fact is that our estate plan is the final statement we make to our heirs. How we choose to divide our money communicates our values.

Good communication means no unpleasant surprises

One couple decided they would be leaving the bulk of their several million dollar estate to charity, reserving only $250,000 for each child. This was something they communicated to their kids while their youngest was still in college, so at no point during their adult life did the kids expect a big inheritance. They were able to make decisions based on that knowledge, securing their own retirement funds and investing for their future. The couple was generous during their lifetimes, paying for family vacations, investing in their daughter’s business ventures, and giving their son the down payment on his first home. When they passed away, the $250,000 was received as the gift the couple intended it to be; and in fact, the son donated 10% of his share to charities of his own choosing.

His parents’ insistence on good communication meant that a large inheritance just wasn’t something the kids expected. They also learned that helping others is one of the responsibilities that come with wealth.

Contrast this with a woman who had a very small estate, owning nothing but her home and some personal effects. When she died, her will stated that everything should be divided equally among her three daughters. The difficulty lay in the fact that her eldest daughter, Rosie, lived with her, and had spent the bulk of her adult life caring for her mother and helping her as she aged. Rosie was, unfortunately, still dependent on her mother.

When her siblings decided they wanted to sell the house, Rosie was left with no recourse but to accept the majority opinion and vacate the home she had occupied for the last 31 years. She expected her mother would leave her the house, partly because she needed it, and partly as a recognition of the close relationship they’d always shared. On paper, it seems fair that the estate was divided evenly, but Rosie certainly didn’t see it that way. It will come as no surprise that this family did not value good communication in other areas as well.

Your final statement

One of the easiest ways to communicate your values through estate planning is to include a "Statement of Intent." This is an optional paragraph in the opening part of the estate planning document (either a Will or Trust) where you can state in your own words what you intend for your assets. Most people assume their family members don’t need any further explanation, and that the Will speaks for itself. In some cases, this may be true. Misunderstandings can be present in just about every human interaction, however. It’s better to be clear than assume others already know your mind.

Documents are limited, however, by their very nature: they are static, unfeeling pieces of paper. So we encourage all our clients to have face-to-face, honest conversations with their families about their estate plan. At the very least, those agents you choose to serve as Personal Representative, Medical Power of Attorney, or Trustee should know you have chosen them. The fiduciary professionals we recommend at our practice insist on meeting with their clients to discuss their values, their hopes for their estate, and their family situation. If good communication is something a professional considers an important component of estate planning, it’s probably a good idea to follow their example.

Whatever you choose to do with your assets, The McKenzie Law Firm can help you develop a plan to achieve it, and we can assist with difficult family conversations, too.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Medicaid and Long-Term Care. Is there any way to Protect Assets?

Thu, 29 Sep 2022 03:56:00 GMT

Most of us do not realize that when the time comes for our parents or ourselves, there are few options in paying for in-home care, assisted living, or long-term/nursing home care needs.
The average cost of a nursing home in Colorado is around $7,000 per month with some facilities charging $12,500 a month or more. Medicare, our country’s medical insurance benefit for those over age 65, will only pay for up to 100 days of care, and usually much less. After this time period, your options are to private pay or seek Medicaid benefits. Will you have an extra $7,000 to $12,500 to spend each month for this care?
Medicaid is a massively misunderstood benefit in America. It is a joint program between the federal government and the states which provides benefits for in-home care, assisted living, and long-term/nursing home care. Each county in Colorado has its own Medicaid office overseen by the Health First Colorado (Colorado’s Medicaid Program).

Qualifying for Medicaid Help

To qualify for Medicaid, one must submit an application that shows "countable" assets below $2,000 and monthly income below $2,523 (the 2022 limit). However, these asset and income levels are subject to detailed structuring so that even a person having over $500,000.00 in assets or more may, with careful planning, qualify for Medicaid.
The common thought that one must be poor to qualify for Medicaid is absolutely wrong. How can this be true? Health First Colorado Medicaid regulations allow a married couple to shift assets and income from the spouse needing assistance to the healthy spouse. Also, certain assets like a home, car, wedding rings, medical equipment, and the like are exempt from counting towards the Medicaid limit. A single and widowed person has similar planning options.
You may have heard that one must “spend down” all their assets to get under $2,000 to qualify for Medicaid. Many people in the medical field may suggest this to you. But this is untrue. In many instances, our planning can shield all a person’s assets from being counted by Medicaid and also protect those funds from being captured down the road.
Medicaid in Colorado has a program called Medicaid Estate Recovery which seeks to recover Medicaid benefits from one’s assets after one’s death. For instance, Medicaid can place a lien on one’s house which must be satisfied before that house can be eventually sold, or at the time of its sale. Our planning seeks to minimize or eliminate this possibility.

Medicaid Planning

Our Medicaid planning seeks to achieve three goals:

Qualifying one needing benefits for Medicaid-in a nursing care facility or home-care.
Keeping assets in one’s family and not subject to Medicaid “Spenddown”
Shielding as much of the assets as possible from Medicaid Estate Recovery.

Medicaid qualification can be met by almost any Coloradoan; however, it takes careful planning with a qualified Elder Law attorney. Our firm is experienced in Elder Law and Medicaid planning and has helped many Colorado families meet Medicaid qualifications while saving their legacy for the family.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Understanding a Living Trust

Thu, 29 Sep 2022 03:43:00 GMT

You may have heard that you should get a revocable living trust. But what is that? Frequently people talk about trusts as though they are thing, like a box, that you can put assets into. You may have heard, for example, that you should put your house into a trust. But a trust is not a thing. It’s a relationship. There are three people involved:

The person making the trust. There are several different terms to describe this person: the “ grantor ,” the “ settlor ,” the “ trustor ,” or the “ trustmaker .” Each of these terms describe the same thing – a person who owns property and wants to control how that property will be managed if they can’t do it themselves, either because they have become incapacitated or because they have died. This person writes their instructions down in a “trust agreement.” Then they hand the property they want controlled by those instructions and the instructions to the second person in this relationship.
The person managing the trust. The person put in charge of managing the trust is the “ trustee .” The trustee’s job is to follow the instructions given to them by the person who created the trust. If the trustmaker told the trustee to give the trustmaker’s kid all the assets in the trust when that kid turns 21, the trustee has to do it, even if he thinks that doing so is a terrible idea. The trustee is a fiduciary for the beneficiaries of the trust, meaning that he or she has to proactively manage the trust assets in the best interest of the people who are ultimately to receive those assets. The trustee has a duty of loyalty to all trust beneficiaries, meaning that he must put their interests ahead of his own. He cannot, for example, use their money in a way that will benefit him. He also has a duty to treat all the beneficiaries equally. He can’t manage the trust in a way that benefits one beneficiary at the expense of another.
The person entitled to receive something from the trust. A person who is entitled to receive anything from a trust is called a “ beneficiary .” This could be one particular item, or it could be everything in the trust. It could be an income stream for a certain period of time, or it could be the amount left over after income has been paid to someone else for a period of time. It could be an outright distribution, with no restrictions, or it could be held under the ongoing supervision of a trustee who gets to decide if and when the beneficiary receives assets. As long as the trustmaker’s instructions don’t violate public policy (requiring a beneficiary to divorce his spouse, for example, before he can get anything from the trust), the trustmaker has wide latitude to decide what restrictions to put on the distribution of trust assets to a beneficiary.

Although each of these roles is legally distinct from the others, one person can fill multiple roles. Or multiple people can fill one role. In fact, when you set up a revocable living trust, you initially fill all three roles. It is also common for people to set up trusts that name their children as the trust’s beneficiaries, and for one of those children to also become the trustee after the trustmaker has passed away.

why would you set up a trust?

So, why would you do this? Because a trust allows you to separate ownership of your assets from control over the assets, and doing that creates all kind of opportunities that you don’t have if your assets are simply titled in your name. The primary reason people set up revocable living trusts is so that their assets can be managed for themselves and their beneficiaries without court involvement. If all your assets are titled to you, and you suddenly can’t do things like write checks, file tax returns, sign real estate closing documents, or make investment decisions, somebody (usually a family member) has to get authorization from a court do those things for you.
If, however, you were holding your assets as trustee of your trust, the person you named to be your “successor trustee” in your trust agreement simply steps in and starts managing the trust assets the moment you can’t do it. No court authorization would be needed because, on paper, those assets weren’t yours. You were simply managing them as the trustee.
We frequently describe this as setting up a little company for your personal stuff. Think about Apple Computer, for example. At one point, Steve Jobs was running Apple as its CEO. Sadly, he developed cancer and became too sick to do the job. When that happened, one of Apple’s other officers, Tim Cook, had to step in and start running Apple. When that became necessary, Mr. Cook was able to take over immediately. He didn’t have to wait for a court to transfer all the assets from Mr. Jobs to him. They weren’t Mr. Jobs’s assets. They were Apple’s. Mr. Jobs was just running Apple. Transferring your assets from yourself to yourself as trustee of your trust can provide you with the same convenience.

Separating Ownership from control

Another common reason that people set up trusts is because they want to give assets to people who might benefit from letting someone else control those assets for them. There are situations where you have to do this. If you are directing the distribution of assets to someone who is currently 5 years old, for example, you have to give control of those assets to a responsible adult. The best way to do that is giving those assets to the adult as the trustee for the 5-year-old beneficiary.
Another common situation in which people want to use trusts is when they want to encourage a beneficiary to make certain decisions. They might, for example, instruct the trustee not to distribute assets until the beneficiary has successfully completed rehab, or held a job for a certain period of time. This can provide an option for giving assets to someone that otherwise might have to be disinherited (something that we often discourage).

asset protection for beneficiaries

Finally, something that many people fail to appreciate is the protection that it can provide for beneficiaries, not just from their own ill-advised decisions, but from others as well. To be clear, placing assets into your own trust over which you maintain control does not provide you with asset protection. (You may find that disappointing, but keep in mind that if you are ever injured by someone else’s negligence, you wouldn’t want that person to be able to avoid compensating you by putting assets in a trust that they continue to control.)
Assets placed in a trust for you by someone else, however, can enjoy protection, but only in proportion to the restrictions that were placed on the beneficiary’s ability to access those assets. If you have said, for example, that your kids have to ask a trustee for money from your trust, those assets are going to be very difficult for any creditor your kid might pick up to access. If your kid is in a troubled marriage, or has a high liability career, you might want to give them protection by limiting their access to your trust. On paper, this can look punitive. They may, however, be thanking their lucky stars if they get into financial distress.
Setting up a revocable living trust requires lots of decisions. Those decisions can have consequences for decades. You should only set up a trust with the guidance of an expert, one that has experience seeing how these work after the trustmaker has passed away.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What A Will Won't Do

Thu, 22 Sep 2022 03:04:00 GMT

Let’s make something perfectly clear: having a will is very important ! Dying intestate, or, dying without a will, can cause heartache and headache for your loved ones. However, even a properly executed and professionally prepared will won’t do everything. Read on to see what we mean.

A Will Won’t Avoid Probate

What’s the number one misconception about estate planning? It’s that having a aill avoids probate. The truth is that a aill alone will not avoid probate. In fact, the purpose of probate is to validate the will and ensure that it:

Is the most current will,
Has been properly executed, and
Names a Personal Representative to fulfill the will’s instructions.

A will is basically just a set of instructions that specifies two key things: who gets what, and who is going to make it happen. But unless you die with only a modest estate ( i.e. , one that contains no real estate and is worth less than your state’s “small estate” standard), the will itself can’t do either of those things.

A Will Won’t Transfer Authority

Take our advice, and don’t try to walk into a bank with a copy of a will that names you as Personal Representative. The bank doesn’t have any way to know whether the account owner really has died, whether that will is the most recent version, whether it was executed properly, whether anyone is challenging its validity, etc., etc., etc. That financial institution should absolutely not allow you to transfer the money because a will has no power or authority in and of itself. Only after the probate court accepts and admits the will, and appoints the named Personal Representative, can that agent act on behalf of your estate.

The first thing your Personal Representative needs to do is lodge your will with the appropriate probate court. The court must then issue your Personal Representative letters testamentary before he or she has the legal authority to handle your assets. Since this is such an important job, the Personal Representative will have fiduciary duty to put the needs of your estate and your heirs above all other considerations. It’s essential to choose the right person. See our post on Serving as a Personal Representative for more guidance.

A Will Won’t Bypass Administration

Here’s something else a will won’t do: avoid the multiple step process that is required to settle the final affairs of the deceased.

There are several steps required to transfer a loved one’s property to their heirs. A will is essential to provide guidance and instructions that ensure your wishes are carried out to your specifications, but it’s still necessary for someone to actually do all of it. Some of the steps required include: creating an inventory of your assets, paying the filing fee and inventory fees to the probate court, alerting possible creditors and paying valid claims, filing final tax statements, and distributing the remaining assets. With probate, these steps are taken with the public oversight of a court. However, it is not the court itself that performs the work. Instead, your Personal Representative has the responsibility of carrying out all the instructions.

A Will Won’t Control All Your Assets

A Will is only one of many ways to transfer assets to your beneficiaries. Many people do not realize that joint ownership and payable- or transfer-on-death beneficiary designations bypass your Will. See our video on how an estate plan is more than just a will .

Your will only governs assets or property that are owned in your sole name at your death. When you have assets or property that are jointly owned by others or have a payable- or transfer-on-death beneficiary designation, your will does not control them. In fact, using beneficiary designations is an estate planning tool that many people use without even realizing it.

Before you start planning to use these methods exclusively, though, keep in mind that there are downsides to transferring property through joint ownership, designated beneficiaries need to be actively updated to be effective, and you will always have other assets such as your personal property, which can’t be transferred with a payable-upon-death designation.

What's next

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Is any estate plan better than no estate plan?

Tue, 23 Aug 2022 15:23:00 GMT

It is not unusual for the estate planning process to bring up difficult questions that people would rather avoid thinking about. Questions about what should happen when kids do not get along with one another. Or what should be done when one kid is clearly more capable than the other. Or whether an equal distribution is fair when one kid needs more help. Or when one kid has provided more end-of-life help than the other.
Every once in awhile, a client will suggest effectively tabling these difficult questions and just getting something in place for now. Then they will get back to it at some unspecified time. The theory is that any plan is better than no plan. But is that true?
The short answer is no, a bad estate plan can absolutely make things worse than if there had not been a plan. The sad reality is that every contested and difficult probate in which we have been involved has had a will underlying it, most of them drafted by lawyers. The problems have rarely been the result of technical deficiencies. The will in question was drafted and executed correctly. The problem is the content of the plan.
What makes a plan bad? There are several common threads that we see.

out of date plan

People badly underestimate how fast time passes, how much about their life changes over short periods of time, and how often laws relevant to estate planning change. You might think that all your estate plan does is divide assets equally between kids and that nothing has changed about that since you last thought about it. But even if you think your plan is that straightforward, consider the following questions. Ten years ago:

Were you living in the same place you are now?
Did you spend your time with the same people with whom you spend your time now?
Did you use the same banks and financial institutions, and have all the same accounts, for financial management?
Were your and your kids’ marital statuses the same?
Did you have all the same family members, or have their been births or deaths since then?
Do your kids have the same financial capabilities and challenges that they used to have?

Even in the unlikely event that your answer to the above questions is that nothing has really changed in your personal life, the laws have changed dramatically. Ten years ago, there was no estate tax (congratulations Steinbrenner family on your tax free transfer of the Yankees!), but people were planning around the expectation that a relatively low estate tax threshold was going to be resurrected in 2013. As it turns out, although the estate tax did come back in 2013, it was only for estates that exceed $5 million in value. And for the first time, married couples could combine their exemption amounts, meaning they could give away a combined $10 million, estate tax free. 10 years before that, when that threshold was only $600,000 and couples could not combine, estates commonly owed estate tax. Going forward, only a small percentage would.
Then in 2017, that amount was doubled. With adjustments for inflation, the amount single people can give away in 2022 in $12.06 million. Married couples can give away $24.12 million, estate tax free. At the moment, almost no one has an estate tax problem.
Yet, we are still encountering plans that have complex planning to avoid an estate tax that the planner does not need to avoid anymore. Sometimes, this is just inconvenient. In some circumstances, these outdated plans are creating problems that go far beyond inconvenience. Some plans, for example, have inadvertently disinherited the surviving spouse by sending money directly to kids (or, worse yet, stepkids) to try to avoid a tax that is no longer due!

wrong person in charge

People also badly underestimate the complexities involved with administering even a modest estate. The administration of most estates involves a mix of probate law, trust law, real estate law, tax law, and family law. On top of all those legal complexities are the human complexities of jealousy, greed, grief, and impatience. Liquidating and slicing up your own estate would probably be a challenging thing to do. Imagine trying to step in and liquidate someone else’s.
Because people underestimate the complexity of the job, they typically just appoint a close family member to do it. But just because someone is close to you does not mean they have the ability to handle the issues described above, deal with difficult family members, and stay organized. My advice to clients who we are assisting with planning is to focus on selecting the right people for the various jobs that need to be filled. That tends to be more important than the exact instructions you give them (although those are also critically important). A person with the right skills will probably do fine, even with less than perfect instructions. A person who lacks the necessary skills will struggle, even with highly detailed instructions.

lack of liquidity

You might think that a smaller estate is easier to administer than a bigger estate. This is not necessarily true. The hardest estates to administer are ones that don’t contain a lot of cash, which can be a prolem in any estate, big or small. We have seen estates where the only asset of any significance is a modest home. The problem is that the personal representative can pay the estate's bills with a modest home. He or she can’t split the home into pieces if multiple beneficiaries want it. Even with a will that specifies who should get what, you have little room to maneuver if any dispute or unexpected need for funds arises.
These challenges can surface in bigger estates too. Even when there are millions of dollars of assets, it is not necessarily helpful if those millions of dollars are tied up in commercial real estate or a closely held business.

family that disagrees with the plan

You may think your plan is great. The plan, however, is not for you. And if the people who are affected by it don’t agree with it, that can still cause problems. You may think that children of a decedent could only get upset about an unequal distribution. But even if an instructions to divide things equally can cause problems. The first problem is that it is not always easy to equally divide things, especially when the assets include substantial personal property or other difficult to value assets, such as business interests or unique real estate.
The second problem is that the children may not view their siblings as worthy of receiving equal distributions. We most often see this come up in situations where one child was living with, and assisting, elderly parents prior to their deaths. That child frequently feels as though they are owed more for the service they provided. They also often feel as though they sacrificed their own careers and happiness to do that. Whether that sounds reasonable to you, the other children never agree. They view the sibling who was living with the parents as having received free housing and support for years, and actually think that they should receive less!
Don’t assume that your children can’t fight over an equal distribution.

