Estate planning is an area of law that can become easily complicated. As a result, there are a lot of misconceptions about estate planning, as well as who benefits from having an estate plan. It is clear that for those individuals with large overall estates, an estate plan is essential to ensuring that such assets are properly protected coupled with minimal potential estate tax liability. However, estate plans are also important for small estates.
One advantage of having a small estate is that your friends and family may be able to settle your estate using a simplified probate procedure. Under Colorado Revised Statutes § 15-12-1203, a simplified probate process is available if the value of the entire estate, “less liens and encumbrances, does not exceed the value of personal property held by or in the possession of the decedent as fiduciary or trustee” together with some other allowances, such as reasonable funeral expenses, medical expenses for end of life care, and exempt property allowance. Estate planning for the small estate comes into play here because by using specific tools, such as trusts, certain assets can pass outside of probate, thereby making the value of the estate smaller and increasing the chances that your estate could be closed with these simplified procedures.
Another important reason to have an estate plan even if you have a small estate is if you have minor children. Creating an estate plan allows you to designate a preferred guardian in the event you and the child’s other parent both pass away before the child reaches the age of majority. The estate plan can also provide you with a method to set aside financial support for your child until they become an adult. This is especially useful when you are not confident the other parent or guardian will be fiscally responsible with the assets you leave behind for your child.
Finally, estate planning is essential to make your wishes known. Without estate planning, your assets will pass according to Colorado laws of intestacy. This could result in your assets passing to relatives instead of the special loved ones or preferred charitable causes that you would have preferred to receive an inheritance after your passing.
We are experienced in helping our clients with all types of issues regarding estate planning. Call us today and let us talk with you about your plans for the future and what we can do to help you.