Frequently Asked Questions: Estate Planning

What does “estate planning” mean?

Estate planning is the process by which a person decides how assets will be managed in the event that they become unable to do so. It also covers how and to whom those assets will be transferred either during your lifetime, upon your death or sometime later.

Estate planning also addresses personal welfare and needs, by outlining health preferences and other directives if a person is no longer able to care for himself. The care of minor children is also a key estate planning issue, as is the distribution and protection of assets on behalf of those children. Individual estate plans sometimes need to be adjusted to reflect legal and personal changes.

What is involved in Estate Planning?
If you are starting to consider your estate plan, ask yourself the following questions:

What are my assets and what is the approximate value?
Whom do I want to receive those assets — and when?
Who should manage those assets if I cannot, either during my lifetime or after my death?
Who should have the responsibility for the care of my minor children if I become incapacitated or die?
Who should make decisions on my behalf concerning my care and welfare if I become unable to care for myself?

Once you have developed tentative answers to these questions you are ready to seek the advice and services of a qualified lawyer, who will discuss the various estate plan documents with you.

Who needs an Estate Plan?
Everyone. Estate planning is not exclusive to people with significant wealth, minor children or spouses. It’s vital to designate who will receive assets upon your death, handle your affairs and care for children and pets. It is also crucial to identify the person who will take responsibility for managing your assets and care, including the authority to make health decisions on your behalf if you are unable to.

Without a plan in place, Colorado law provides for the court appointment of persons to take responsibility for your personal care and assets. The state also provides for the distribution of assets in your name to your heirs pursuant to a set of rules to be followed if you die without a will, a process known as “intestate succession.” Contrary to popular myth, if you die without a will, everything does not automatically go to the state. If you have any relatives (whether through your own family or that of your spouse), regardless of how remote, they will be your heirs ahead of the state. Nonetheless, they may not be the people you would want to inherit from you, making a will the preferable approach.

What is a Will?

A will is a traditional legal document which is effective only at your death that accomplishes the following:

1. Name individuals or charitable organizations to receive assets upon your death (either by outright gift or in trust).

2. Nominate a Personal Representative, appointed and supervised by the probate court, to manage your estate, pay debts, expenses and taxes, and distribute your estate in an accountable manner and in accordance with your will.

3. Nominate the guardians of the estate and of your minor children.

Assets or interests in property in your name alone at your death will be subject to your will and to the administration of the probate court, generally in the county where you reside at your death.

What is a Revocable Living Trust?
A revocable living trust is commonly referred to as a revocable inter vivos trust, a grantor trust or a living trust. A living trust may be amended or revoked by the person creating it (commonly known as a “trustor,” “grantor,” or “settlor”) at any time during the trustor’s lifetime, as long as the trustor is competent.

A trust is a written agreement between the individual creating the trust and the person or institution named to manage the assets held in the trust (the “trustee.”) In many cases, it is appropriate for you to be the initial trustee of your living trust, until management assistance is anticipated or required, at which point your trust should designate an individual or bank or trust company to act in your place. The terms of the trust become irrevocable upon the trustor’s death. Because the trust contains provisions which provide for the distribution of your assets on and after your death, the trust acts as a substitute for your will and eliminates the need for the probate of your will with respect to those assets which were held in your living trust at your death.

You should execute a will even if you have a living trust in place already. That will is usually a “pour over” will which provides for the transfer of any assets held in your name at your death to the trustee of your living trust, so that those assets may be distributed in accordance with your wishes as set forth in your living trust.

You should consult with a qualified estate planning lawyer to assist in the preparation of a living trust, will and other estate planning documents. Further, inasmuch as living trusts are not automatically subject to probate court jurisdiction, the choice of a trustee to manage and control your property is an extremely important decision.

 

How long does it take to get divorced?

In Colorado, the soonest a divorce can be granted is 91 days. Sometimes the parties use this period to resolve some or all of the divorce-related issues and are then able to submit a separation agreement, along with all of the other paperwork to the court. If the parties are not able to have an agreement in place by the 91-day mark, the length of the divorce process will be longer, depending on the caseload or docket of the county in which the parties are filing.

 

Frequently Asked Questions: Estate Planning

 

What are the legal requirements for getting a divorce or legal separation?

At least one of the parties must have been a resident of Colorado at least 91 days prior to the filing of the petition for dissolution of marriage or legal separation. In addition, one of the parties must attest that the marriage is irretrievably broken, which means there is no chance of reconciliation of the marriage. Because Colorado is a no-fault state, there is no need to show fault during the process.

 

Does Colorado recognize a common-law marriage?

Yes, Colorado does recognize a common-law marriage, which is established by showing the mutual consent or agreement of the parties to be husband and wife, followed by a mutual and open assumption of a marital relationship. Although a common-law marriage does not require any kind of a ceremony to be legitimate, cohabitation on its own is not enough to prove a common-law marriage.

 

What is a legal separation?

Legal separation means that the parties can live separately from each other and not be tied to the actions and obligations of the other party. This arrangement does not terminate the marriage. During a legal separation, the marital estate is divided, which means that the property and debts are separated between the parties, child support and spousal maintenance is awarded and parental responsibilities are determined. Six months after the Decree of Legal Separation is entered, either party can request that the legal separation be converted to a decree for dissolution of marriage.

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