You don't just need a plan. you need a good plan.

The moral of the story is that putting a plan in place is not necessarily helpful if the plan doesn’t honestly account for your family. In fact, it can make things worse. Before you start tinkering with your plan, it is critical that you understand what various jobs need to be filled, what those people will need to do, and your options you have concerning how to instruct them. If you never been through an estate administration, planning for one can end up giving you a false sense of security. If you have decided to "just get something in place for now," proceed with caution.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Navigating Conflicts of Interest for Personal Representatives and Executors Who Are Also Beneficiaries

Sun, 21 Aug 2022 17:29:00 GMT

It is not uncommon for the personal representative of an estate (also known as an executor in some states) to also be a beneficiary of the estate that they are tasked with administering. Most wills appoint a spouse or adult child to serve as personal representative and those same parties are often primary beneficiaries under the will that they will be administering. Generally, such an arrangement can work, but the potential for conflicts of interest is immediately apparent.
A personal representative’s job is to execute the deceased person’s wishes as articulated in their will. This, among other things, involves collecting and distributing assets to the will’s beneficiaries. It is almost impossible for a will to be explicit about every decision that a personal representative will have to make and there is generally some discretion in how property is divided, allocated, or managed.

Equal isn't always fair

Imagine a situation where a will says, “half my property shall pass to child 1, with the other half going to child 2.” Well, which property exactly should go child 1 and which should go to child 2? Does child 1 get the house? Does child 2 get the sportscar? What if child 1 is the personal representative of the estate and gets to make that decision? A personal representative is a fiduciary to all of the estate’s beneficiaries, but how then can they guarantee that their own personal interests as a beneficiary are not influencing their decisions as to who gets the house and who gets the sportscar?
Even if the personal representative can mentally isolate their interest as a beneficiary from their duty as personal representative, it is unlikely that a disgruntled family member will see it that way when they don’t get the property they want. Disgruntled family members plus the appearance of a conflict of interest is a recipe for a messy estate administration. These disgruntled family members could seek removal of the personal representative and ask for additional punishment based on either real or perceived improper dealings.

Traps for the unwary

A potential conflict of interest exists for personal representatives who are also beneficiaries when they sell assets to themselves from the estate, buy assets from themselves with money from the estate, hire their company to perform estate services, charge excessive fees, sell property that co-beneficiaries want to keep, refuse to sell property that co-beneficiaries wish to sell, make loans or gifts to themselves from the estate, or make investments that benefit them as a beneficiary but not the other beneficiaries. The personal representative may not even be aware of the conflict of interest when performing some of these tasks, but simply administering the estate in what they believe is a convenient manner. These actions could nonetheless give rise to claims of self-dealing or impropriety from other beneficiaries.

One person, competing interests

Due to the ambiguity of what exactly could be construed as a conflict of interest, it is always a good idea to consult an estate administration attorney to help you navigate the process as personal representative. In fact, if you are both the personal representative and a beneficiary, you might consider hiring separate attorneys to represent you in each of your roles: one for you as a personal representative and one for you as a beneficiary. This is because any attorney you hire to help you as personal representative will have that very same duty to all beneficiaries of the estate, which may be directly opposed to your separate interest as a beneficiary. This is especially true in situations where a beneficiary, who is also the Personal Representative, is contesting part of the will.
Oftentimes, the solution to resolving conflicts of interest in estate administration is full disclosure and getting all beneficiaries to sign off on actions. That does not, however, resolve the problem for a lawyer who is tasked with representing a Personal Representative who is also a beneficiary under the will. In representing a client, a lawyer is required to “exercise independent professional judgment and render candid advice” to its clients ( American Bar Association Rule 2.1 .) Can a lawyer truly exercise independent professional judgment when its two clients are in direct opposition to each other?
If an attorney simultaneously represents two clients (or one client with two distinct roles) whose interests are adverse, the attorney could be sued for malpractice, disqualified by the court, disbarred, or face additional punishments from State Bar associations and courts. The lawyer’s unethical representation could also cause problems for the clients themselves when the lawyer’s representation casts doubt on the administration of the entire estate. This can even result in a probate court’s decree being reopened, or greatly delay administration of the estate as the parties argue about whether the personal representative should be removed.

In an ideal world, every beneficiary serving as personal representative would obtain separate counsel to independently represent them in each of their two roles. Most people do not do this because of the expense and hassle of being represented two different attorneys, especially if those attorneys end up giving you conflicting advice. The apparent cost savings of obtaining an attorney to represent you in both roles, however, can be more than offset by the myriad risks that such dual representation carries.

What Next?

If you have been appointed to administer someone else's estate, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about how correctly administering an estate can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
Learn more by reading our blog or watching our videos .

What Is A Family Limited Partnership?

Sun, 21 Aug 2022 17:04:00 GMT

Families that own and run successful businesses together often face several challenges. The successful transfer of a business is one of the most notoriously difficult problems in estate planning.
Many times, the generation that created the business wants to transfer that business to future generations – eventually. In the meantime, they want to maintain control. So the first problem is how to both maintain control while transferring management, knowledge, and eventual ownership to the next generation.
The other common problem is that, usually, different family members have different levels of interest and participation in the family business. The family members who have high levels of participation and interest might feel as though they deserve a larger share, or even the whole thing, when the founding generation eventually moves on, given the amount of time and effort they have contributed over the years. The less interested family members may not necessarily want the business, but that doesn’t usually mean they are okay with being disinherited. The more interested family members may feel resentful of less interested family members receiving the same ownership interest as they have. The less interested family members may feel resentful about the more interested family members having been handed a career.
And then, of course, one of the biggest threats to the longevity of family businesses is outsides becoming involved, especially if it happens involuntarily via divorce or creditor problems.

Many of these issues can be addressed with business entities designed specifically for the purpose. One flexible and powerful arrangement is a family limited partnership.

What is a family limited partnership?

A family limited partnership is a business partnership formed under state law, with two more family members controlling the day-to-day operation of the business as its “general partners.” The partnership is “limited” because, unlike traditional partnerships, these are arranged under state laws specifically allowing certain people to be given partnership interests without taking on liability for the partnership.
The non-controlling partners are “limited partners.” Limited partners are entitled to share in the business’s profits, but they do not have a right to participate in its day-to-day management. The benefit of not having the right to participate in the business’s day-to-day management is that limit on liability for the business’s debts and liabilities.
The characteristic that separates a family partnership from other types of partnerships is the restrictions on to whom ownership can be transferred. Typically, transfer options are tightly limited to other family members.

Advantages of a family limited partnership

A family limited partnership:

Allows the founding generation to remain in control of the business while establishing a structure through which to transfer ownership in the business to future generations.
Gives the founding generation a way to transfer ownership of the business to family members in a manner that reflects their interest and involvement in the business. As described above, it is very common, in families that own businesses, for some members to be more interested or involved in the business than others.
Limits who can become a member of the business. Perhaps the biggest risk that family business face is that ex-in-laws will gain ownership interests through divorce.
Provides asset protection. The only members of a limited partnership that potentially have personal liability are the “general partners.” Limited partners do not. We further limit the potential for a partner’s creditors to get to partnership assets by, for example, requiring a super majority for certain actions or requiring unanimous agreement among the partners to liquidate the partnership’s assets or dissolve the partnership. Further protection can be built in by including layers of protection, such as LLCs, within the partnership.
Can minimize taxes. Often the value of the assets inside of a family partnership exceed the value of the partnership itself. How can that be? Because the limits on control over the business or who can it be transferred to diminish its value. Would you pay $5 million for a business that had $5 million of assets if you knew you would never have any right to control or direct how those assets were used?
Allows for flexibility. Unlike trusts, a family limited partnership can provide asset protection and tax minimization while still allowing the founders to change the entity’s governing terms.

Words of caution

To the extent you do end up using your family partnership to avoid debts or minimize taxes, you better be prepared for the possibility that a court or the IRS are going to closely scrutinize it. As a society, we don’t want to make debt or tax avoidance easy.
What will they be looking for? The following scenarios can result in a loss of the benefits a family partnership is supposed to provide:

Commingling the partnership’s assets with your personal assets. The partnership should be limited to holding business and income-producing assets. Trying to extend the protection to your personal life by putting your house or cars in the trust blurs the line between the two.
Using the partnership’s bank account to pay your personal expenses. If you need money to pay your personal expenses, you should go through the hassle of making a profit distribution and then using the funds that you received to pay those expenses. Using the partnership bank account or credit card to buy your groceries, for example, is another form of comingling.
Receiving income that was produced by a partnership asset directly. Sometimes people will put rental properties into their partnership, and then have the rent paid directly to them. Again, the income should go to the partnership first and then be distributed as a profit.
Living in a property that is owned by the partnership, rent free. No true business would allow someone to live in its properties for free. If you are living in a property that is owned by the family partnership, you not only need to pay rent, but fair market rent.
Transferring all your assets to the partnership. Sometimes, people get excited about the asset protection potential a partnership provides and try to transfer everything into it. A critical part of asset protection, however, is not to make yourself insolvent. You need to keep enough assets in your name to cover your expected personal expenses and liabilities.
Having no reason to set up the partnership other than tax minimization. The IRS requires that these types of entities have a purpose beyond just tax avoidance. That additional purpose can include consolidation and organization, asset protection, and other typical business purposes.

Conclusion

If you own a business that you are interested in keeping in your family while also achieving tax and asset protection benefits, you should consider adding a family partnership to your estate plan.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

What Does “Legally Dead” Really Mean?

Tue, 16 Aug 2022 17:19:00 GMT

Recently, actress Anne Heche was declared legally dead , but was not taken off life support in anticipation of organ donation. How can someone be dead but still on life support?

Do We Really Have To Define Death? Doesn't Everyone Already Know What It Means?

Short answer: YES. We had to define it. Here's why:

The Uniform Determination of Death Act (“UDDA”), adopted by all states and the District of Columbia (though some have modified it) offers two definitions for when an individual may legally be declared dead: Irreversible cessation of circulatory and respiratory functions; or Irreversible cessation of all functions of the entire brain, including the brain stem.

Circulatory/Respiratory Death: The Heart Stops

Circulatory Death is when the heart stops beating on its own (no heartbeat without mechanical intervention: without a heartbeat, the blood won't move through the body, the lungs stop so there's no air, and the rest of the organs start shutting down because they all need blood and oxygen to function ) but the person is not brain dead yet (there is still some electrical/synaptic activity, for now) and has no hope of actual recovery.

Like Anne Heche, it may involve medical personnel who have transported the person from the scene of an horrific car wreck to the emergency department while continuously performing chest compressions to simulate the heart beat. In the hospital emergency department or operating room, when the patient’s heart stops beating on it’s own (it is very well documented at this point), the medical team waits for several minutes to ensure that the heart has completely ceased functioning and will not function without mechanical (outside) intervention. At this time, a physician from the hospital will pronounce the patient dead. This can also happen when the person has some illness with no way to recover; usually it is diagnosis of “terminal cancer” that has spread throughout the body to the point where chemotherapy is no longer an option.

Brain Death

According to the UDDA, brain death is defined as the irreversible cessation of all functions of the entire brain, including the brain stem. A brain-dead person is dead, although his or her cardiopulmonary (heart/circulatory system and lungs) functioning may be artificially maintained for some time. Because of the neurological nature of brain death, a controlled and extensive clinical exam must occur before a qualified, authorized professional can make that final declaration. Brain death is final and finite; it is not the same as a being in coma or persistent vegetative state.

Declaration of Death: State Laws

Either scenario is often depicted in movies and television dramas, with “Time of death, 2:14 a.m.” with the high-pitched, uninterrupted whine of heart monitors in the background. Anne Heche was declared brain dead on Friday afternoon, but her family announced her body was not taken off life-support in anticipation of organ donation.

Although all states (and the District of Columbia) have adopted the Uniform Declaration of Death Act -- most using the exact wording of UDDA -- some state laws add additional regulations. Some examples include:

Florida: Determination of death must be made by two doctors -- one the treating physician and the other a board-eligible neurologist, neurosurgeon, internist, pediatrician, surgeon, or anesthesiologist.

Texas: Except in situations where a patient is on life support, the determination of death (including brain death) may be made by a registered nurse or physician's assistant if the hospital's written policy allows.

Colorado: declaration of death; Disposition of last remains; and medical Durable Powers of attorney (Living will)

In the State of Colorado, there are laws, regulations, and standards governing an official declaration of death: who can make that declaration; when that declaration can be made; and how – the criteria that must be met before the declaration may be made. Effectively, Colorado codified the UDDA.

In Colorado, C.R.S. § 12-36-136 provides:

(1) An individual is dead if:

(a) [they have] sustained irreversible cessation of circulatory and respiratory functions; or

(b) [they have] sustained irreversible cessation of all functions of the entire brain, including the brain stem.

(2) A determination of death under this section shall be in accordance with accepted medical standards.

The Disposition of Last Remains , addressed in Colorado at C.R.S. §15-19-103 et seq. , covers several aspects of the disposition of someone who has been declared medically dead – and therefore is legally dead. In the United States, there are three major customs: (1) the rituals performed for a dead person, which can include a visitation or wake; (2) a funeral or memorial service; and (3) the burial service or inurnment.

The Colorado statute contains a form for the declaration of disposition of last remains at C.R.S. 15-19-107 , and it includes some very important choices for everyone to consider, including: burial, cremation, entombment, or “other” (which includes a disposition as determined by a named designee); and, requests concerning a funeral, memorial service and other special instructions including “Anatomical Gifts” -- a.k.a. Organ Donation. (NOTE: Colorado law does not address cryogenic preservation and biological continuity, but does cover assistive reproductive technology; please be sure to consult with a qualified legal professional if you have undergone IVF treatment or donated sperm.) All Colorado residents can easily sign up to be an organ donor with the Department of Motor Vehicles (a division of the Colorado Department of Revenue) when they apply for their state ID or driver’s license. They are identified by a small red heart with an embedded “Y” on the lower right corner of the front of their license or identification card.

The Medical Durable Power of Attorney (“MDPOA”) is found at C.R.S. § 15-14-506. Subsection 3 (applicable to the aforementioned types of death) states:

"An agent appointed in a medical durable power of attorney may provide informed consent to or refusal of medical treatment on behalf of a principal who lacks decisional capacity and shall have the same power to make medical treatment decisions the principal would have if the principal did not lack such decisional capacity."

An MDPOA is such a “declaration” as defined by C.R.S. §15-19-103. The MDPOA may also be referred to as a Living Will, especially if you have a thorough Estate Plan in place. It often contains a statement of wishes, and can give authority to the agent upon injury or death, to make a determination of disposition of last remains of the principal, including organ donation.

At The McKenzie Law Firm, we highly recommend having at least some form of an end-of-life plan in place, even if it’s incredibly simple: “I do NOT want to be placed on life support;” “I only want to be placed on life support until it is determined my body will not recover/function without it;” “I want to be an organ donor;” "No funeral services;" "Cremation, and spread my ashes in the fire pit we built at our camping grounds in Ophir Creek;" or “Donate my body to science.” Too many people are unwilling to consider having these plans in place, and even fewer are willing to discuss their wishes with family and friends. Unfortunately, no-one knows how much time they have left – we may be given an estimate (“six months to a year, at most,”) but most of us do not get to pick the exact date and time.

What is most important to know is this: hospitals and emergency medical professionals will make every effort to save a patient’s life (regardless of their status as a donor), unless the patient somehow tells them NO . This is where the MDPOA plays the starring role. We tell clients " If you don't write it down, it won't happen. " It appears that Ms. Heche did take the time to memorialize (in writing) and declare her wishes, discussed them with her family and friends, and then appropriate measures were taken to ensure her wishes were carried out. In short: she decided what she wanted to happen after she died.

When a loved one (child or adult) is injured, in a near-fatal or fatal incident, the family and friends are often overwhelmed with trying to decide what to do. If the person is unconscious due to head injury, but also only has a broken leg, who is able to authorize medical treatment? What about an elderly person who has a stroke, falls down, and is still unconscious a week later: what can medical personnel do, how long can they do it, and who do they need to talk with to get permission? Answers to these questions (and many more) will also vary based upon age (over or under eighteen/legal adult), marital status, and whether there is some sort of declaration by the individual already officially in place.

Fortunately, The McKenzie Law Firm can help you with all aspects of Guardianship, Conservatorship, Estate Planning, and Estate or Trust Administration. We are able to help our clients navigate the confusing situations that often occur with these and their situations. As a full-service firm, we can help you understand what paperwork is necessary, what is and is not required by law, shield clients from unwanted contact, and ensure that their wishes are carried out.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Some Benefits to Grandparents of Giving Gifts to Their Grandchildren in Trust

Wed, 27 Jul 2022 13:41:00 GMT

There are some serious drawbacks to many options for giving gifts to grandchildren. Either there are no tax or estate planning advantages, or you have no control of the funds (or lose control after a certain point), or the money could affect a grandchild's eligibility for financial aid.

An option that overcomes many of these problems involves transferring money into a trust established to benefit a grandchild. With the help of an attorney, you can draft a trust that reflects your express wishes about when the income and principal will be available to the grandchild, and even how the funds will be spent.

Transferring funds into such a trust offers the following benefits:

You can reduce the size of your estate by transferring up to $16,000 (in 2022) into each trust you create for each grandchild. No gift taxes will be due in connection with the transfers;
Although the trust owns the assets, you control them as trustee and can decide what type of investments to make;
Income earned by the trust from amounts that you've deposited will not be taxed to you; the trust pays the taxes;
Amounts deposited in trust, and the income earned from those funds, will be used for the benefit of your grandchildren; and
You can provide that the trust terminate at any age you specify.

In order to qualify for these benefits, however, certain restrictions apply. These trusts are complex legal documents and should not be set up without the help of an experienced attorney. As a result, the chief downside of such trusts is the cost of establishing and maintaining them, which you should discuss with an attorney before going ahead with a trust.

Finally, you must be totally comfortable with this gift-planning strategy and the amount of money available to you in your estate. In short, you should only make gifts if you feel certain that the amount of funds remaining in your name and the amount of income they will produce will be adequate for your needs.

What next?

