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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.

WHAT IS A LIVING TRUST, AND IS IT RIGHT FOR YOUR ESTATE PLAN?

A revocable living trust is one of the most commonly used estate planning tools. It allows the trust’s creator, the grantor, to remain involved and in control of the trust during their lifetime. And after they’ve passed on, the trust will be passed to a successor trustee so that beneficiaries may continue to benefit from the trust’s creation.

However, like all estate planning measures, living trusts have their unique pros and cons. It could be that a revocable living trust is precisely the right option for you. But to better determine that, let us first go over some of the advantages and disadvantages of living trusts.

WHAT ARE THE ADVANTAGES OF LIVING TRUSTS?

The pros of creating a living trust include:

• Avoid Probate and Maintain Privacy: Unlike a will, a trust does not need to pass through the probate process after your death. Probate court can take a long time, cost a lot of money, and is an entirely public process.
• Long-Term Financial Control Over Your Estate: Your estate does not need to distribute all of your assets immediately after your death. A living trust can include language which stipulates how and when certain assets are distributed to your beneficiaries.
• Avoid Court-Appointed Conservatorship: When someone becomes incapacitated and they do not have a living trust, the court could appoint a representative to manage the incapacitated individual’s financial matters. A living trust would avoid this by passing the trust on to a successor trustee.

WHAT ARE THE DISADVANTAGES OF LIVING TRUSTS?

The cons of creating a living trust include:

• No Protection from Estate Taxes: Putting assets into a revocable trust does not protect them from estate taxes.
• No Asset Protection from Creditors: Asset protection is not afforded to items in a revocable trust, as the grantor still has ownership of those assets.
• You’ll Likely Still Need to Take Other Estate Planning Measures: Some assets simply cannot be put into a trust. For this and other reasons, you may need additional estate planning tools in place to make sure that everything is taken care of.

WHICH ASSETS SHOULD BE PUT IN A LIVING TRUST?

The assets which you should consider putting into your trust may include:

• Real Estate: Your family home may be the biggest asset you own, and it stands to reason you would want to protect it from probate courts.
• Financial Assets: Certain accounts may be put into a living trust, including stocks and bonds, mutual fund accounts, annuities, and checking and savings accounts.
• Valuables: Certain valuable personal items should be considered for inclusion in your trust, including jewelry, art, antiques, and furniture.

Additionally, motor vehicles, patents, copyrights, precious metals, and small business interests could be worth putting into a trust. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

A personal representative’s deed, or PR Deed, can be useful for those selling the real estate of someone who has passed on. The personal representative’s deed is an estate planning tool that names the executor of the estate with powers to transfer titles for real estate property. It is then the personal representative’s duty to transfer the title of the deceased real estate owner to a new party or buyer.

A PR Deed is a specific legal document and should be drafted only by an experienced probate lawyer or estate planning attorney. Errors in the documents relating to the deed could result in headaches and heartaches for all those involved.

WHAT ARE THE RESPONSIBILITIES OF A PERSONAL REPRESENTATIVE?

It should be considered an honor to be named in a will as a loved one’s personal representative, and there is even usually a payment for the role they play. However, this duty is a big responsibility and requires a lot of time and effort put into a short amount of time. Some of this work may require dealing with beneficiaries who are fighting over who gets a bigger piece of the estate’s pie.

The individual to be named as a personal representative cannot be a minor and, typically, cannot be a convicted felon.

WHEN SHOULD A PR DEED BE DRAFTED?

There is no such thing as too early to begin estate planning. But it can sometimes be too late. So, with that being said, it is important to begin estate planning sooner rather than later. The personal representative’s deed is just one element that goes into a strong estate plan, but there are many others.

To ensure that your estate is effectively managed and protected, it is important to work with an attorney experienced in estate plans and drafting PR Deeds. Not every estate planning tool is right for every person’s estate, and all pros and cons must be considered carefully. With the legal guidance of your lawyer, you should be able to draft a strong PR Deed so that your real estate is properly tended to after you’re gone.

WHAT IS THE DIFFERENCE BETWEEN A PERSONAL REPRESENTATIVE AND A TRUSTEE?

Both the trustee and the personal representative are fiduciaries entrusted with acting in the legal and financial best interests of the estate and its beneficiaries. The responsibilities for each role begin to diverge from there. The personal representative’s duty is to see to the transfer of title for an estate after the estate owner’s passing and tends to matters dealing with probate courts. The trustee, meanwhile, sees to the everyday management and distribution of assets owned by the estate. In each case, both the personal representative and the trustee can be an individual or an institution. They are usually held to other requirements, though, which may vary from state to state. Regardless of what state they operate in, they are expected to act in the best interests of the beneficiaries at all times. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.

If you are ever incapacitated, an individual or institution entrusted with your durable power of attorney can make important decisions on your behalf. During the time when you are either mentally or physically incapable of making decisions for yourself, sometimes there still may be important decisions to be made. Maybe those decisions are in relation to your finances or real estate holdings, or perhaps those decisions are about the medical care that you are to receive while incapacitated. Whatever the case may be, sometimes these choices simply cannot wait.

Without a legally recognized durable power of attorney agent acting on your behalf, the court may appoint someone to make these decisions for you. Or maybe worse, your family members may fight among themselves about how best to interpret your wishes during a difficult time.

In the state of Colorado, every POA is considered durable unless stated otherwise.

WHAT IS A SPRINGING POWER OF ATTORNEY?

While a durable power of attorney is in effect from any set start date and continues while you are incapacitated, a springing power of attorney does not go into effect until a certain condition is met. For example, while the conditions and powers of a durable POA agent may not change in the event of your incapacitation, your springing POA agent may not obtain any power until you are incapacitated.

While this may seem like a useful distinction for limiting your agent’s powers, many estate planning lawyers recommend against springing powers of attorney because sometimes the definitions of ‘incapacitated’ can be difficult to satisfy for all.

DOES A NON-DURABLE POWER OF ATTORNEY HAVE ITS USES?

Non-durable power of attorney is not useful for estate planning, as it loses its power in the event of your incapacitation via illness or injury. But that doesn’t mean such a POA is without its usefulness.

A non-durable power of attorney may be assigned to stockbrokers and investors so that they have the legal authority to manage your investments under your supervision.

IS A POA RIGHT FOR YOUR NEEDS?

Hoping for the best and planning for the worst is a practical way to think about estate planning. No one ever wants to imagine themselves incapacitated and unable to make decisions for themselves. However, we know of several injuries or illnesses that have robbed the abilities of people we love. In those situations, having a durable power of attorney agent selected can make a difficult situation that much more bearable.

The agent selected for your POA must act in accordance with your wishes and the best interests of your estate. If they are ever found to be acting in bad faith, their powers can be revoked.

For help drafting your power of attorney documents, it is advisable to speak with an estate planning attorney familiar with your state’s laws. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.