Rocky Mountain Wills & Trusts

Estate planning can feel grim, not least of all because you are attempting to make plans for how to take care of your beneficiaries after you are gone. Perhaps the grimmest of all considerations might be the concern as to whether the government will attempt to tax your estate in the event of your death, thus inherently limiting the assets that can be distributed amongst your loved ones.

The estate tax says that any value over the current year’s exemption amount can be taxed by the government. Federal estate tax exemptions can change yearly. And each state may have different estate tax laws across the country.

In 2022, the US government sees that any individual’s estate valued at less than $11.7 million is exempt from federal estate tax. Married couples’ estates can be exempt for up to $23.4 million.

Does Colorado Have Estate, Inheritance, or Gift Taxes?

Colorado does not have an estate tax, an inheritance tax, or a gift tax. Only a dozen states across the country have an estate tax at the state level. But even for those states which don’t have their own estate taxes, their citizens may still be liable to federal estate taxes if their estate was particularly wealthy.

While Colorado does not have an inheritance tax, if you are inheriting something from an estate established in another state, those assets may be subject to that particular state’s inheritance tax laws.

What is the Death Tax?

There is no such thing as a ‘death tax’ in Colorado or America. The term death tax is not official and is mainly used by those who strongly oppose taxation of any kind. The term has a scare value to it that catches your attention, is all.

When someone mentions a death tax, they are usually referencing inheritance or estate taxes, as they only go into effect after the death of those in charge of the estate.

How Best to Avoid Estate Taxes?

Across America, very few taxpayers ever need to concern themselves with paying estate taxes to the IRS. Partly this is because they’ve kept their estates at a level that rules them exempt, but also, it is because many wealthy estates have found ways to protect their assets from estate tax.

One such option for wealthy estate owners is to put some of their assets into an irrevocable trust. This act will give up ownership of the assets in favor of your beneficiaries, defending them from taxation and probate court.

People in Colorado can also gift thousands of dollars worth of assets yearly to their loved ones, free of taxation. Donating to a tax-exempt charity through a trust can also be a viable option. Some may opt to establish a family-limited partnership, which can make heirs your partners. To better understand how to defend yourself from the federal estate tax, please speak to an estate planning attorney. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

In 2004, the Colorado state government authorized that a transfer-on-death deed (or TOD deed) can transfer property rights to beneficiaries upon the deaths of the property owners. Known as a beneficiary deed in Colorado, this allows you to pass real estate property on to a selected individual or entity without the need for passing the property through probate courts.

However, these deeds are not for everyone. Couples need to understand that joint tenancy of a property can supersede a beneficiary deed, rendering it inoperable. TOD deeds can also affect Medicaid eligibility.

How to Obtain a Beneficiary Deed?

The state of Colorado provides a downloadable form that can be filled out and then signed by a notary. The form then needs to be properly filed.

Deeds that have been filed can later be revoked, so long as this act occurs before the deed owner’s death. The named beneficiaries can also be changed.

What Types of Property Can Be Transferred Via a TOD Deed?

Colorado law states that a TOD deed can be used to convey the interest of “real property.” In this definition, real property means real estate. By ‘interest’, the law includes any individual’s sole ownership of a real estate title, partial ownership, or certain lesser real estate interests.

A Colorado beneficiary deed can only transfer properties located within the state. Out-of-state property may potentially be eligible for transfer, but only under certain conditions established by laws in other states.

Is a Beneficiary Deed the Right Estate Planning Tool for You?

TOD deeds are non-probate transfers and do not need to go through the extra steps and processes that a typical will might, like probate court. These deeds are especially useful for estates of smaller sizes, as they may help keep the family home out of probate. However, if you leave the family home to all your surviving family members, this could result in conflict with indecision about what to do with the property as it is divided amongst everyone.

There are pros and cons to every estate planning tool available, and beneficiary deeds are no different. To better understand whether this is the right option for you and your beneficiaries, please speak with an experienced estate planning attorney in the state of Colorado. Every estate is unique in its way, and what’s best for one family may not be right for another. But rest assured, you do have options. A transfer-on-death deed may sound grim, but it could possibly be the best way to protect your family’s real estate for future generations. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

You can make the decision to revoke power of attorney for any number of reasons, not least of all the simple notion that maybe you just changed your mind. However, the how, when, and why of revoking these legal powers should be considered, lest you risk issues like lapses in representation.