If you are in the process of thinking through your financial legacy to your family, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

2022 Brings the Latest in Testing and Treatments for Alzheimer’s Disease

Wed, 27 Jul 2022 01:33:00 GMT

Alzheimer’s disease gradually destroys memory and other mental functions that cause confusion. Many of us have a friend, family member, or know of someone that has been diagnosed. The medical community continues to search for ways to relieve symptoms, test for early signs, and find a cure. Studies have shown that changes in learning and memory happen well before signs of Alzheimer’s are found in brain scans. Early detection could offer an opportunity for preventative treatment in the future.

Testing for Earlier Diagnosis

Recently, The US Food and Drug Administration (FDA) authorized the first in vitro diagnostic for early testing of Alzheimer’s disease. It is an alternative to (PET) scans that use radiation and cerebrospinal fluid taps that are costly and time-consuming.
In May 2022, Fujirebio Diagnostic developed a new testing application for patients 55 years and older who have shown cognitive impairment. The test was able to get through an expedited review process. It can be used to detect brain plaques and analyze spinal fluid and proteins that accumulate to form the amyloid-beta plaques tied to Alzheimer’s disease. The FDA suggests testing be combined with other clinical evaluations to confirm a diagnosis.

Doctors and medical labs evaluate the future of alzheimer's

Most primary care doctors believe that one day, dementia will be managed as a chronic disease. But that means doctors and patients need to be made aware of new treatments and technologies, like the test developed by Fujirebio Diagnostic.
A survey by the Harris Poll for Quest Diagnostics suggests half of physicians don’t think Alzheimer’s will ever be cured, but about 75% thought new therapies might help manage the disease. Quest introduced a blood test in March for the early detection of Alzheimer’s. The company wants to see physicians and patients begin to prepare for the newer, more convenient diagnostics to become widespread tools in the health care industry. Diagnostic blood tests would be faster and more cost-effective for the healthcare system overall and lead to a more immediate referral to specialists. However, the majority of clinicians also feared the blood tests for Alzheimer’s would cause a surge in diagnoses and stress the health care system.

What next?

If you are concerned about Alzheimer's and dementia and wondering about your planning options, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Supreme Court Rules Medicaid Can Recoup Against Settlement Funds for Future Medical Payments

Wed, 27 Jul 2022 01:13:00 GMT

The Supreme Court of the United States issued a ruling last week that dictates that a state’s Medicaid agency can recoup funds for benefits paid against an injured party’s settlement award for future medical expenses.
In this case , a Florida student was tragically injured and left in a vegetative state when she was hit by a truck after she stepped off her school bus. Her personal injury suit settled with an $800,000 award, of which roughly $35,000 was designated for past medical expenses. Instead of taking the amount designated for past medical expenses, the state Medicaid agency tried to attach $300,000 of the settlement proceeds.
The Medicaid Act requires states to seek reimbursement from third parties who are liable for a recipient’s medical care. As a result, Florida enacted the Medicaid Third-Party Liability Act, which automatically attaches a lien to settlement proceeds that an injured applicant receives from a case “that necessitated that Medicaid provide medical assistance.” (See Fla. Stat. §§409.910(6)(c), (6)(c)(1), 409.901(7)(a).) Generously, the state’s statute limits recovery to 37.5% of the injured party’s total recovery amount.
The plaintiffs argued that federal statute prohibited a state from attaching settlement funds for future medical expenses. While the Medicaid Act prohibits a Medicaid agency from seeking reimbursement from a recipient’s property, the SCOTUS interpreted 42 U. S. C. §1396k(a)(1)(A) to allow a state Medicaid agency to seek reimbursement for both past and future medical care expenses from a personal injury settlement

What next?

If you are plan around a potential need for Medicaid assistance, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Should You Agree to Serve as Someone’s Personal Representative or Trustee?

Mon, 25 Jul 2022 02:01:00 GMT

Many people engaged in estate planning underestimate the importance of choosing the right Personal Representative or Trustee (sometimes referred to as the executor). They treat these roles like honorary titles, to be bestowed upon a favored family member or friend as a reward for their loyalty and companionship over the years.

In fact, however, being an estate executor is a real job, with hard tasks, complex legal concepts, and a lot on the line. Serving as an executor often involves real estate transactions, tax transactions, negotiations with medical facilities and creditors, personal property valuation, organization and tracking large amounts of information, and personal money management.

Each of these tasks can be challenging enough when you are dealing with your own finances, with which you are intimately familiar, let alone someone else’s. If you have been nominated to serve as the Personal Representative or Trustee for someone who has passed away and are considering whether to accept the challenge, knowing what the job entails is critical.

Fiduciary Duties

The first thing to understand about the property you are managing is that it is not yours. Because you will be in control of it, it will feel like yours, but you are merely managing it for the benefit of the estate’s beneficiaries and creditors. Some or all of it may eventually become yours, but not until it is properly transferred out of the estate and retitled to you.
In the meantime, you have fiduciary duties to the estate’s beneficiaries and creditors. A fiduciary duty is a duty to act in someone else’s best interest.
Sounds simple, right? Well, this seemingly simple concept contains lots of traps for the unwary. Among your duties, and the problems that frequently arise, are the following:

You have a duty to diligently administer the estate. There are surprisingly few deadlines in the probate process. The reason for the lack of deadlines is that the pace of administration is not totally under the executor’s control. Even modest estates can sometimes take years to administer if negotiations with creditors are necessary, or if the estate has difficult-to-liquidate assets, or if there will be a tax return due the following year, or if there are other legal processes involving the estate, such as a medical malpractice case or a personal injury lawsuit. Because there are so few deadlines, it is critical that the executor be a self-starter and not need a lot of oversight and reminders keep things moving at a reasonable pace.
You have a duty to proceed in the best interest of all the beneficiaries, and not take sides or play favorites among them. This presents two challenges.

First, what you think is in their best interest may not be what they think is in their best interest. Telling someone that they are wrong about what is best for them can require some awkward conversations, if not serve as the catalyst for litigation.

Second, what is best for one beneficiary is not necessarily what is best for every beneficiary, and trying to decide whose interest should take priority over whose can require difficult decisions that have no right answer. This can be particularly difficult if the executor is also one of the beneficiaries, a common scenario.

Even modest estates can contain personal property that more than one person wants, for example. Deciding who is going to get that property in a way that leaves the people who did not get it feeling that the process and outcome were fair can be a Solomonic feat.
Your fiduciary duties extend not just to the estate’s beneficiaries, but to its creditors as well. Every estate has creditors, even the estates of people who had little to no debt during their lifetimes. Obviously, the beneficiaries’ interests and the creditors’ interests are opposed to one another. Every dollar paid to a creditor is one less dollar going to the beneficiaries, and vice versa.

In your own negotiations in your personal life, you can engage in gamesmanship with an opposing party. For example, you might understate your ability to pay to your own creditors, or you might threaten actions you do not intend to take, such as litigation or bankruptcy.

You cannot, however, engage in deception, misrepresentation, threats, or gamesmanship with someone to whom you owe a fiduciary duty. You have to deal with them openly, honestly, and fairly. This does not mean that you cannot negotiate. But all parties that have an interest in an estate, both beneficiaries and creditors, have the right to see the estate’s inventory and accounting, and to be kept reasonably up to date on the administration progress. You are working for them, not against them.
You have a duty to secure and protect the estate’s property. This means quickly taking steps to ensure that real estate is locked up (and possibly that locks are changed), car keys are accounted for, and personal property is not unknowingly removed. It also means locating the Decedent's bank accounts, investments, insurance policies, and other financial assets and retitling them to the estate.

Over the long term, it means making sure that property insurance is kept in force, taxes are timely paid, and maintenance and upkeep continues as long as the estate continues to control the asset. Losing property to a natural disaster, tax liens, avoidable fees, or theft can be a breach of your duties. So can allowing property to fall into disrepair.

It can be surprisingly easy, even for a smart, capable person with the best of intentions, to run afoul of these duties. The law can be unforgiving when that happens.

Specific tasks you will be called on to Complete as an estate’s executor

In addition to the difficulties presented by fiduciary duties, the tasks an executor typically has to complete are often no simple matter. Those tasks often include:

Securing estate property.
Ensuring there is a plan to pay the Decedent’s debts and liabilities until they can be resolved or a longer term plan can be developed.
Reviewing and organizing the decedent’s financial records.
Correctly and timely notifying the Decedent’s creditors about the decedent’s death.
Estimating property values (or getting appraisals done for property that is not going to be sold soon or in a public market)
Inventorying the estate’s assets and liabilities.
Preparing a house for sale (the amount of work this requires can vary widely depending on how much maintenance and upkeep the Decedent was doing).
Negotiating the sale of the house.
Filing an income tax return (maybe more than one, if the assets in the estate continue to produce income into a new calendar year).
Filing an estate tax return.
Figuring out what to do with personal property, which usually involves some combination of distributing to the beneficiaries, selling, donating, and throwing away.
Correctly notifying the estate’s beneficiaries and keeping them reasonably apprised of your progress.

None of these tasks is easy. Additional tasks that don’t necessarily need to be done in every estate, but can be especially difficult when they do arise, are managing a rental property or business, working with someone who is living in the Decedent's property without an ownership interest or lease, selling or transferring a closely held business, dealing with unique or valuable personal property, or dealing with angry, bitter, or otherwise difficult family members.

Conclusion

Serving as an estate’s executor, whether that is as a personal representative or a trustee, is a real job with lots of responsibility and work. It is often a thankless role, and in some cases, may make you the target of anger and resentment for decisions that were dictated to you by the Decedent or by the law. You should not go into the job lightly (and if you are in the process of trying to determine who should be the executor of your estate, you should carefully choose someone capable of this kind of work, not just default to your closest family member or friend).
On the other hand, if someone nominated you to be the executor of his or her estate, you should not summarily turn down the job without carefully considering why they thought you were the right person to do it. You should be aware that accepting the job does not necessarily mean you need to personally do every task described above. There are professionals that can do each and every task, and you can also hire a professional fiduciary or lawyer to help you. The costs of these services are typically paid by the estate. Help is available .

What next?

If you are about to be part of an estate administration, either as the executor or as a beneficiary, and you have questions., you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about your rights and responsibilities, whatever your role.
Learn more by reading our blog or watching our videos .

Don’t kid yourself. Your contested probate IS about the money.

Wed, 20 Jul 2022 14:51:00 GMT

If there is one thing I can count on when working with clients in contested probate matters (and just about any litigation, for that matter), it is that at some point, they will assure me that “it’s not about the money.” I think there are two reasons everyone feels compelled to make this claim. First, they don’t want to be seen as greedy. Second, they want to see themselves as having higher principals at stake than mere money. I don’t doubt that people who say that it is not about the money really believe it.
But here is the counterintuitive consequence of believing you have something more than money at stake. You may think not prioritizing money makes you a more reasonable person. It does not. Viewing your probate case as a statement of principal and not about money is usually an obstacle to resolution because the only thing the court can do is move property around between the parties.
It cannot make people feel bad about what they did. Or apologize for it. Or perform some other act of contrition. This is not a criminal case where victims get to make “impact statements” to the person who harmed them, and the guilty party can be forced to perform community service. A probate court does not have the time, interest, or ability to validate your principals.
It has one tool: if the judge or jury thinks your claim is supported by the law, they can require the other party to pay you money (or refuse to force you to pay the other party money). So if you really are doing this for some reason other than money, you are setting yourself up for disappointment because your best possible scenario cannot get you what you want.

getting your expectations right is critical

Unreasonable expectations aren’t harmless. Refusing to consider or make settlement offers based on the hope that, someday, a judge or a jury is going to make an unambiguous statement to the world that you were right, and the other party was wrong can lead to a lot of irrational, expensive, time consuming, energy-sucking decisions.
We have had clients tell us they wanted to turn down a reasonable settlement offer unless the other side would agree to also send a letter of apology. Even in the extremely unlikely event that such a request was to be accepted, now we have to negotiate what counts as a satisfactory apology letter. Is a perfunctory “sorry” in a text message good enough, or do we need a handwritten card with a full admission of all the things the apologizing party did wrong?
If you are looking for more than money out of this process, not only are you limited to receiving the one thing you say you don’t care about from the court, but you likely will find the process that it takes to get there to be extremely stressful and frustrating, and ultimately not worth it. People who haven’t been through litigation have a fantasy about arriving at the court, telling their story, and getting a nice, tidy verdict that they were right. In their mind, it is going to be like an episode of Judge Judy. They are going to go to the court with their evidence, argue about it in front of the judge for 15-20 minutes, and then the judge is going to tell the other side what a horrible person he or she is and how much money they owe for their bad behavior.
They don’t realize how stressful it will be to be cross examined by a hostile lawyer while a judge or jury silently stares at them, stone faced. They don’t picture the frustration of having to sit there silently while the other side lies about what happened. They don’t expect their favorite piece of evidence to get tossed aside due to some arcane evidentiary ruling or their best witness to be out of town during the hearing. They don’t picture themselves having to dig through years old documents to answer discovery requests, many of which will feel highly invasive, or sit for an hours long deposition.
In short, most people don’t realize that when you sue someone, you open yourself up to investigation by the person you are suing. In their mind, it is going to be a one-way street of retribution. That’s not how it works. The other side gets to tell its version of the story too.

After everything else has failed...

Clients frequently misinterpret these warnings to mean that we don’t believe them. Or that we are not going to put every bit of effort possible into fighting for them if they do choose to proceed with this process. I always point out that my encouragement to very seriously consider compromise as opposed to litigation is against my own financial self-interest. Our fees are multiples higher for a contested probate than for an uncontested one. Ten times as high is easily possible. You may have heard someone say that when people fight, the only winners are the lawyers. We work as hard as we can to ensure that is not how our clients end up feeling about the process. But the most certain way to avoid that outcome is to treat litigation as the last option, after every other option has failed.

More important to us than making the most money possible is that our clients proceed, to the maximum extent possible, based on reason and logic, even if them proceeding based on emotion would be more lucrative for us. The challenge in probate, which is not necessarily present in other types of litigation, is that the parties usually have long, close ties to one another. The emotions from relationships that may be decades old can make it difficult to treat decisions about whether to make or accept a compromise offer as a business decision. But at the end of the day, the more you can view your different options for resolution as a math calculation about money instead of as a chance at vindication, retribution, or justice, the sooner you will be able to find peace and move on.

What next?

If you are involved in a difficult estate administration, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about how you can protect your rights in a probate or trust administration process.
Learn more by reading our blog or watching our videos .

Don’t make your family clean up your mess!

Tue, 19 Jul 2022 00:14:00 GMT

I recently had a conversation with my sibling about our parents’ estate planning. I was (rightfully) very concerned as I’d just learned that they had not updated their Wills in decades: the last time they updated their Will was in the 1980s! Suffice to say, both my sibling and I are no longer minors, and neither a Guardian nor a Conservator is necessary. Additionally, some of the people mentioned in that document are now deceased, and left no heirs of their own.

To make matters more complicated, my parents are the second marriage for each: we are a blended family. My (adoptive) father has not spoken to two of his first four children in over thirty years, and the other two in about five.

Fortunately, my parents have now actually updated their documents and told my sibling and I where the originals are : they have separate Wills; their Powers of Attorney (Medical and Financial), Advanced Directives, and Healthcare Proxies are now fully executed; and, most importantly, there’s a fully executed Beneficiary Deed on file with the County Clerk & Recorder’s Office. My parents want absolutely no mistakes to be made and have made every effort to be incredibly clear about their wishes (individually and jointly).

What documents make up an estate plan?

Here are the four (main) documents everyone should consider having on file, and periodically updating:

Will or Trust
Durable Power of Attorney- Medical and Financial
Healthcare Proxy
Advanced Directive (Living Will)

At the McKenzie Law Firm, we highly recommend having at least some form of an end-of-life plan in place, even if it is incredibly simple: “All of my property, including any real property, goes to my child/friend/sibling Jane Smith. If Jane Smith dies before me, then everything to Jack Reacher.” Most people are very shocked to see that certain sections of their existing estate planning documents are no longer applicable because it’s been so long since they’ve even thought about it: property has been sold and they have moved, sometimes to a completely different state; children are born or are no longer minors (and therefore do not need legal guardians!); and, divorces/separations happen. Change, including death, is a fact of everyone’s life.

With the death of a loved one, an individual can become completely overwhelmed with trying to clean up their parents’, in-laws’, spouse’s, and occasionally a friend’s affairs. There are instances where a parent was completely unwilling to even speak of death and dying, and their adult child was left trying to pay off debts they had no idea existed (including reverse mortgages), personally paid thousands of dollars to clear those debts, only to find out there was almost nothing in their parent’s estate. Had that adult child been able to have even one conversation with their parent about their end-of-life wishes, a lot of this heartache and wasted time could have been avoided. This adult child came to us for help sorting things out, and we were able to alleviate the stress and uncertainty, and get everything finalized.

Fortunately, The McKenzie Law Firm can help you with all aspects of Estate and Trust Administration. We are able to help our clients navigate the confusing situations that often occur with death. As a full-service firm, we can help you understand what paperwork is necessary, what is and is not required by law, shield our clients from unwanted contact with toxic individuals, and ensure that our clients and the Estate or Trust are protected from unauthorized takings and scammers. Please contact us to learn more about how we can help.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Estate Planning For A Recession

Sun, 10 Jul 2022 15:48:00 GMT

Estate planning may seem like a luxury expense, one that should not be top of mind during a recession, but there are few better and more economically efficient ways to protect what you have already earned.

protecting your assets

Everybody has creditors. Your credit card company and mortgage lender are two of the most common examples. While you cannot transfer assets to another entity to shield them from current creditors, you can protect your assets from future creditors by transferring them into a specialized trust or business entity.

With all of the uncertainty currently facing financial markets, it may be especially prudent to protect your assets now. Situations tend to change in a hurry and the unfortunate truth is that unemployment, lawsuits, and catastrophic injuries can happen at any time.

Trusts

Trusts are one of the most common tools in estate planning to shield assets from creditors. Broadly speaking, there are two types of trusts: “revocable” and “irrevocable."

Revocable trusts, like their name suggests, can be revoked or amended at any time during the “trustmaker’s” life. These trusts can create some practical difficulties for creditors by holding ownership of your property outside of your name, but they do not provide any legal asset protection. This is because the trustmaker essentially maintains the ability to control the trust assets at any time by simply revoking the trust.

An irrevocable trust , on the other hand, has terms that cannot be changed absent court approval. This permanently removes ownership of the assets in the trust from the trustmaker. This more permanent transfer of ownership is what protects the assets from creditors in all but a few, limited circumstances.

Despite the permanent loss of ownership, a trustmaker can enjoy both asset protection and continued use of certain assets through an artfully constructed irrevocable trust.

Conclusion

The average cost of establishing a comprehensive estate and asset protection plan is between $2,000-$5,000. This expense pales in comparison to the costs of failing to adequately “wall off” your assets from potential creditors and the legal costs that can arise during contests to a will or the probate process (typical will contest can cost $10,000-$50,000 (2012)). It is therefore a prudent financial decision to shore up your asset protection and estate planning strategies well before you anticipate needing to use them. This is especially true in times of economic uncertainty when risks of all forms are elevated.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Estate Planning With Cryptocurrency

Sun, 10 Jul 2022 15:40:00 GMT

One of the benefits of NFTs and popular cryptocurrencies such as Bitcoin, Ethereum, Solana, and Cardano is that you are able to own, possess, and transact these assets without needing custodial services from a financial institution. However, this inherent benefit can also be a risk in estate planning situations.

There are primarily three ways in which crypto assets are stored:

On a centralized exchange ( i.e. , Coinbase or Gemini)
In a digital “hot” wallet ( i.e. , Mycelium or Metamask)
On a cold storage device ( i.e. , Ledger or Trezor)

Each of these storage options have their own benefits and risks related to security, reliability, and accessibility.

For example, a centralized exchange will allow a Personal Representative (Executor), Trustee, or Power of Attorney to recover assets in much the same way that estates gain access to brokerage accounts: namely, by providing a death certificate, letters testamentary, or other documentation to the centralized exchange. This benefit, however, is offset by the risk that the centralized exchange will not exist at the time of your passing, that the exchange will lose your assets (crypto assets are not FDIC insured), or that they will freeze or seize your assets in accordance with some potential future regulation.

On the other hand, cold storage devices are only accessible to individuals possessing the wallet’s “seed phrase” or the login information for the device that stores the private keys. This form of ownership is akin to holding cash in your wallet and provides the owner with full autonomy over their crypto assets, however they are also the sole point of failure in maintaining access to those funds. Every owner of crypto assets should take precautions to make sure that their seed phrase and login information are both secure and retrievable, but, absent a comprehensive plan, if they misplace or forget that information, it will be impossible for their estate to gain access to their crypto assets.

In light of these risks, it is important to consider how your estate and heirs will access your crypto assets if you die or become incapacitated. Generally, a will alone will not suffice. While there is currently no perfect solution, the following steps and considerations will help ensure that your crypto assets pass to your desired heirs.

Step 1: Instruct

Provide explicit instructions in your estate planning documents, including access to the necessary seed phrases and passwords to allow for a Personal Representative, Trustee, or Power of Attorney to actually access and distribute your crypto assets to the desired beneficiaries.

It is also preferable that the individual you appoint as your Personal Representative, Trustee, or Power of Attorney has a familiarity with crypto assets and how they work. This will help reduce the risk of funds being sent to an incorrect address and being lost forever. Crypto assets require far more instruction and information to access than most traditional asset classes. Even if your crypto assets are not yet part of a formal estate planning strategy, detailed instructions are essential to making sure that your crypto assets are found by your desired beneficiaries and successfully held or transferred.

Step 2: Focus on the big picture

Consider crypto assets as part of any larger estate planning effort.

While it is possible that crypto assets would go unnoticed by any probate or trust administration process, it is best practice to account for any crypto assets in order to prevent infighting amongst heirs and to make sure that applicable tax laws are followed. It is likely that the IRS’s crypto asset tracking capabilities will increase exponentially over the next few years, and it would not be surprising if they are able to identify the identity of most wallets in existence in the not-so-distant future (learn more here and here ). As a result, including crypto assets as part of a trust or other estate planning strategy may help protect the assets from potential tax and creditor issues. In most instances, this larger estate planning effort would likely include a trust to keep the crypto assets out of probate courts.

Step 3: Secure

Devise a secure method of holding and transferring your crypto assets upon your death or incapacity.

If your crypto assets are stored in a cold or hot wallet, any owner wishing to transfer these assets to an heir will necessarily need to provide the Personal Representative or Executor of their estate with access to the wallet. What is the best way then to both keep your seed phrase/login information secure during your lifetime, but also easily accessible upon your death or incapacity?

One solution involves a safety deposit box, in which one would place their cold storage device or seed phrase, to allow a Personal Representative or Trustee to access upon their death. Another solution includes simply providing the key (potentially encrypted) in the trust documents held privately by the owner until their death. Both of these solutions, however, potentially compromise the crypto assets themselves by exposing the seed phrase to other parties and will require the Personal Representative or Trustee to have some familiarity with cryptocurrencies to successfully hold or transfer the assets. As of yet, there is no perfect solution to this trust/security dilemma.

Step 4: Stay up to date

Stay up to date on relevant legal and technological developments to ensure that the transfer of your crypto assets follows best practices.

As mentioned above, there is no perfect solution to the problem of storing your crypto assets during your lifetime and transferring them easily upon your death or incapacity. There are several projects in the work that attempt to solve for this problem, but none are yet reliable enough to trust for estate planning. These projects are based on smart contracts that will self-execute transfers of assets upon the occurrence of specific events, however, these types of products bring their own set of issues, including the oracle problem of determining how a smart contract ascertains that an outcome in the real world (i.e. death or incapacity) has actually occurred.

Conclusion

Crypto assets are increasingly representing a substantial portion of individual estates around the world. While one may believe that they can transfer these assets to heirs and beneficiaries without drawing the attention of the IRS or other agencies, they will likely end up leaving their heirs with back tax bills (for potential estate tax or capital gains tax liabilities) and inquiries from increasingly crypto knowledgeable government agencies. Once known, these assets may also become available to creditors of the estate or its heirs.
By integrating crypto assets into a comprehensive estate plan, efforts can be made to limit these risks and provide for a safe and orderly transfer. Clear and explicit transfer plans can be memorialized and assigned to a competent Personal Representative or Trustee, explicitly chosen to make sure that crypto assets do not slip through the cracks and are not lost due to an erroneous transfer to a bad wallet address.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

The Surprising Challenges People Encounter in Probate

Sat, 09 Jul 2022 23:35:00 GMT

When we help people with estate planning, a lot of our clients assure us that their estates are “simple.” Yet a lot of people who have been through an estate administration process tell us that it was harder than they anticipated. Why the disconnect?
My theory is that it is because a lot of people underestimate the complexity and stressfulness of the tasks required in an average probate. Many of these tasks are common. That does not, however, mean they are easy. Selling a house, for example, is a multi-step project with an enormous amount of money on the line. Filing even a basic tax return is a notoriously difficult task. Keeping track of bills and staying on top of finances is a challenge for most people.
Now imagine doing that not with your own assets and finances, but with someone else’s. And imagine that if you a make a mistake, it doesn’t just cost you money, but other people too. And imagine that you didn’t get to choose those other people. You got thrown in with them by fate. Sure, those people are likely family members, but that certainly doesn't mean you get along with them or see eye-to-eye.
With all that in mind, it can become hard to believe it ever goes well. It usually does, but people can be surprised what can cause the process to become complicated, messy, or contested. Many people assume that if the estate is relatively modest and is just going to be equally divided between siblings, then there isn't much possibility for difficulty. Oh, if only that were true!

real estate

Most people own real estate at some point in their lives. While real estate transactions can be complicated, regular people with no special training engage in them every day. So why would real estate present any special challenge in an estate administration?
First off, most real estate that ends up in an estate administration process is nowhere near ready to sell. Even well-maintained houses usually require at least a little bit of preparation work — a touch up in paint, replacement of broken hardware, cleaning up landscaping, etc.
A very large portion of houses going through estate administrations, however, are not well maintained. If the owner was elderly, it may have been decades since the house was updated in any significant way. We regularly encounter situations where the house needs substantial work or may be so far out of code, it literally can’t be sold to anyone other than a fix-and-flip investor. Another situation we see more often than you would expect is hoarding, a house full of stuff, most of which is garbage, but some of which may be valuable or contain critical information. Finding those valuable items can be like searching for a needle in a haystack.
Another problem with real estate is that all real estate is unique. The estate’s beneficiaries are not emotionally attached to any particular dollar in a bank account, or any particular share of stock in an investment account. They may, however, have lots of emotional attachment to the real estate.
While it’s not a huge sample size, I can report that, as of this writing, real estate is at the center of the problem in every difficult or contested probate administration in which we are involved.

People in Possession of Property That Isn’t Theirs

One of the first things the executor of an estate should do is find and secure the Decedent's property. This can be difficult when the property is in the possession of someone else. The most common situation that we see this arise is where someone is living in a house that isn’t theirs. Perhaps a child who never left home or one that moved back in with parents to help them in their elder years. It can also happen with cars and personal property.
The problem in all these scenarios is that the person in possession of the property and the people entitled to receive that property usually are not the same people. And depending on the circumstances that led to this situation, the person in possession of the property may think of it as theirs.
Sorting this situation out can require some awkward conversations and hurt feelings, if not litigation. It is not unheard of, for example, to have to evict siblings, or send the police to repossess personal items.

Property That Is Difficult to Value

Fairly and a ccurately distributing an estate of course requires completely and accurately identifying and valuing the estate’s assets. Bank accounts, publicly traded investments, and residential real estate is typically easy to find and value.
But every estate has tangible personal property ( i.e. , furnishings, jewelry, artwork, clothing, collectibles, etc. inside the house). Most of the time, the hardest problem created by tangible personal property is figuring out how to get rid of it. Sometimes, however, there are unique items with sentimental or market value. These situations can be very difficult. The underlying problem in these situations is that personal property is usually not easy to divide. And unlike a bank account, that is worth exactly the same amount to everyone, different people value different personal property differently.
Other assets that can be difficult to value and divide are closely held businesses and non-residential real estate.

Difficult Creditor Issues

Most people go into estate administrations focused on the beneficiaries — the people who are going to be receiving assets from the estate. Creditors, however, are just as much a part of the process. The Personal Representative or Trustee has fiduciary duties to the estate’s creditors too, meaning that they are expected to deal with those creditors openly and fairly, and get the best outcome possible for them. They can't hide from those creditors, or mislead them about the estate's financial wherewithal to pay its debts.
In most probate cases, the creditor claims are manageable and unsurprising. Sometimes, however, neither turns out to be true. It’s not unusual, for example, for there to be substantial medical bills from the Decedent's end-of-life care. In rare cases, the estate can become involved in litigation (or can already be in litigation from something that happened during the Decedent’s lifetime). These situations can lead to long delays and complicated court processes.

Heirs With Expectations out of sync with Reality

People creating an estate plan sometimes agonize over whether to share the details of that plan with the estate's beneficiaries. On one hand, telling people what the plan says can make it difficult to change the plan later on. On the other hand, if the plan differs from what the beneficiaries expect, perhaps it is better to find out about that while the person who has the power to change it is still around to do so.
Like a lot of things in life, it’s not necessarily the result that’s the problem. It’s how that result compares to expectations. A person who would have been perfectly happy to receive $50,000 finds that amount to be intolerable disappointing if he was expecting it to be $100,000. That disappointment is exacerbated tenfold if that $100,000 goes to a sibling instead.
It can be very difficult to predict at the beginning of an estate administration process whether it is going to be easy or hard. The problems listed above don’t necessarily crop up immediately. But if you see the potential for these issues to arise in an estate in which you have ask interest, either as an executor or a beneficiary, being alert to the possibilities can help head them off.

What Next?

If you are involved in an estate administration process, either as the executor or as a beneficiary and might benefit from legal advice, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration to learn more about 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.
Learn more by reading our blog or watching our videos .

Six Tips for a Smooth Probate

Thu, 30 Jun 2022 19:13:00 GMT

If you are reading this, it might be because you have recently lost a family member, and perhaps you have determined that a probate process will be necessary to get their debts resolved and assets distributed. Even if you do not need to open a probate process, you almost certainly will have to do something to get funds from bank accounts, dispose of personal property, sell a car, etc.
Here is the good news: Colorado’s probate process usually requires minimal court process, and there are a lot of resources out there to help people navigate it even though they have never done it before.
Still, there are several potential potholes, the avoidance of which can make your probate process go much smoother than it otherwise might. To avoid those potholes, consider taking the following steps.

Determine whether there is a will, and if so, read it in its entirety before doing anything

Back when I was a litigator and new clients would come in with a story about how they had been wronged, we would have to run that story by one of the senior attorneys in the firm before agreeing to take the client on. That attorney gave us the same instruction every time: get the documents. That advice always turned out to be good. It was not necessarily intentional, but what the client remembered about the relevant contract or expected that it would say almost never matched up with what the document said. Sometimes, the differences were substantial.

Do not assume that you know what the will says! Read it! Get intimately familiar with it! Be able to cite to it when asked questions by beneficiaries or creditors!

Familiarize Yourself with the Relevant Statutes

If your family member did not have a will, the probate process will be governed by the intestacy provisions within the Colorado Probate Code . Even if your family member did have a will, that will operates within the confines of the Colorado Probate Code. The will might, for example, specify that the “informal” probate process should be used. That might, however, not be an option. In certain circumstances, such as when the original will can’t be found or if the estate appears to be insolvent, you cannot use the informal process. And sometimes, getting the court’s seal of approval on certain transactions might be preferable for the Personal Representative, even if the informal process could have been used.
The Colorado Probate Code also contains a number of deadlines and other requirements and lays out the extent of the Personal Representative ’s rights, powers, and obligations. The more familiar you can get with it, the better.
If your family member had a trust, you will also want to familiarize yourself with the Colorado Trust Code .

Find, Secure, and Inventory the Assets as Quickly As Possible

When the Personal Representative or Trustee role is filled by a professional, that professional typically swoops in and immediately ensures that locks are changed, keys are found, and financial custodians are notified about the death of the account owner. Non-professionals are often much slower to do these things. This can be particularly problematic if credit cards keep getting used, or assets that can be moved, such as tangible personal property or cars, disappear. Those assets are just as much a part of the estate as the real estate and large financial accounts and protecting them for the beneficiaries is just as important, even if those assets don’t seem likely to have significant monetary value.

Overcommunicate

When administering an estate, there are a number of disclosures that the Personal Representative or Trustee are required to make. Although the Personal Representative or Trustee should not get into trouble for only making those disclosures, you probably can’t hurt yourself by making more disclosures than required. Although it can be tempting to try to avoid problems by not talking about them, the reality is that it is better to find out sooner rather than later whether someone is going to be unhappy with something. If an unanticipated problem does arise, being able to say that the person causing the problem has had the information available to them the whole time can be a great defense to any allegation that you have not been doing your job correctly.

Do Not Promise Anything to Anyone

Most estates have multiple beneficiaries and creditors. Somewhere in that group is likely to be someone who is especially eager to get their money. No matter how simple it all seems to be, and no matter how insistent they are that they be told exactly what they will receive and when, it is critical that you not try to assuage them with any specific promises. Every court process takes longer than the participants initially expect it to take, and although most probates go smoothly, there are several critical deadlines and disclosures that need to be made before you can be sure that you know what you have and who will get what. Although promising someone that they will get something by a certain date can temporarily buy you some peace, that person will come back 100 times worse if an unexpected bill or tax obligation prevents you from being able to do what you told them you would do.

Hire a Lawyer!

Many people underestimate the complexity of handling someone else’s affairs. Doing so usually requires a combination of probate law (and maybe trust law), real estate law, tax law, contracts, secured transactions, and other areas of law that are difficult even for attorneys. Layered on top of that are family dynamics and psychology around money. It can be easy for even seemingly simple estates to go off the rails. The Personal Representative or Trustee can almost always use estate or trust funds to pay the costs of an attorney. Our firm does most probates on a flat fee basis, meaning that you and the beneficiaries will know the full cost up front.

What Next?

If you need help administering someone else's affairs, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about how we can help you keep the administrative process as hassle-free as possible.
Learn more by reading our blog or watching our videos .

Why You Should Avoid Probate

Sat, 09 Apr 2022 17:14:00 GMT

If you have heard anything about probate, it's probably that you should avoid it. But probate is different from state to state and has changed substantially over the years. So what you have heard about probate may be based on a different time and different place.

Colorado has made substantial changes over the years to try to take the probate process much more manageable and less like a typical court process than it used to be. Many probates are completed without the Personal Representative ever going to court. The court wants to see certain notifications get sent out to heirs and creditors, and wants confirmation that an inventory and accounting have been made available to those parties. But the court relies on the interested parties to let it know if there is any reason to conduct hearings. Unless a party requests such a hearing, the court assumes everything is going fine and lets the estate's Personal Representative administer the estate as he or she sees fit (within the confines of state law and the decedent's will if there is one, of course).

Despite this simplified process, there are still several scenarios in which we recommend to our clients that they consider creating a plan that would avoid probate.

1. Blended family

A blended family is a family that has some sort of step relationship in it ( i.e. , a married couple with separate kids from prior relationships). Because blended families are so common, many people fail to appreciate the complex legal issues and tricky family dynamics that blended families can encounter in the estate administration process.
The problem we most often see is that the people making the plan do what most married couples do, which is to set their estates up so that the survivor between them will receive everything at the first death. The often-inadvertent consequence of this arrangement is that the children of the first person to pass away end up receiving nothing because the survivor's plan leaves everything to his or her kids.
When asked, most married couples with blended families want to create a plan that ensures that the survivor between them will be able to continue to live the lifestyle to which they have become accustomed, but also ensure that, at the second death, all the kids from both spouses will receive distributions from the estate. A trust is often needed to create this kind of multi-step distribution process. In addition to enabling control of distributions past one step, properly funded trusts also avoid probate.

2. Property in multiple states

Sometimes people ask us whether their estate plan will control assets located in other countries. We have to let those people know that, not only do Colorado probate courts not control property outside the country, they do not control property outside the state. If you live in Colorado and have a vacation property in Arizona, for example, an "ancillary probate" will need to be opened in Arizona to deal with the property there.
An ancillary probate process does not necessarily require all the steps that typically comprise a full probate process, but even if it is abbreviated, it frequently still requires hiring another lawyer in that jurisdiction, paying another court filing fee, publishing another creditor notice, etc. And as mentioned above, the probate process is different in each state. If your other property is in a state with a slower, more court-intensive probate process, it will complicate things.
Again, our most frequently used solution to this problem is to set up a trust, and title all properties to it. That ensures that your trustee can step in and handle all properties through one trust administration process, as opposed to having to open multiple probate cases in different jurisdictions.