Only you, or someone the court appoints to act in your best interests, have the ability to revoke power of attorney from any previously selected agent. The court also asks that you be of sound mind to make these changes.

Why Should You Consider Revoking the Power of Attorney?

The reasons why you may consider making changes to your power of attorney agent can be personal or legal in origin. Perhaps your relationship with the selected agent has changed dramatically, maybe even deteriorated completely, in the time since you initially named them. Or maybe the person you selected simply does not want to be your power of attorney agent anymore, for reasons including but not limited to using up their personal time and/or mental well-being in the role. It would also likely be necessary to select a new attorney-in-fact if your agent was your spouse, but the marriage ended in divorce.

If your agent has passed away or is no longer mentally or physically competent for the demands of the role, it is necessary to select someone new. And while you may select an agent who lives out of state, their availability must come into mind in relation to their ability to perform the duties of the role they’ve been given.

How Can Powers of Attorney Be Revoked in the State of Colorado?

You can revoke power of attorney by either destroying all documents and copies relating to the original selection or by filing an official Notice of Revocation. Filing the official notice is the preferred course of action, however, as it creates a paper trail of your intentions in cases of future legal conflict.

You may transfer power of attorney to someone new before or after declaring an official notice of revocation. However, it is recommended that you file these documents separately.

If you wish to amend your power of attorney, do not simply edit the document, as this may call the document’s authenticity into question. Even if only minor changes are being made, it is advisable to start over with a new document.

When is the Right Time to Make This Change?

So long as you remain mentally capable, you may change your designation of durable power of attorney at any time between its initial creation and the time when it comes into effect. The most obvious times to amend your power of attorney are after marriage or divorce, after moving to a new state with its own particular laws, or if you lost the original document.

When making changes to your POA, it is important to notify relevant parties, such as banks, creditors, landlords, lawyers, doctors, and insurance companies. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

What is a Spendthrift Clause?

Most estate plan trusts include provisions of some kind or another. The spendthrift clause can limit a beneficiary from using the assets in the trust. This can be especially useful when you are aware that an intended beneficiary has money issues or poor spending habits. The spendthrift trust could prevent these beneficiaries from spending or borrowing against trust fund assets.

The spendthrift clause usually requires that only a certain amount of the trustee’s money can be given to the beneficiary. But it also usually makes it so that the beneficiary’s creditors cannot place liens or other judgments against the assets of the trust.

Why Would You Want to Consider Implementing a Spendthrift Clause?

Typically, one would consider putting a spendthrift provision into a trust if they thought a beneficiary would misuse or mishandle the assets or otherwise borrow against those assets in order to repay creditors. It is important to note that one cannot set up a spendthrift trust to protect their assets from creditors looking to settle debts. The spendthrift trust only provides protection for the people named as beneficiaries.

Proper estate planning means protecting assets for future generations and intended heirs. However, sometimes we know that those heirs aren’t the best at handling money, or perhaps they have creditors breathing down their necks. A spendthrift clause can help protect assets meant for the beneficiary from the beneficiary if this is deemed necessary.

Which Debts Cannot Be Avoided Via Spendthrift Trusts?

Though a trust can help defend assets from creditors, taxes, probate, and reckless spenders, no trust should be considered 100% bulletproof.

Spousal support, child support, and certain government claims may be enforced against assets locked up in a trust if they cannot otherwise be repaid. State law can decide that such entities are not creditors and therefore not blocked by spendthrift clauses.

How Could a Spendthrift Trust Help Your Family?

So long as assets remain in a trust, a beneficiary’s creditors cannot attach interest to those assets. The beneficiary could have their money troubles, but with a well-written spendthrift clause, those financial issues should never threaten to suck the trust dry. A spendthrift provision is meant to block any “voluntary and involuntary” transfers of assets from the trust.