3. An heir who would use a court process to torment your family

As explained above, although a probate really is a court case, with a judge, a case number, and a court file, most probate cases do not require anywhere near the amount of paperwork, court hearings, or other process typically required in civil litigation or criminal matters. Still, however, as also explained above, the court will get more involved in an interested party asks it to. If you have a difficult, abusive, or combative family member, it is very easy for them to use this process to gum up the works, or worse. All that person has to do is file an objection (the current fee for which is $12) and the process can suddenly become significantly more time-consuming and adversarial. We frequently see handwritten objections filed by people without the help (and expense) of lawyers. For people who enjoy "stirring the pot," there is little incentive for them not to do this.
Interested parties can also raise objections about transfers that happen outside the probate process too, but doing so is significantly more difficult. For one thing, they usually do not have access to anywhere near the amount of information they are entitled to receive through the probate process. And then to get a court process started, they typically have to file a lawsuit, which is a much bigger deal than filing an objection in an already-existing probate process. The filing fee alone is usually at least several hundred dollars, and the filing process is complicated enough that most people will find it too difficult to do without a lawyer who, in addition to charging them, will hopefully also talk some sense into them about how good of an idea this really is.

4. Personal preference

We have many clients who do not have any of the scenarios listed above, but still want to create plans that would avoid probate. Many of those clients express a desire to maintain privacy or avoid government involvement in their affairs.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Learn more by reading our blog or watching our videos .

Should You Put Your Rental Property Into An LLC?

Mon, 04 Apr 2022 02:18:00 GMT

If you own rental real estate, you may be wondering whether you should be holding that property in your name, or whether you should transfer it into a limited liability company (a.k.a. an LLC). There are a number of factors to consider. Even if you have decided that titling your rental property to an LLC is the way to go, there are often many more decisions to make concerning the structure and location of that LLC.

What is the purpose of an lLC?

The reason to set up an LLC is to silo off the risks associated with different assets from one another. Or to put different assets under different umbrellas, if you prefer that metaphor.
The most common concern that landlords have, after not receiving rent on time and having to make major unexpected repairs to the property, is that someone is going to be injured on the property, and that injured person is going to sue. If that happens, having the property in an LLC at least gives the landlord the argument that any resulting damages award should be entered against the LLC, not the landlord personally. Whether that argument prevails or not depends on a number of factors (Google " piercing the corporate veil " to learn about why your LLC might not stand up to judicial scrutiny). But if you have managed your LLC correctly, the purpose of this arrangement is that you should not have to pay any judgment entered against the LLC from assets or insurance outside the LLC.
What I just described is known as "inside-out risk" -- i.e. , risk arising from inside the LLC and potentially reaching assets outside the LLC. It can, however, go the other way too. If you get sued as a result of an event in your personal life ( e.g. , a car accident), you don't want the plaintiff in that lawsuit to be able to attach a lien against your rental property. An LLC might help you accomplish that.
LLCs give you the opportunity to separate business assets from personal assets, or even separate some business assets from other business assets, and potentially contain the risk associated with one asset from affecting other assets. If you own multiple rental properties, you could, for example, put them all into one LLC. Doing so would at least separate the risks associated with those rental properties from the risks associated with your personal life.
You may, however, want to consider putting each property into separate LLCs. The drawback to splitting properties up this way is the added administrative hassle of managing multiple LLCs. Even for single-member LLCs, this can get exhausting at some point, and many people fail to maintain the discipline necessary to maintain multiple bank accounts, multiple leases, multiple books, etc.

What kind of LLC should I set up?

If you are a sole operator, meaning that you are the only owner of the property and the only recipient of its income, the answer is probably straightforward. You would form a single-member LLC (in the world of LLCs, owners are referred to as "members"). The nice thing about single-member LLCs is that they do not have their own tax return. The IRS treats them as "disregarded entities," and the LLC's income is simply reported on Schedule C of your personal tax return. Also, because you don't have a business partner, having your property inside an LLC likely won't feel any different from having the property in your name.
The drawback to such LLCs is that, because there is so little administrative hassle involved, it can be difficult to argue that this truly is a business entity, separate from you and worthy of allowing you to shield your personal assets from the LLC's debts. If you have a single member LLC, it is especially important that you go out of your way to handle the LLC's assets separately from your personal assets. When it's just you, it can be easy to use the LLC's bank account for personal expenditures, and vice versa. You must not blur these lines! It may feel silly sometimes, but the optics matter greatly. If, some day, you find yourself asking a judge to honor the LLC and not authorize the collection of its debts from your personal assets, that judge will wonder why he or she should treat the LLC's assets as separate from your own if you have not done so yourself.
If you do have a business partner, the answer is also probably straightforward. You would set up a multi-member LLC. Running a multi-member LLC is usually significantly more complicated than a single-member LLC. As you may have deduced, unlike a single-member LLC, a multi-member LLC does file its own tax return. Moreover, it is strongly recommended that multi-member LLCs have operating agreements, detailing the roles, obligations, and contributions of the members. That operating agreement should probably also have detailed "buy-sell" provisions, specifying what happens if one of the members wants to exit the business (something that is a certainty to happen some day). While it may seem like this will be easy to figure out when the time comes, it usually is not. The benefit of all this hassle is that, in the event of a lawsuit, it will likely be considerably easier to prove that the LLC really is separate from its owners than it is for the owner of a single-member LLC.
A more difficult question can arise if your business partner is your spouse. Even if your business partner is your spouse, the IRS still considers that to be a multi-member LLC, and taxes that entity as a partnership, with its own separate tax return. The need for a sophisticated operating agreement, however, is probably less than when the partnership is between unrelated parties, because, unlike unrelated partners, in the worst-case scenario, married couples do have the divorce process to help them figure out who gets what.
I recently made the following video with Ryan Nguyen of Nguyen & Associates , discussing factors for married couples to consider when deciding how to structure their rental property ownership.

What Next?

If you think it might be time to think through your rental property structure, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our small business page to learn more about how proactively thinking through your rental property structure can help protect your assets and give you peace of mind.
Learn more by reading our blog or watching our videos .

Asset Protection Planning: Should Your Estate Plan Include A Spousal Lifetime Access Trust

Tue, 22 Mar 2022 17:31:00 GMT

A lot of new clients tell us that they are interested in putting their assets in trust in order to shield those assets from taxes and creditors . Many of those clients are talking about revocable living trusts. We have to break it to those clients that, unfortunately, neither the IRS nor the U.S. court system are going to allow you to avoid your debts and liabilities by placing your assets into a trust that you control and have the right to revoke or amend at any time. Frankly, you wouldn't want to live in a society in which that would be allowed. Imagine being hit by someone's car and being told that the person driving that car can't compensate you for your damages or medical bills because everything they have is in a trust -- one that they control. You might think that is unfair.

But what if you could get your assets out of your name, minimize taxes, and protect yourself from lawsuits by putting your assets under the control of someone who has the same priorities, goals, and interests as you? Your spouse, for example. Enter the Spousal Lifetime Access Trust (also known as a SLAT).

How does a sLAT work?

To set up a SLAT, one spouse sets up a trust for the benefit of the other spouse and usually their kids too. As explained above, unlike your typical living trust, this kind of trust does have to irrevocable, and ideally, you appoint a non-family third-party to the trustee position. Doing this gets those assets out of your and your spouse's names for asset protection purposes and also allows all future growth in value to occur outside your estate.
Although it may seem undesirable to irrevocably hand your money over to someone outside your family, keep in mind that:

you are choosing this person and it can be someone to whom you have a close relationship (just not someone to whom the beneficiaries of the trust are closely related, like their siblings, parents, spouses, or kids);
you can reserve the right to replace the trustee;
you are the one creating the instructions for the trustee as to how and when he or she distributes money from the trust; and
the trustee has a fiduciary obligation to protect and use the assets for the beneficiaries' interests.

While it is technically possible to appoint the spouse for whom the trust is being created or another beneficiary as the trustee, the benefit of having an unrelated trustee is that an unrelated trustee does not need to be limited to making distributions by any particular standard. They can be given full discretion to make distributions for any reason they see fit.
If, on the other hand, a beneficiary, or someone closely related to a beneficiary, is serving as trustee, their discretion to make distributions has to be limited to an "ascertainable standard." Similar to its policies around revocable trusts, the IRS does not view handing over your assets to a spouse and then giving that spouse the right to withdraw the assets for any reason as a sacrifice that is sufficient to justify the substantial tax breaks for which these trusts can qualify. While the ascertainable standard can be quite broad (the most common example of an ascertainable standard is limiting distributions to those for the beneficiary's "health, education, maintenance, or support"), having a beneficiary in charge of the trust invites much closer scrutiny of the trust and how it has been managed by the IRS and courts. Any deviation from the ascertainable standard, or any lack of supporting documentation, can completely undo the purpose of the trust. It can be difficult for people who are not professional trustees to consistently abide by these standards and maintain documentation for years.

Common questions about SLATs

Why not just retitle my assets to my spouse instead of setting up this complicated trust structure that I can't undo?
Giving assets to your spouse does not necessarily avoid the estate tax problem if you have one. Unlike direct transfers to a spouse, SLATs are specifically set up so that when you transfer assets into them, the transfer counts as a gift and uses up some of your gifting exemption. Transferring your assets to a trust for your spouse's benefit instead of to your spouse gets the assets out of your estate and allows future growth to occur without increasing the size of your estate and your estate tax problem. It also creates asset protection because the assets are no longer in the name of a person who can get sued.
What if my spouse and I get divorced?
It's certainly not ideal! But you can define the "spouse" to be the person to whom you are currently married so that if the identity of that person changes, the recipient of the trust's distributions does as well. You can also draft it so that your children can continue to access the funds. Of course, your children may not be as willing to share funds they receive from the trust as your spouse would have been. Even if they are, there could be gift tax considerations for transfers from kids back to a parent.
What if my spouse dies before I do? Can I get the trust assets back?
Sorry, but no. As explained above, to get the tax and asset protection benefits from this kind of trust, it has to be irrevocable. But again, you can specify who becomes the beneficiary of the trust at your spouse's death, and can set up the trust so that it could be used to cover expenses for your kids that you might have covered, such as helping them with their educations, weddings, or housing.
Can my spouse and I create SLATs for each other?
It's possible, but it has to be done with extreme care. The IRS looks with suspicion on people creating identical trusts for each other (Google " the reciprocal trust doctrine "). Allowing married couples to create the same trust for each other would create a massive loophole to the various rules requiring you to give up control as both spouses would continue to have control over all their combined assets. But there are some tweaks you can make to one trust or the other to make them different enough to avoid this problem while still accomplishing the same general purpose.
What is the ongoing maintenance and cost of having a SLAT?
You will have to file a gift tax return when transferring assets into the trust, and then going forward, the trust will have its own income tax return for any income earned by assets inside the trust.

In addition to those expenses, your trustee might expect to get paid, Professional trustees likely will charge several thousand dollars a year for this service. That may sound like a lot, but compared to the potential tax savings, which can, in many cases, get into six figures, it is often worth it. And don't underestimate the liability associated with being a trustee.

Finally, given the constantly changing tax and asset protection laws, it would be advisable with your attorney on a regular basis to review the trust and ensure that it is continuing to be in compliance with the various regulations and rules.

Who are sLATs best for?

Ideal clients for a SLAT strategy are happily married couples who own property that is expected to significantly appreciate and who can transfer such property irrevocably without jeopardizing their current standard of living. We start to suggest clients consider creating SLATs when they have at least a couple million dollars that they could potentially set aside without impacting their day-to-day lives. For clients who are only worried about asset protection, and not estate taxes, more flexibility can be built into the SLAT to potentially have the person setting it up included as a direct beneficiary.

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by areading our blog or watching our videos .

What happens during a probate in Colorado?

Sat, 19 Mar 2022 18:01:00 GMT

If you have had a family member pass away recently, you may have learned that you will need to complete a probate process. What is probate? It is the court-supervised process for settling the debts and transferring the assets of a person who has passed away. In Colorado, a probate process has to be initiated if the person who passed away had more than $50,000 (adjusted annually for inflation; it's up to $70,000 as I write this in 2022), or real estate.

This threshold only includes assets that were titled to the decedent by him- or herself, without a surviving co-owner, and which assets did not have designated beneficiary instructions attached. Assets titled to a trust or business being run by the decedent do not count towards these totals (although the business itself could be part of the estate if it did not have a co-owner and did not have any documentation directing otherwise). If your loved one did not have this amount of assets, you may be able to collect any assets or accounts using a small estate affidavit .

In the following videos, Denver estate planning attorney Dan McKenzie of The McKenzie Law Firm, LLC (303-578-2745, www.themckenziefirm.com) summarizes the process of opening and completing a probate case.

What Next?

If you need to administer someone's estate, or may be the beneficiary of an estate, and would like guidance, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate administration page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by attending one of our free webinars , reading our blog , or watching our videos .

What is the most frequent cause of a difficult estate administration?

Wed, 16 Mar 2022 19:22:00 GMT

If you have done any estate planning, your goal was probably to make the administration of your estate as easy as possible for your family. But while having a will or trust can be helpful, your estate might still be difficult to administer if your paper life and your actual life are out of sync with one another.

What is your "paper life"? It is the deeds, titles, and ownership documents for house, cars, and other assets. It's your marriage license or divorce decree. It's the contracts that you have entered. It's the loans you have taken or co-signed.

For example, if you want to treat someone like a spouse even though you are not married to him or her, you need to write that down. If you want to let someone live in a house even though he or she is not on the deed and doesn't have a rental agreement, you need to write that down. If you want to treat money that you gave to a kid as a loan (or want a loan to be forgiven), you need to write that down.

In this video, Denver estate planning attorney Dan McKenzie of The McKenzie Law Firm, LLC (303-578-2745, www.themckenziefirm.com) discusses how conflicting documents that are out of sync with how you actually are living can make administering your estate very difficult, even if you do have a well written will or trust.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Estate Planning Strategies to Protect Assets and Minimize Taxes

Mon, 14 Mar 2022 00:16:00 GMT

Contrary to its reputation, asset protection isn’t just about rich people hiding their ill-gotten gains from the IRS in offshore accounts. You may not think that asset protection is something you need, but if you’ve bought insurance, formed a business entity, or separated out money into several different types of accounts, you have already engaged in at least a little asset protection planning.

The question is, do you need to have a more comprehensive, deliberate, coordinated asset protection plan in place than what you currently have, and if so, what are your options for accomplishing that? Here are four critical points to understand about effective asset protection:

It usually requires several different strategies and approaches. The adage about not putting all your eggs in one basket applies here.
Just like the best time to borrow money is when you least need it, the best time to protect your assets is when you don’t face any threats. If you try moving assets into a spouse’s name or establishing irrevocable trusts after you’ve gotten into a situation that is likely to result in a lawsuit, you will putting yourself at risk of a fraudulent conveyance charge.
Along the same line, you need to be reasonable about the amount of assets you include in your asset protection plan. You can’t protect everything. Your asset protection plan must leave you fully solvent outside of the protected assets and able to pay any claims that you knew or should have known about at the time you were shifting your assets around.
The level of protection you are able to achieve will depend on the amount of control over your assets that you give up. You cannot put your assets into a revocable trust that you control and of which you are a beneficiary and expect that a court is going to let you ignore those assets for purposes of satisfying a judgment that has been entered against you.

Below, I describe seven trust-based asset protection strategies and how they can:

Protect your assets from creditors, including former spouses and other litigants.
Protect assets gifted to, or inherited by, your spouse, children, or other beneficiaries.

If done correctly, these seven trust-based asset protection strategies can put significant, sometimes insurmountable, obstacles in the way of a creditor. If you have questions or would like to discuss your options for trust-based asset protection, please call our office to discuss this further.

Lifetime asset protection trusts -- having your cake and eating it too

A Lifetime Asset Protection Trust is an irrevocable trust created during your lifetime that can be used to accomplish several goals.

A Medicaid Planning Trust may qualify you or your spouse for Medicaid while preserving an income stream for the well spouse and protecting the trust assets from estate recovery after death.
A Lifetime QTIP Trust is a lifetime trust for your spouse’s benefit that takes advantage of the gift tax marital deduction. This can provide asset protection plus a reduction in overall estate taxes.
A Family Bank Trust , also known as Spousal Lifetime Access Trust (“ SLAT ”), is a lifetime trust for your spouse’s benefit that uses the annual exclusion gifts and the lifetime gift tax exemption. Again, these trusts can provide asset protection plus a reduction in overall estate taxes.
A Domestic Asset Protection Trust (“ DAPT ”) is a lifetime trust for your benefit, primarily for the purpose of asset protection.

1. Medicaid Planning Trusts

Medicaid Planning Trusts may help you and your spouse:

Qualify for Medicaid while protecting an income stream for the benefit of the well spouse.
Avoid estate recovery. Assets held in this trust will pass to your heirs protected from the government’s estate recovery, which would otherwise require paying back Medicaid benefits that were received during your lifetime.

Planning Tip : Medicaid is jointly funded by the federal and state governments, and each state sets its own rules and guidelines for Medicaid eligibility and estate recovery. Therefore, a Medicaid Planning Trust must be tailored to the laws of your state of residence. Trusts may also be subject to a look-back period (not “disqualification period”) of three or five years. Medicaid Planning usually works best if done as early as possible, so please call our office now if you have Medicaid planning questions.

2. Lifetime QTIP Trusts

When one spouse is significantly wealthier than the other spouse, a Lifetime QTIP Trust offers the following benefits:

Makes use of the less wealthy spouse’s federal estate tax exemption.
Provides a lifetime, asset-protected trust for the benefit of the wealthier spouse if the less wealthy spouse dies first. (Subject to state law.)
Insures that assets left in the trust (after both spouses die) get distributed according to the wealthier spouse’s wishes.

Planning Tip : Lifetime QTIP Trusts offer a great deal of flexibility when spouses have lopsided estates. During the less wealthy spouse’s lifetime, that spouse will receive all of the trust income and may be entitled to receive principal. If the less wealthy spouse dies first, then the assets remaining in the trust will be included in his or her estate, thereby making use of the less wealthy spouse’s estate tax exemption. Although some of the estate tax savings might be obtainable with “portability,” the asset protection aspects are only available with a Lifetime QTIP.
Depending on applicable state law, the remaining trust funds may continue in an asset-protected, lifetime trust for the surviving spouse’s benefit. These trust funds will be excluded from the surviving spouse’s estate when he or she later dies and will ultimately be distributed according to the wealthier spouse’s wishes.

3. Spousal Lifetime Access Trusts

SLAT s or “ Family Bank Trusts ” became popular for married couples in 2012 when it was looking like we were going to go over the “fiscal cliff.” They remain popular today as an estate tax reduction and asset protection strategy.
This trust is sometimes also referred to as a “Lifetime Bypass Trust” since it is funded with lifetime gifts that are held for the benefit of you or your spouse. As with a Bypass Trust created after the first spouse’s death, distributions from a SLAT can be as broad or as limited as you choose.
Planning Tip : SLATs are useful if you live in a state that does not collect a state gift tax but collects a state estate tax and the state exemption is expected to remain significantly lower than the federal exemption ( e.g. , Maine, Massachusetts, Minnesota, New Jersey, Oregon, Vermont and Washington).

4. Domestic Asset Protection Trusts

The goals of a DAPT are to allow you to fund the trust with your own property, maintain some degree of interest in the trust as a beneficiary, and protect the trust’s assets from your creditors. Currently 16 U.S. states permit creation of DAPTs and the number will likely continue to grow, although laws vary widely from state to state.
Planning Tip : The laws governing DAPTs are relatively new and still evolving. U.S. courts have had limited opportunities to evaluate them thus far. We do know that bankruptcy laws allow trust assets to remain exposed to the claims of your creditors for ten years. Nonetheless, a DAPT can be a powerful asset protection strategy for the right person.

testamentary asset protection trusts -- ruling from the grave

A Testamentary Asset Protection Trust is an irrevocable trust created after your death and used for a variety of reasons.

Irrevocable Life Insurance Trusts (“ ILIT s”) protect life insurance proceeds for the benefit of your heirs.
Standalone Retirement Trusts protect retirement accounts for the benefit of your heirs.
Discretionary Trusts protect other assets for the benefit of your heirs.

1. Irrevocable life insurance trusts

An ILIT is a powerful tool for leveraging generation-skipping planning and protecting insurance proceeds for the benefit of your intended beneficiaries. In addition to asset protection, an ILIT can remove life insurance proceeds from your estate for estate tax purposes and, with proper planning, provide much-needed liquidity for owners of illiquid assets, like farms, closely held businesses, or real estate.

2. Standalone retirement trusts

Because of the recent U.S. Supreme Court decision in Clark v. Rameker (which held that an IRA inherited by a non-spouse beneficiary is not protected from the beneficiary’s bankruptcy creditors), the Standalone Retirement Trust has become an important vehicle for protecting retirement accounts from the creditors of your beneficiaries.
Planning Tip : If you have more than $200,000 in a retirement account and you have named your children as primary beneficiaries of the account, then please call our office now to discuss how a Standalone Retirement Trust can be used to protect the account from your children’s creditors after death.

3. Discretionary Trusts

A Discretionary Trust is an irrevocable trust that can be built into an ILIT and is an integral part of a Standalone Retirement Trust. You can also include a Discretionary Trust for each of your beneficiaries in your Revocable Living Trust to protect other assets.
Planning Tip : If you are concerned about an heir who is a spendthrift, married to an overreaching spouse, bad at managing money, in a high-risk profession, or otherwise worried about being sued, we can help you incorporate Discretionary Trusts into all of the testamentary trusts created in your estate plan.

trust-based asset protection planning -- the bottom line

Although asset protection trusts must be irrevocable to safeguard the trust property, they still offer a great deal of flexibility and protection for your own property as well as property gifted to, or inherited by, your loved ones.
This type of planning can become complicated and should not be attempted without the assistance and counseling of an experienced attorney. We are here to answer your questions about trust-based asset protection strategies and advise you on planning options. Please feel free to call our office at your convenience.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

In A Domestic Partnership? Make Sure You Have A Will.

Fri, 11 Mar 2022 04:13:00 GMT

A domestic partnership is an arrangement between two people. Though they are not legally married, domestic partners live together and share household and financial responsibilities. Also, though the term "domestic partnership" is most common, some states call this arrangement a "civil union" or "civil partnership." It exists in some states as an alternative to traditional marriage for both same-sex couples and partners of the opposite sex.
What does a domestic partnership do? It formalizes the relationship in a legal sense. Partners do not have all the same rights as a married couple, but they may have privileges when it comes to hospital visits, medical decisions, and control of common property.

The details of these legal rights vary by jurisdiction, but it is always essential to understand the nuances of the arrangement. Most importantly, you need to make sure you have a will that details your wishes related to property, inheritance, and other estate-related issues.

Why do domestic partners need a will?

If you or your partner die intestate (without a will), state law will dictate what happens to your estate. This can raise a few issues. First, if your domestic partnership is registered in a municipality, it might not be recognized by the state at all. Even if your domestic partnership is registered at the state level, the rules vary widely from place to place. Some states may give your partner specific rights, while others may not. If the law is unclear, other relations can challenge your inheritance or other rights in court.
A will can take any confusion out of the equation and protect you or your partner should someone choose to challenge you or your partner's rights to the estate.

Learn your rights

Your rights as a domestic partner vary by state and municipality. Therefore, you should start the process of creating a will by consulting a lawyer so that you clearly understand the law.
If you entered into a domestic partnership in a city, your rights might be limited. This is because estate laws are always applied at the state level. If the state does not recognize the city-level domestic partnership, the surviving partner may have no rights to the estate whatsoever.
In addition to gaining the necessary knowledge about estate-related rules, you can also find out what rights you have in terms of medical decisions and power of attorney. Power of attorney gives the other member of the partnership the right to make medical decisions if you are unable to decide them for yourself.
Once you consult a lawyer, it should be clear what specific steps you need to take to ensure you and your partner get the benefits from a will.

What about property?

Regardless of your legal relationships status, you can hold property as joint tenants with the right of survivorship with your partner. If either of you passes away, the property that you own together will pass to the surviving person regardless of status.

What does a will include?

Your will should include any assets or inheritance not covered by state law for your domestic partnership. You can also engage in a more comprehensive estate planning effort to ensure that your wishes are carried out after your death.
A will names beneficiaries who will inherit your property. Your domestic partner can be a beneficiary, as can friends, relatives, children, or even organizations and charities.
You can have multiple beneficiaries if you want to divide your assets. Most lawyers will advise you to name a contingent beneficiary. This person will get the inheritance if the primary beneficiary has also passed away or is otherwise unable to take over your estate. Even if you leave all your assets to your domestic partner, you can still name a contingent beneficiary who can control your estate if you pass away together.
If you have multiple beneficiaries, you can choose to bequeath specific assets to certain people or divide the value of all property into percentages. You will want to clearly name the beneficiary and precisely describe their inheritance to avoid any confusion.
The next step in a will is to appoint an executor. You can choose a trusted friend or family member or rely on a lawyer. The executor is in charge of reading the will and ensuring that everyone gets their inheritance. They are also charged with settling debts and paying any taxes due.
If you have specific items that already name your partner as a beneficiary, such as life insurance, you do not need to name them in your will. These assets will transfer directly to the designated party when you pass away.

Make sure the will is legal

You will have to take specific steps to ensure your will is legal. In most states, you need to sign the document in front of witnesses, who also sign the document. Depending on the circumstances, these witnesses might have to testify in a probate court that they saw you sign the will and ensured that you did so of your own volition and had the mental capacity to do so.

Other considerations for domestic partners

A will covers your estate and ensures that your domestic partner gets the inheritance that you desire them to have. However, there could be situations when a will does not grant sufficient benefits. For example, if you are somehow incapacitated and your state does not provide your domestic partner with powers of attorney, you can create a document that gives them the right to control your assets and finances until your recover.
With financial powers of attorney, you and your domestic partner can pay bills, manage investments, and take other necessary steps until the other person recovers or passes away, at which time the will takes effect.

How a lawyer can help domestic partners with a will

Because each state or city has different rules for domestic partnerships, you need to consult a lawyer to ensure that you cover all the necessary aspects of estate planning, powers of attorney, and other steps.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Are You Buying A Value Meal or Protection For Your Family?

Fri, 11 Mar 2022 04:00:00 GMT

There are times when prioritizing speed and cost in a purchasing decision makes sense. I like to go to a really high-end steakhouse every now and then, and linger over a three-hour dinner, served slowly and prepared with great care. But not when I’m on a cross-country road trip. When I’m driving through western Iowa on the way to our annual Great Lakes vacation, the last thing I want to do is spend a lot of money or have to keep the kids entertained for hours while we wait for five different courses to slowly come out, even if the food is amazing.
There are, of course, situations where the opposite is true as well. My wife and I aren’t looking for a value menu or a guaranteed service time when we’re celebrating our anniversary. In fact, if we walked into a restaurant that boasted about either, we would immediately walk back out. Not only would it not be a selling point, but it would be a red flag.
So yes, there are times when low cost and high speed are positives and times when they are not. The question is which end of the spectrum should protecting yourself and your family from unanticipated emergencies fall on? Based on the marketing materials of some well-known websites that claim to protect your loved ones and give you peace of mind, saving time and money is critically important:

I, however, humbly suggest that you, your spouse, your kids, your pets, etc. are worth more than 15 minutes of your time and $89. The conversation about whether a will alone adequately addresses the concerns your loved ones would have if you suddenly weren’t able to perform your normal tasks and duties, and also how that will fits in with other estate planning decisions that you’ve made, such as how you have titled your propery, or who you have put on your designated beneficiary forms, is probably an hour-long conversation by itself. And there is so much more to creating a complete plan than that.
All of us are looking for ways to save money and time, but there are times when that’s appropriate and times when it’s not. To gain a proper understanding of all the concerns and issues an estate plan can and should cover, contact us . We pride ourselves on understanding our clients’ needs, properly addressing those needs, and ensuring that our clients understand how their plan works. We are also proud to say that we don’t compete on time and that assembling your plan will take a lot longer than 15 minutes. We assume you agree that your loved ones are worth it.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

An Estate Plan Is More Than Just A Will

Fri, 11 Mar 2022 01:15:00 GMT

Many people think that if they have a will, then they have an estate plan, and that if they don’t have a will, they don’t have an estate plan. In fact, your estate plan is a mix of a number of decisions you have made. There are situations in which your will could end up controlling nothing at your death. There are other situations in which, even if you don’t have a will, your assets would get distributed quickly, with no court involvement, to exactly the people you wanted.
You will make a number of decisions over the course of your life that impact how your assets would be managed or distributed, but which you do not consider to be estate planning decisions. Jointly purchasing assets, designating beneficiaries to receive certain insurance benefits, retirement accounts, or other assets, your state’s law, and even your marital status will all play a significant role in determining who can manage your affairs for you if you cannot, and who will receive your assets if you pass away. A common problem is that many people do bits and pieces of estate planning here and there, but never think through their plans as one cohesive whole. In this video, Denver estate planning attorney Dan McKenzie of The McKenzie Law Firm explains that a will is only part of an estate plan. Watch this video to learn more about what a will does and does not do.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more reading our blog ,or watching our videos .

Thirteen Estate Planning Terms You Need to Know

Fri, 11 Mar 2022 00:30:00 GMT

Estate planning — it is an incredibly important tool, not just for the uber wealthy or those thinking about retirement. On the contrary, estate planning is something you are doing every time you acquire a new asset, open a new financial account, enter into a contract, or assume a new debt. Whether you are taking these actions in a deliberate, coordinated manner is another issue. Thoughtful, deliberate estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate on to when you pass away.
While it should be at the top of everyone’s to-do list, it can be an overwhelming topic to dive into. To help you get situated, below are some important estate planning terms you should know as you think about your own estate plan.
Assets Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.
Beneficiary A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.
Distribution A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.

Estate All assets and debts left by an individual at death.
Fiduciary A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “ Fiduciary " implies great confidence and trust, and a high degree of good faith.
Funding The process of transferring (re-titling) assets to a living trust. A living trust will only avoid probate at the trustmaker’s death if it is fully funded, meaning it contains all of the decedent’s assets.
Heirs at Law The people who would be entitled to receive a decedent’s assets if there were not a plan. Note that even if these people are not included in your plan, they might have a right to be notified about a probate process if one is taking place.
Incapacitated/Incompetent Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.
Inheritance The assets received from someone who has died.

Living probate The court-supervised process of managing the assets of an incapacitated person. Conservatorship is another term used for this process.
Marital deduction A deduction on the federal estate tax return, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.
Settle an estate The process of winding down the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to beneficiaries) after someone dies.
Trust A fiduciary relationship in which one party, known as the trustmaker or settlor, gives another party, known as the trustee, the right to hold property or assets for the benefit of another party, the beneficiary. The Trust should be memorialized by a written trust agreement, outlining how the trust assets will be distributed to the beneficiary.
Will

A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. A will can also contain the nomination of guardian for minor children.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Why Should I Have A Will?

Tue, 08 Mar 2022 23:58:00 GMT

There comes a time in every person’s life when they need to get serious about their estate plan. Writing a will is fundamental to ensuring your wishes are carried out after you die, whether they relate to the distribution of your property and assets or the care of your minor children.

Regardless of your age, medical history, and marital status, a will offers peace of mind and could save your loved ones from undue stress and expense. Let’s explore wills, what they are, and why they matter in more detail.

What is a will?

A will is a legal document that outlines what you wish to happen to your assets and young children following your death. If you do not have a will, there is no guarantee that these wishes will come to fruition. What’s more, your nearest and dearest may be burdened by the emotional and financial toll that comes with settling your affairs.
Wills are not all created equally, and some are more widely recognized and legally binding than others.

Who needs a will?

The short answer: every single person needs a will. It doesn’t matter if you don’t own property or investments; a will is still a vital legal document that benefits you and your family. If you are older, unwell, married, a parent, a property owner, or a business owner, writing a will is even more important.
It’s also essential to re-visit your will if your life circumstances change – if you have a child, inherit a property, or divorce your spouse, for example.

Why should i have a will?

Wills are not just for the wealthy or individuals with high-value assets. Everyone should have a will, including you. Here are some of the reasons why:

You can decide who your assets are passed on to and how they are divided.
You get peace of mind knowing your most valuable assets won’t end up in the wrong hands – an ex-partner you have separated from or an estranged family member, for example.
You can choose who will care for your minor children. If you do not have a will, this decision will be left to the court.
You protect your heirs from the lengthy and potentially complicated process of securing access to and transferring your assets.
You can minimize estate tax through strategic estate planning. For example, you might donate to a charity.

What type of will is best?

The best type of will is what’s known as a testamentary will. This is a written will and the most common type. You can create a testamentary will yourself; however, to ensure your wishes are carried out, have it prepared by an experienced estate planning attorney. Keep in mind, your will must be signed in the presence of witnesses.
Other types of wills include holographic wills ( i.e. , a handwritten will), oral wills (not valid in Colorado), pour-over wills, and mutual wills. These less common types of wills usually serve specific purposes and should be avoided unless advised by an attorney.

What can i include in my will?

Your will should include how you wish your belongings to be distributed. This includes things like the property you own, cash in your bank account, businesses, investments, and other higher-value or sentimental possessions.
A will can also include any charities, institutions, or organizations you would like to direct all or a portion of your assets toward.
Finally, a will should detail who you'd like to become the guardian of your young children if you die.
It’s worth noting that some of your assets are not covered by the instructions in your will. For example, you cannot nominate beneficiaries for your life insurance policy payout. Nor can you specify the distribution of investment accounts that have already assigned the ‘transfer on death’ option.

What happens to jointly owned property?

If you own property jointly with your spouse, you likely have a right of survivorship. This means that if one spouse passes away, the other receives full ownership of the property. The right of survivorship can also apply to joint ownership involving unrelated individuals.
If your spouse will obtain everything after you die without a probate proceeding, do you really need a will? Yes. You absolutely do, and here are three reasons why:

Suppose you and your spouse die simultaneously. Without a will, your property may end up with someone other than your desired heir.
While you might own your home jointly with your spouse, your other valuable possessions might be yours and yours alone. Even if you share everything with your partner, there is still the possibility of an unexpected windfall before your death.
If you hold all of your property in joint tenancy, you may not be able to take full advantage of tax-saving estate planning strategies.
While holding property jointly with a spouse seems like the obvious thing to do, it can lead to undesirable results in blended families, such as the inadvertent disinheriting of the first-to-die's children.

What happens if i die without a will?

If you die without a will (called intestate), the state will typically use a formula to determine the distribution of your assets. In most cases, half of your estate will go to your spouse or partner, and the other half will go to your children.
However, time- and energy-consuming complications can arise. For example, the state may mandate the sale of your family home or assets to ensure even distribution. Or, if your children are minors, representatives nominated by the state will protect their interests.
Dying without a will can result in higher taxes, too.

The bottom line: you need a will

To ensure the best possible scenario plays out after your death, you need a will. A will not only protects your property and assets, but it alleviates any burdens on your family members.
The good news is, preparing a will that clearly outlines your estate planning wishes doesn’t have to be difficult or stressful. With the help of a trusted and experienced estate planning attorney, you can safeguard your belongings and protect those nearest and dearest to you. Even better, in some cases, you can leverage estate planning approaches to save money.
If you would like help preparing your will, reach out to the friendly team at The McKenzie Law Firm today. We would be more than happy to help or to answer any questions.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Choosing Between a PC and an LLC

Mon, 07 Mar 2022 02:39:00 GMT

A professional corporation and a limited liability company both offer their owners the benefit of limited liability in the event that an activity of the business harms someone. For professionals, however, this liability limitation does not extend to our biggest risk — being sued by a client or patient for malpractice. A professional corporation, however, will protect you from liability for the malpractice of your partners, if you have them. And a limited liability company will limit your liability from other sources of risk. For instance, if you get into a dispute with your landlord, your liability to your landlord might be limited.

When choosing between a PC and an LLC, the determining factor may be how you want to handle your taxes. Creating a single member LLC will have a minimal impact on your taxes. All that is required is an extra attachment to your personal tax returns. PCs can also be set up as pass-through entities. The default, however, is that PCs are required to file their own tax returns and be subject to corporate tax rates, which are notoriously high.

If you are going to be working alone, without partners, I see few benefits to establishing a PC as opposed to an LLC. Whichever route you decide to go, you will need to confirm that the option you choose is recognized by all the states in which you intend to operate. Both PCs and LLCs are created by state legislation, and the rules for establishing and operating them can therefore vary from state to state.

do you really need to form an entity?

One other question you should ask yourself — perhaps the first question — is whether you need a formal entity at all, or whether you can get by operating as a sole proprietorship. As this post notes, once you create a PC or an LLC, there are certain, sometimes burdensome bookkeeping and paperwork formalities that you must observe to actually enjoy the benefits of limited liability. Moreover, there are fees that you will have to pay to your state’s secretary of state every year to keep your business records current. And as noted above, unlike other businesses, professionals subject to malpractice lawsuits cannot limit their professional liability by shielding themselves with a business entity.