A well-written will and trust can be the determining factor in whether your estate plan best defends your interests both for your legacy and for the futures of your beneficiaries. If you think a spendthrift clause may be a smart provision to add to your trust, please contact an estate planning attorney in your state. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

How Divorce Affects Estate Planning in Colorado

It’s sad to say, but statistically, almost half of all marriages end in divorce in the United States. What’s more, the state of Colorado ranks among the highest number of divorces in the nation. With divorce becoming increasingly common in our society, it is important to understand the implications this could have on your estate planning.

Your wills, your retirement plans, your trusts, and more could all be directly affected by the end of a marriage. But so long as you are aware of the implications under the law, you may be able to properly defend your assets in the unfortunate event of a divorce.

How Does Colorado Law Change Estate Planning in the Event of a Divorce?

In Colorado, a divorce results in the automatic revocation of an ex-spouse as the beneficiary or fiduciary of your will or trust. This means that your ex-spouse and their relatives are no longer able to claim any assets in your estate. Children that you and your ex-spouse shared will still be eligible for claims, however.

While some may consider these laws beneficial, they could create major complications if one spouse passes away while the two are engaged in divorce proceedings.

Colorado law dictates that the rules surrounding divorce’s impact on estate planning depend on the timeline of the writing of the wills, the start of the marriage, and the eventual divorce. If you get divorced after the will was created, your ex-spouse is automatically no longer entitled to any assets from the estate. They are also automatically eliminated from being your will’s executor. If, however, the will named the other party before the two of you were ever married, then they may potentially have certain statutory rights to assets even after divorce.

Estate Planning Actions That You Should Not Take in a Divorce

Any action taken to hide or move assets during a divorce is prohibited by law. Not only will the act be harshly frowned upon by any divorce court judge who may make final determinations in your divorce, but hiding assets or money during divorce proceedings is also punishable under the civil law code.

You are prohibited from funding a new revocable or irrevocable trust during a divorce. Nor can you modify any existing life insurance or benefit plans.

When is it Time to Start Over?

Going through a divorce can be one of the most stressful times of our lives and estate planning isn’t exactly relaxing either. However, after the divorce is done, it is time to get back to work.

Following a divorce, it is necessary to begin revising wills and trusts in order to keep your estate plan up to date. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

The decision to turn to a nursing home or an assisted living facility is never an easy choice to make. We want to believe that family members should stay with their loved ones all throughout their twilight years. However, sometimes the conditions of their care are simply too great for those of us who are either untrained or otherwise unable to provide adequate time and care to those in need. In these situations, often, we must make the decision to entrust a loved one’s care to professionals and move them into a facility.

However, just because the decision has been made does not mean that your troubles are over. Regardless of how necessary their services may be, the costs for residency at a nursing home in America can be extreme.

Medicaid benefits can help pay for nursing home care. However, it may require careful planning to ensure that assets are not seized by Medicaid in return for paying for those services.

Medicare or Medicaid?

While some people may have the funds to pay for nursing homes, many of us do not. And while long-term care insurance is becoming more a popular element in estate planning and asset protection, again, not everyone can afford this.

Medicare provides only short-term assistance for nursing home costs, usually only up to 100 days, and may not provide benefits for people stricken with certain diseases. And to get even that minimal amount of care, one must pass a strict set of qualifications.

Medicaid offers long-term assistance for nursing home costs, so long as a state-required asset and income tests are met. In Colorado, Medicaid requirements ask that recipients have only $2,000 worth of countable resources. However, many assets are exempt from being counted against you in these tests.

What Assets May Be Kept and Which Are Considered Non-Exempt?

In Colorado, certain assets are exempt from being counted against the $2,000 limit. These exempt assets include:

• A family home is exempt for a married couple so long as there is an established intent to return to the home after the nursing homestay
• Household goods and personal property should be exempt
• Wedding and engagement rings are exempt, regardless of their value
• One motor vehicle is exempt, regardless of its value, so long as it is in use
• Required medical equipment
• Health insurance policies with a value of $1,500 or less

Cash and savings, individual retirement plans, certain trusts, stocks, recreational vehicles, additional automobiles, or pieces of real property may be counted against the $2,000 limit.

Can You Give Assets Away?

It is possible to give away assets in an attempt to obtain Medicaid eligibility, but this must be done right. Colorado law has penalties against those who simply give away assets in an attempt to obtain certain benefits. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.