What this all means is that there are fewer benefits to a professional business of creating a limited liability entity than there are for other types of businesses. Yet the burdens and costs are exactly the same. Still, there are several good reasons to use a limited liability entity. First, although it is true that professional services cannot use business entities to limit their malpractice liability, malpractice liability is not the only type of risk your business will face. For instance, assuming that you are fortunate enough to have clients or patients regularly coming into your business, there’s a risk that one of them will suffer an injury while on your property and hold you and maybe your landlord liable. You should insure yourself against that risk (your landlord will probably require it), and when you do, your insurer might consider it a positive if your business has a limited liability structure.

Second, although you might not need limited liability protection now, if your business grows, as you’re probably hoping it will, your need for a limited liability structure will increase. Changing to a different structure later on will at least be inconvenient, if not extremely costly. At the minimum, you will have to change your letterhead, your business cards, your website, the name on your checks, and maybe the sign on your door. Many of the formalities that you would need to observe while running a limited liability entity, such as maintaining separate books and accounts, are things you’re going to want to do anyway, even if you are running a sole proprietorship. Avoiding the hassle of having to make a change later on might be worth dealing with the hassles of observing some of these formalities now.

What next?

If you are thinking through business formation issues, you can:

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our small business page to learn more about how proactively thinking through your business set up can avoid issues down the road.
Learn more by reading our blog or watching our videos .

What You Need to Know About the Final Estate Tax Portability Rules

Mon, 07 Mar 2022 01:30:00 GMT

Married couples concerned about the estate need to understand how the final "portability election" rules may affect their existing estate plans. Recent widows and widowers also need to understand how these rules may affect their deceased spouse’s estate.

What is the "portability election" and how is the election made?

The “portability election” refers to the right of a surviving spouse to claim the unused portion of the federal estate tax exemption of their deceased spouse and add it to the balance of their own exemption. Since in 2015 the federal estate tax exemption is $5.43 million per person (the exemption changes every year since it is indexed for inflation), this means that a married couple can potentially pass on $10.68 million to their heirs free from federal estate taxes.

To properly make the portability election, the surviving spouse must timely file a federal estate tax return, known as the “United States Estate (and Generation-Skipping Transfer) Tax Return,” or “Form 706” for short. Form 706 is due on or before nine months after the deceased spouse’s date of death, but an automatic six-month extension of time to file the return can be requested by filing an “Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes,” or Form 4768 for short, on or before the due date of the estate tax return.

Which estates are subject to the final estate tax portability rules?

The portability election first went into effect for the estates of decedents who died on or after January 1, 2011, and in response the IRS issued temporary regulations to guide taxpayers and their advisors through properly making the election. The final regulations that were released to replace the temporary regulations for the estates of decedents who die on or after June 12, 2015, while the temporary rules still apply to the estates of decedents who died on or after January 1, 2011, and before June 12, 2015.

What do the final estate tax portability rules provide?

The final rules clarify that a regulatory extension of time to make the portability election will only be granted to estates that have a gross value below the estate tax exemption in effect in the year of death. In other words, in 2022 the gross estate must be valued less than $12.06 million in order for a request for a regulatory extension to be made.

The final rules also make it clear that the administrator of the estate of a decedent who was not a U.S. citizen at the time of death may not make a portability election on behalf of the non-citizen decedent.

Unfortunately, the IRS ended up rejecting a recommendation made by the American Institute of CPAs for the creation of a shorter version of Form 706 that would be used solely for the purpose of making the portability election. The IRS cited problems it has had with other types of abbreviated forms and the difficulties and costs associated with maintaining alternate forms as the reasons for rejecting this recommendation.

How do the estate tax portability rules affect existing estate plans?

Married couples who already have an estate plan should consult with their estate planning attorney to determine if any changes need to be made to their plan in view of these final rules. Things to consider include the potential for an estate to be subject to state estate taxes, whether the portability election is a viable option in view of second or later marriages, the projected value of the couple’s estate over their life expectancies, and the loss of the step up in basis when traditional AB Trust planning is use d

what next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Question and Answer: Can a personal representative charge for cleaning up estate property?

Sun, 06 Mar 2022 22:41:00 GMT

Question : Can a personal representative charge the estate for cleaning up and disposing of the decadent’s property? If I have my wife do it, can I pay her?

Thank you,
Sal

Answer : Cleaning up a decedent’s property is an important responsibility of the personal representative. Just like when you sell your own home, a personal representative should take steps that will increase the value of the estate property by an amount that would exceed the amount they would cost to complete. This probably means at least cleaning the property, if not updating it or renovating it, as recommended by a real estate professional. The personal representative may charge a reasonable amount for time spent doing this, or get reimbursed for reasonable costs of having someone else do it. If the amount that you are paying your wife to handle the cleanup is reasonable, that should be fine.

What’s reasonable? That can be in the eye of the beholder. But a good way to make sure you’re being reasonable is to consider how much you would have to pay a professional for the services you are considering having your wife provide. You will then need to honestly and fairly assess whether the service your wife is providing is as good as what a professional would provide. If it isn’t, the amount you pay her should reflect that, because ultimately, your legal obligation is to maximize the value of the estate for its beneficiaries.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Who Is Your Beneficiary? Marilyn Monroe Ultimately Had No Idea

Sun, 06 Mar 2022 20:10:00 GMT

When creating a last will and testament, it’s important to know who your beneficiaries are. Sadly, not everyone does and it can lead to outcomes that clearly were not what was intended. Marilyn Monroe, one of the world’s most famous icons, didn’t seem to have any idea to whom she left her money.

Acting Coach and psychiatrist got everything

Marilyn Monroe died at the age of 36 from a drug overdose. The year was 1962 and there have always been questions as to whom she named as beneficiaries. In fact, her business manager, Inez Melson, was allegedly suspicious about Marilyn Monroe’s will when it was first drafted.

Monroe’s will left some money to care for her mentally ill mother and bequeathed some of her personal belongings to Inez Melson. The remainder went to her acting coach and psychiatrist:

25% to her psychiatrist to help those who couldn’t afford psychiatric counselling
75% of the residue (the majority of her estate) was left to Lee Strasberg, her acting coach

A bit strange, but there it is, and Monroe could never have predicted what happened next…

Stasberg's second wife takes control of monroe's fortune

Lee Strasberg controlled Monroe’s estate for a short while. Then, his second wife, Anna, took over. Although she only met Monroe one time, she created utter chaos for years. Here’s a brief rundown of what happened:

Multi-million lawsuit over publicity rights . Strasberg filed a multi-million lawsuit over publicity rights of Monroe’s image and likeness – and won. Ironically, she has since earned more money thanks to Monroe than Monroe earned in her lifetime.
Licensing deal on products . Strasberg made millions of dollars through a licensing deal with CMG Worldwide who sold products with Monroe’s picture on it such as cigarette lighters, pet clothing, and other “iconic” memorabilia.
Multi-million lawsuit over personal belongings . Strasberg also filed a lawsuit against the heirs of Monroe’s former agent, Inez Melson, for personal belongings in their position. She won and auctioned them off at Christie’s for over $13 million.

Strasberg eventually sold her interest in Monroe’s estate for a reported $20 – $30 million. Interestingly, Monroe has consistently been one of the highest earning deceased celebrities since her death. Her estate earned $17 million in 2015 alone.

Consider everything carefully

When creating an estate plan, it’s important to consider everything very carefully. While you may want a specific person to benefit from your estate (as Monroe wanted for Lee Strasberg), the probability that someone else will get control of your assets is likely unless you provide otherwise.

Monroe obviously had very good intentions for providing for help to those who are mentally ill. Had she considered those intentions more carefully, many more people could have been helped. Instead, someone she met once bilked her estate for their own purposes.

We can all learn from Monroe’s mistakes. We can help you come up with a good estate planning tool which provides for your family, friends, and charitable organizations.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Sonny Bono’s Procrastination in Creating a Will Led to Years of Estate Battles

Sun, 06 Mar 2022 03:30:00 GMT

Sonny Bono, the singer, songwriter, restauranteur, and former Congressman, died in a tragic ski accident in 1998 at the age of 62. His net worth was just under $2 million at the time of his death, yet Bono did not have a will. Apparently, he meant to have one drawn up, but simply never got around to it.

Sadly, his fourth wife and surviving spouse, former Representative Mary Bono, spent years battling to be the executor of his estate. She also faced lawsuits filed by anyone and everyone who wanted a piece of the pie – some of whom you wouldn’t believe…

Cher and secret love child want piece of sonny's estate

Having died intestate (without a will), Sonny Bono’s estate was seemingly up for grabs. His surviving spouse had to specifically fend off two people whose demands on the estate made headlines:

Yes, the Cher, Sonny’s second wife, sued for a share of his estate seeking $1.6 million in unpaid alimony. When the couple divorced in 1974, Sonny was allegedly ordered to pay Cher $25,000 per month for six months, $1,500 per month child support, and $41,000 in attorneys’ fees.

Apparently, he never did. While it’s odd that someone with their own net worth of over $300 million would even bother taking the time, it’s nonetheless true. Whether she collected is anyone’s guess, but not likely.
Secret Love Child. As if Cher’s lawsuit wasn’t odd enough, a secret love child made his own claim on Sonny’s estate. Then 35-year-old Sean Machu came forward claiming to be Bono’s illegitimate son.

Although Bono admitted to having an affair with Machu’s mother in his autobiography, The Beat Goes On, and Machu’s birth certificate lists Salvatore Bono (aka Sonny) as the father, Machu later withdrew the lawsuit when a DNA test was required.

Bono’s estate was eventually divided between his surviving spouse and his two children, Chastity (now Chaz) Bono and Christy Bono Fasce (a child from his first marriage).

Don't Leave your wealth up for grabs -- take action now!

As Sonny Bono’s case shows, not having a will, trust, or other estate planning documents in place gives others the sense that your wealth is up for grabs. Most of us don’t relish the idea of creating a plan for what will happen when we die. However, it’s a necessity in order to avoid having your spouse and children go through court battles and heartache.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Photo attribution: By Joop van Bilsen / Anefo - GaHetNa (Nationaal Archief NL) 919-5202, CC0, https://commons.wikimedia.org/w/index.php?curid=98251383

Question and Answer: When and how much can someone with power of attorney be compensated?

Sat, 05 Mar 2022 21:42:00 GMT

Question : Hi. Both my parents signed power of attorney documents naming my sister as their financial agent. They now both have dementia and live in an assisted living facility. My sister wants to pay herself $50 an hour to do things like take them to the doctor, pick up their prescriptions, do some occasional shopping, and other menial tasks. She claims she spends 10 to 20 hours per week running these errands for them. I find this hard to believe. I think she is exploiting the situation to try to enrich herself. When can someone with power of attorney be compensated, and what is a reasonable amount per hour for someone who is not skilled as a CPA or medical person? There is a clause in their will that says she can be paid but does not say an amount.

Thank you.

Answer : There are a few things going on here that need to be sorted out.

First, with regard to your last sentence about your parents’ will authorizing her to be paid, their will has no bearing on this situation. A will does not dictate anything until the person who executed it passes away.

The power of attorney documents govern what your sister is allowed to do for your parents and whether she is allowed to charge them for it. In at least one sense, a power of attorney is the opposite of a will — it is only effective while the person who created it is alive. You don’t say whether your parents’ powers of attorney authorize compensation. Colorado, however, has a statute that says unless a power of attorney states otherwise, “an agent is entitled to reimbursement of expenses reasonably incurred on behalf of the principal and to compensation that is reasonable under the circumstances.” C.R.S. 15-14-712 . In other words, unless your parents specifically said that your sister is not allowed to receive compensation, then she can pay herself. But the amount has to be reasonable!

The question is, what is reasonable? The thing to note about the jobs listed in your letter is that they are not jobs that require a power of attorney to perform. While your sister is the only person allowed to pay for services performed for your parents out of their bank account, anyone can take them to the doctor, pick up their prescriptions, or do their shopping for them. If you think the amount she is charging for these tasks is unreasonable, offer to do them for less. Or find someone else who will do them for less (if you Google “errand running service,” you will get a whole list of people who do this professionally for less than $50 per hour). It will be very difficult for your sister to claim that the rate she is charging is reasonable if there is someone else willing to do the same jobs for a lot less money.

If this experience has raised concerns about whether your sister is fit for the job of serving as your parents’ financial agent, you may want to take legal action. You could apply to have yourself appointed as your parents’ conservator, which would give you the authority to watch over their finances for them. Becoming someone's conservator is a court process that is often very invasive for everyone very involved, very expensive, and which can easily lead to fighting. Pursue this path with caution, and only with the help of an attorney.

Best of luck to you in getting this resolved.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by attending reading our blog or watching our videos .

Which is better for married couples? One joint trust or two separate trusts?

Sat, 05 Mar 2022 19:04:00 GMT

After married clients decide to form a trust, they must choose whether to have one joint trust or two individual trusts. While many married clients they will create one trust together, there are good reasons to have separate individual trusts. Some things to consider:

Advantages of two separate trusts

Separate Property : Couples who own large amounts of separate property may want to consider an individual trust. This often applies to couples who have prior marriages and are getting together later in life, or individuals who have a large portion of their assets in separately held LLCs or real estate, or in IRAs, Annuities, Life Insurance Policies, or 401Ks.
Sole Control : Property that passed to someone from an inheritance or through a family trust – for instance, a vacation home that has been on one side of the family for generations – is more easily managed through individual trusts.
Prenuptial Agreements : If the spouses have signed a prenuptial agreement keeping each spouse’s earnings and property separate, then two individual trusts may work better.
Unmarried Couples : If the two members of the couple are filing separate income taxes, they will have a much easier time with individual trusts. Also, since such relationships do not qualify for the unlimited marital deduction, an individual trust can protect gifts from being taxable.
Administration After the First Death : In all likelihood, you and your spouse are not going to die together. Many people erroneously assume that there will be little reason for the surviving spouse to change the plan after the first death. Placing the deceased spouse's assets in a separate trust can, however, provide tax and asset protection benefits, both for the surviving spouse and the deceased spouse's kids. This can be done even in a joint trust, but requires more work than if the assets are already split into two separate trusts.

Advantages of One joint trust

Flexibility : Even if the two spouses have some separate property, they can transfer it all to the trust, and still name separate beneficiaries for specific items held by the trust. In addition, either spouse may revoke the joint trust at any time. Once the trust is revoked, the ownership status of the property reverts to the way it was before the trust was created.
Funding : Even one sizable piece of shared property can make individual trusts a real hassle. Some financial institutions will not allow an asset to be titled to two trusts, and the asset must be divided. Other institutions require the asset to be held as tenants in common, which changes the asset from a joint asset that transfers automatically to the survivor into a commonly held asset that must be retitled after the first death. None of this is a problem with a Joint Trust.
Tax Benefits in Community Property States : In most states, property acquired during the marriage can be kept separately. But there are 14 "community property" states in which property acquired during marriage is presumed to be the property of both spouses, regardless of how the property is titled. In those community property states, the capital gains basis of that community property "steps up" at the death of the first spouse. It then steps up again at the death of the second spouse. This is known as the "double step up" and can save a substantial amount of money on taxes. Many couples in community property states use joint trusts to ensure that the community nature of the marital property is maintained and the "double step up" is preserved.
Administration : In a joint trust, shared property can remain in the living trust when the first spouse dies. If the couple chooses not to have the trust broken apart at the first death, administration is very easy for the surviving spouse (this ease can come at the expense of lost asset protection and tax benefits).

In our experience, forming two Individual Trusts adds some complexity and hassle to the initial trust funding process. However, it is often more difficult to administer a joint trust after one spouse has passed away. It’s also possible for a married couple to create both a joint trust for the communally owned property and separate trusts for separate property. That might cost more up front to create, but for some couples, it may be easier in the long run.

What Next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Want to Give the Kids an Early Inheritance? 4 Things to Consider

Sat, 05 Mar 2022 18:05:00 GMT

If you’re thinking about giving your children their inheritance early, you’re not alone. A recent Merrill Lynch study suggests that these days, nearly two-thirds of people over the age of 50 would rather pass their assets to the children early than make them wait until the will is read. It can be especially satisfying to fund our children’s dreams while we’re alive to watch them enjoy it, and there’s no real financial penalty for doing so, provided that you structure the arrangement correctly. Here are four important factors to take into account when planning to give an early inheritance.

Keep the tax codes in mind

The IRS doesn’t really care whether you give away your money now or later — the lifetime estate tax exemption as of 2016 is $5.45 million per individual, regardless of when the funds are transferred. So, whether you give up to $5.45 million away now or wait until you die with that amount, your estate will not owe any federal estate tax (although, remember, the law is always subject to change). You can even give up to $14,000 per person (child, grandchild, or anyone else) per year without any gift tax issues at all. You might hear these $14,000 gifts referred to as “annual exclusion” gifts. There are also ways to make tax-free gifts for educational expenses or medical care, but special rules apply to these gifts. Your estate planner can help you successfully navigate the maze of tax issues to ensure you and your children receive the greatest benefit from your giving.

Gifts that keep on giving

One way to make your children’s inheritance go even farther is to give it as an appreciable asset. For example, helping one of your children buy a home could increase the value of your gift considerably as the home appreciates in value. Likewise, if you have stock in a company that is likely to prosper, gifting some of the stock to your children could result in greater wealth for them in the future. Note, however, that there can be capital gains tax benefits to making certain transfers at death.

One S ize does not fit all

Don’t feel pressured to follow the exact same path for all your children in the name of equal treatment. One of your children might actually prefer to wait to receive her inheritance, for example, while another might need the money now to start a business. Give yourself the latitude to do what is best for each child individually; just be willing to communicate your reasoning to the family to reduce the possibility of misunderstanding or resentment.

Don't touch your own retirement

If the immediate need is great for one or more of your children, resist the urge to tap into your retirement accounts to help them out. Make sure your own future is secure before investing in theirs. It may sound selfish in the short term, but it’s better than possibly having to lean on your kids for financial help later when your retirement is depleted.

Giving your kids an early inheritance is not only feasible, but it also can be highly fulfilling and rewarding for all involved. That said, it’s best to involve a trusted financial advisor and an experienced estate planning attorney to help you navigate tax issues and come up with the best strategy for transferring your assets. Give us a call today to discuss your options.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Did Whitney Houston Leave Too Much Money To Bobbi Kristina?

Sat, 05 Mar 2022 04:38:00 GMT

Whitney Houston’s estate was worth approximately $20 million when she died – plenty to meet the needs of her only daughter – Bobbi Kristina. Sadly, only a few years after Houston’s death, Bobbi Kristina died as well.

Although Bobbi Kristina’s previous boyfriend, Nick Gordon, is still a suspect in her murder, many say that having access to so much money at a young age was a contributing factor. Sadly, Houston’s estate planning mistakes are all too common.

Aunt & grandmother say will did not depict houston's intentions

Houston’s aunt and grandmother filed a lawsuit to re-write the will as they say it didn’t accurately depict what Whitney really wanted for Bobbi-Kristina. They claimed that she was too young to handle so much money.

Although they likely had the best of intentions, probate courts must follow the terms of the actual will or trust documents, not what the person who died might have otherwise intended.

Whitney Houston’s will was created in 1993, specifying that a trust would be created after she died for any children she may have (so before Bobbi-Kristina was even born). Unfortunately, she never updated her will before she died.

Inheriting money at a young age is never a good idea

Whether this tragedy could have been adverted if Bobbi Kristina’s distributions were delayed until she was older is anyone’s guess. The bottom line is that inheriting large sums of money at a young is generally never a good idea. Although the young beneficiary might be responsible, young people can be easily manipulated by others.

While it’s clear that Houston could have better protected that money with a stronger estate plan, she’s certainly not the only one guilty of not following through. In fact, many of us have the best intentions, but simply don’t make the time to create – and update – proper estate planning documents that can help beneficiaries.

Set your beneficiaries up for success

You do have the power to set your young beneficiaries up for success. In most cases, that means creating a trust that allows them access to money over time and can be managed by someone you trust and has their best interests at heart.

We can provide you with the tools you need to protect your loved ones – whatever your situation may be. As Houston’s case shows, ignoring estate planning issues can have tragic consequences. Contact us today and let’s get started protecting you and those you love.

What next?

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

Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

Photo credit: Asterio Tecson, CC BY-SA 2.0 <https://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons

Marlon Brando’s Housekeeper Claimed He “Told” Her She Would Inherit His Home

Sat, 05 Mar 2022 04:18:00 GMT

Legendary Oscar-winning actor Marlon Brando left the bulk of his estate (worth approximately $26 million) to his producer, other associates, and his longtime housekeeper, Angela Borlaza.

Brando created a valid last will and testament. However, he did not include Borlaza – who later sued alleging that Brando promised that she would inherit his home when he died.

A promise is a promise...

While a promise is a promise, it can be easily broken. In this case, Brando either never promised Borlaza anything or promised to give her the home, but never got around to putting it in his will. Borlaza claimed the latter and sued his estate for $627,000.

However, since the alleged promise was oral, the court was restrained by what was contained in Brando’s will on the assumption that he made all of his wishes known. Borlaza eventually settled the matter for $125,000, but she was lucky to get even that.

Making oral promises to someone about what they’ll inherit when you die generally fail without some other proof that the promise was valid such as someone else being part of the conversation in which the promise was made. Short of that, courts can – and reasonably must – rely upon the documents in front of it when probating an estate.

Put it in writing

Make sure that your loved ones receive everything you promised them by putting your wishes in writing through a last will and testament, a trust, or another estate planning tool. Don’t rest on your laurels. It is imperative to update your estate plan documents when any significant or life changing events occur such as:

a new oral promise you made to someone
adoption
birth
circumstance changes (change in health, wealth, or state of residence)
divorce
income changes
marriage
divorce
re-marriage

Need help putting your wishes in writing? You’re in the right place. Contact our office today and let us help you decide what type of estate plan might work best for your situation. It’s easier than you think and will give you the peace of mind that your loved ones aren’t forgotten.

what next?

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

Give us a call at 303-578-2745 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by attending one of our free webinars , reading our blog , or watching our videos .

Photo Attribution: Marlon Brando, Public domain, via Wikimedia Commons

Asset Protection Trust Planning

Wed, 02 Mar 2022 04:31:00 GMT

In a previous post, I provided basic information about asset protection. As I noted then, asset protection isn’t just about rich people hiding their ill-gotten gains from the IRS in offshore accounts. You may not think that asset protection is something you need, but if you’ve bought insurance, formed a business entity, or separated out money into several different types of accounts, you have already engaged in at least a little asset protection planning.

It usually requires several different strategies and approaches. The adage about not putting all your eggs in one basket applies here.
Just like the best time to borrow money is when you least need it, the best time to protect your assets is when you don’t face any threats. If you try moving assets into a spouse’s name or establishing irrevocable trusts after you’ve gotten into a situation that is likely to result in a lawsuit, you will be putting yourself at risk of a fraudulent conveyance charge.
Along the same line, you need to be reasonable about the amount of assets you include in your asset protection plan. You can’t protect everything. Your asset protection plan must leave you fully solvent outside of the protected assets and able to pay any claims that you knew or should have known about at the time you were shifting your assets around.
The level of protection you are able to achieve will depend on the amount of control over your assets that you give up. You cannot put your assets into a revocable trust that you control and of which you are a beneficiary and expect that a court is going to let you ignore those assets for purposes of satisfying a judgment that has been entered against you.

Below, I describe seven trust-based asset protection strategies and how they can:

Protect your assets from creditors, including former spouses and other litigants.
Protect assets gifted to, or inherited by, your spouse, children, or other beneficiaries.

Lifetime Asset protection trusts -- having your cake and eating it too

A Lifetime Asset Protection Trust is an irrevocable trust created during your lifetime that can be used to accomplish several goals.

A Medicaid Planning Trust may qualify you or your spouse for Medicaid while preserving an income stream for the well spouse and protecting the trust assets from estate recovery after death.
A Lifetime QTIP Trust is a lifetime trust for your spouse’s benefit that takes advantage of the gift tax marital deduction. This can provide asset protection plus a reduction in overall estate taxes.
A Family Bank Trust , also known as Spousal Lifetime Access Trust (“ SLAT ”), is a lifetime trust for your spouse’s benefit that uses the annual exclusion gifts and the lifetime gift tax exemption. Again, these trusts can provide asset protection plus a reduction in overall estate taxes.
A Domestic Asset Protection Trust (“ DAP T ”) is a lifetime trust for your benefit, primarily for the purpose of asset protection.

1. medicaid planning trusts

Medicaid Planning Trusts may help you and your spouse:

Qualify for Medicaid while protecting an income stream for the benefit of the well spouse.
Avoid estate recovery. Assets held in this trust will pass to your heirs protected from the government’s estate recovery, which would otherwise require paying back Medicaid benefits that were received during your lifetime.

Planning Tip : Medicaid is jointly funded by the federal and state governments, and each state sets its own rules and guidelines for Medicaid eligibility and estate recovery. Therefore, a Medicaid Planning Trust must be tailored to the laws of your state of residence. Trusts may also be subject to a look-back period ( not “disqualification period”) of three or five years. Medicaid Planning usually works best if done as early as possible, so please call our office now if you have Medicaid planning questions.

2. Lifetime QTIP Trusts

When one spouse is significantly wealthier than the other spouse, a Lifetime QTIP Trust offers the following benefits:

Makes use of the less wealthy spouse’s federal estate tax exemption.
Provides a lifetime, asset-protected trust for the benefit of the wealthier spouse if the less wealthy spouse dies first. (Subject to state law.)
Insures that assets left in the trust (after both spouses die) get distributed according to the wealthier spouse’s wishes.

3. Spousal Lifetime Access

SLATs or “Family Bank Trusts” became popular for married couples in 2012 when it was looking like we were going to go over the “fiscal cliff.” They remain popular today as an estate tax reduction and asset protection strategy.
This trust is sometimes also referred to as a “Lifetime Bypass Trust” since it is funded with lifetime gifts that are held for the benefit of you or your spouse. As with a Bypass Trust created after the first spouse’s death, distributions from a SLAT can be as broad or as limited as you choose.
Planning Tip : SLATs are useful if you live in a state that does not collect a state gift tax but collects a state estate tax and the state exemption is expected to remain significantly lower than the federal exemption (e.g., Maine, Massachusetts, Minnesota, New Jersey, Oregon, Vermont and Washington).

4. Domestic asset protection trusts

Testamentary asset protection trusts -- ruling from the grave

A Testamentary Asset Protection Trust is an irrevocable trust created after your death and used for a variety of reasons.

Irrevocable Life Insurance Trusts (“ ILITs ”) protect life insurance proceeds for the benefit of your heirs.
Standalone Retirement Trusts protect retirement accounts for the benefit of your heirs.
Discretionary Trusts protect other assets for the benefit of your heirs.

1. Irrevocable Life Insurance Trusts

2. Standalone Retirement Trusts

3. Discretionary Trusts

Trust-Based asset Protection -- The bottom line

What Next?

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

Give us a call at 303-578-2745 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog or watching our videos .

7 Important Facts for Leaving Someone Out of Your Will

Wed, 02 Mar 2022 03:45:00 GMT

Are you considering leaving someone out of your will? Perhaps one of your children needs more than others. Or maybe you will that some family members are not deserving of inheritance. There are, however, restrictions on who you can leave out of your will. Here are 7 things you need to know before removing an inheritance.

1. the spousal elective share

Perhaps you want to disinherit your spouse, perhaps because your spouse has his or her own money, or perhaps you are separated but have never completed a divorce. But will the law permit it? You can leave your spouse out of your will, but Colorado law allows your spouse to waive your will and inherit a certain minimum amount.

The amount to which your spouse is entitled depends on the amount of time the two of you have been married. In Colorado, a disinherited spouse can elect to receive 5% of your augmented estate for each year you were married. For instance, if the marriage was more than one year but less than two, the spouse can elect to receive 5%. Your augmented estate includes whatever is left after funeral and administrative expenses, creditor claims, exempt property allowances, and other expenses are paid. The amount an excluded spouse can choose to receive is capped at 50%.

This restriction can be circumvented with a prenuptial agreement in which your spouse agreed to receive some limited amount of assets upon divorce or your death. Be aware, however, that your spouse could also challenge the prenuptial agreement if it failed to comply with certain requirements, such as a failure to fully disclose all assets, or if your spouse can prove you coerced him or her into signing it.

2. Disinheriting Children

There are also limitations on disinheriting your children. You can disinherit adult children, something that people often do for one of two reasons. One is because the disinherited child may be more financially secure than others. Another is because the parent and child are estranged or otherwise at odds. Whatever your reason, we strongly recommend that you disinherit children reluctantly. This will be your last interaction with your children and the last thing they remember about you. And because you will no longer be around for them to take their frustration out on, they may direct their ire towards their siblings with litigation. All your children may end up with bitter feelings about your decision.

You cannot, however, disinherit children younger than 18. Disinherited minor children can elect to receive whatever they would have received under state law if you didn’t have a will. Children left out of a will that was written after they were born can make the same election if the will didn’t have any provision for “after-born” children.

3. Challenges to a will

There are a number of well-known instances of disinherited adult children challenging a will’s validity. Some were given token shares while others were totally disinherited, with the bulk of the estate awarded to someone who only entered the testator’s life shortly before death, or who didn’t seem to have the type of relationship with the testator that would typically lead to a large inheritance.

One sensational will contest involved the principal share owner of the Johnson & Johnson corporation, widely thought to be the most expensive will challenge in American history. Six children of Seward Johnson challenged the validity of his will based on lack of mental capacity, among other allegations. Johnson had left more than $400 million to his last wife, BASIA PIASECKA JOHNSON , a Polish immigrant originally hired as a cook by Johnson’s second wife. The story was a fascinating tale of incompetent legal maneuvering, conflicting medical accounts, and allegations of undue influence, all combined with public revelations of an extremely weird and dysfunctional family. After three years of litigation, Basia settled with the family paying them about $43 million but keeping $340 million for herself.

Adult children frequently challenge wills from which they have been excluded based on the following causes of action:

Undue influence
Lack of testamentary capacity
Invalidity based on improper execution

Don’t assume that your estate is too small for anyone to bother fighting over. You may not have hundreds of millions of dollars like the Johnsons, but the sting of being left out of even a much smaller estate can lead to feelings of resentment.

4. Undue Influence

Undue influence occurs when a testator’s intent is subjugated to that of another person. Undue influence gets alleged when there appears to have been some kind of pressure exerted on the testator to leave assets to someone other than the natural heirs. Undue influence often is accomplished by threats to reveal some indiscretion by the testator or to impose physical harm.

You need not prove that the testator lacked mental capacity or was otherwise mentally impaired. The challenger only has to show that the testator would have made a different disposition of property than what was done, and that the pressure or influence inflicted directly led the testator to sign the will or trust. Medical or psychological records supported by testimony from witnesses is essential to prove undue influence as well as expert medical testimony regarding the testator’s state of mind.

5. Lack of Testamentary capacity

Lack of testamentary capacity at the time the will was drafted and signed is another common basis for challenging a will’s validity. This is not an easy thing to prove. Courts presume a testator was of sound mind when the will was signed, and it takes substantial evidence to overcome this presumption. It’s a high bar to clear, especially if the will was signed years ago, and typically requires medical records from the time the will was signed. Occasional instances of unreasonable or illogical behavior or testimony regarding peculiar idiosyncrasies are rarely sufficient, especially if the testator had moments of lucidity. If the will was signed in an attorney’s office, it may be more difficult to prove lack of capacity since attorneys are usually careful to note evidence of the testator’s state of mind.

6. Improper execution

People who draft their own will frequently fail to follow all the requirements for proper execution. In COLORADO , the testator must be at least 18 years of age and be of sound mind. He or she must sign the will in the presence of two disinterested witnesses (i.e., two people who have no financial interest in the will). If the person is physically incapable of signing, the testator may designate another person to sign for him or her, so long as that person is not one of the two required witnesses to the will’s signing. Each witness must sign in each other’s presence and observe the testator’s signing or be told by the testator that the signature is that of the testator.

7. You should not leave someone out of your will without professional assistance

If you have questions regarding disinheritance, please contact The McKenzie Law Firm. Our attorneys been advising, drafting and litigating issues regarding the validity of wills and trusts for years. Call our office today if you were disinherited from a will or if you need advice on disinheriting someone from your estate.

What Next?

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

Give us a call at 303-578-2745 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by eading our blog or watching our videos .

How to Choose the Right Fiduciary Agent

Tue, 01 Mar 2022 22:02:00 GMT

While you are alive, your assets are cared for in exactly the way you want, but do you know who will take care of things after you pass away? During the estate planning process, you will be asked to choose a fiduciary agent to serve on your behalf. Trustees, personal representatives, and powers of attorney are all examples of fiduciary agents. When you pick a fiduciary agent in your estate plan, you’re picking someone to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave. Luckily, understanding the basics of what each of these terms means and what to consider when choosing a fiduciary agent can make your estate plan work far better.

Trustee

A REVOCABLE LIVING TRUST is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals. In a revocable living trust, your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or incapacity. The role is two-fold: 1) the Trustee must manage the funds in the trust, growing the estate while ensuring that investments are balanced and protected, and 2) the Trustee will make decisions regarding distributions of income and/or principal to your beneficiaries. Like each of the following individuals involved in your estate planning, it’s essential to have a trusted person or financial institution carry out this vitally important role. That’s only part of the equation, however, as it’s also important to make the language in your trusts as clear as possible so that your trustee knows exactly how you would want them to handle various situations that can arise in asset distribution. Lastly, your trustee will only control the assets contained within the trust — another reason to be sure that you have properly and completely funded your living trust.

Powers of Attorney

Your powers of attorney are documents in your estate plan that appoint individuals to make decisions on your behalf (if you become unable to do so yourself.) There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals. Here are the two most common types to cover in your estate plan:

Financial Power of Attorney

The person you grant FINANCIAL POWER OF ATTORNEY will have the ability to take financial actions on your behalf. This can include purchasing life insurance, withdrawing money from your accounts, transferring funds from one account to another, paying your bills, and selling or buying property in your name. In most cases, powers of attorney are granted to family or friends, but in some cases it may be wise to consider appointing an institution, like a trust company, or professional fiduciary as your financial agent. Whoever you appoint will likely have broad powers to act in your stead, so it’s critically important you choose the right person.

Medical Power of Attorney

A MEDICAL POWER OF ATTORNEY allows an individual to make medical decisions on your behalf. Such powers also cover a wide range of specific actions that can be taken regarding an individual’s medical needs, such as approving medical treatments, determining incapacity, and electing to undergo additional tests or scans.

Personal Representative

Your personal representative, also known as an executor, is the person who will see your assets through probate if necessary and carry out your wishes based on your last will and testament. Depending on your preferences, this may be the same person or institution as your trustee. Many individuals chose to go with a professional entity for this role. This is someone who doesn’t stand to gain anything from your will, and is often the best choice if your estate is large and will be divided among many beneficiaries. Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends. Serving as a personal representative can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job. They may need to hire a CPA to help sort out your taxes, or a lawyer to assist in the process or to aid in dispute resolution. Therefore, choosing a spouse or someone else intimately involved in your life may not always be the wisest option, as they may not be up to the task at the time of your death.

Things to Consider

Before settling on a fiduciary agent to fill one or more of these roles, ask yourself:

are they trustworthy?
have they demonstrated financial and/or emotional intelligence?
do they manage their own responsibilities in a way that gives me comfort and confidence in their abilities?
would I want them in a long-term financial relationship with my beneficiaries?
would a professional be a better fit for this position?

Get in Touch with us today

Let us help you make the process of picking your fiduciary agent as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate is in good hands no matter what life brings.

What Next?

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

Give us a call at 303-578-2745 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
Visit our estate planning page to learn more about 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.
Get a copy of our estate planning checklist to see where you currently stand.
Learn more by reading our blog , or watching our videos .

Four Steps to Stop Mail Addressed to a Deceased Person

Tue, 01 Mar 2022 21:43:00 GMT

One of the first things you should do as a newly appointed personal representative of a deceased person’s probate estate or successor trustee of a deceased trustmaker’s trust is ask the post office to forward the deceased person’s mail to your address. Unfortunately, along with important pieces of mail – statements, bills, and refunds – many not-so-important pieces – catalogs, solicitations, and plain old junk mail – will end up in your mailbox.

On the other hand, you may have purchased a home from a deceased person’s estate or trust and have received some of their mail at your new address.

What can you do to stop the post office from delivering mail addressed to a deceased person? Follow these four steps:

Remember it is a federal offense to open and read someone else’s mail, so unless you’re a legal representative of the deceased person, don’t open their mail!

What Next?

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