Denver Wills & Revocable Trusts

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Colorado Wills and Trust Law

In Colorado, wills and trust law allows you to leave directions both while you are here and after you are gone in order to deal with decisions made both about your healthcare and your assets.

Colorado living wills deal primarily with healthcare directives. There is an entire section in the Colorado Code that addresses health care directives. In Colorado, living wills are legal provided that they are validly signed and executed. It remains in place until and unless it is revoked. Living wills are important as one ages and wants to still have some say in their healthcare decisions. As one declines cognitively and may not have a full understanding of the medical situation that they are facing, they may want to have their wishes in place ahead of time so decisions are merely a matter of executing their preferences.

Medical decisions are not something that one will need to solely entrust to others as they age. Of course you can set up a durable power of attorney for an agent to make care decisions. That arrangement works well for many people. The agent will work closely with healthcare providers to make these decisions. Your wishes can be factored into the decision if they are stated clearly ahead of time.

One of the provisions of Colorado law that families can avail themselves of as loved ones age is the ability to establish a trust in order to preserve assets in case long-term care is necessary. Colorado law allows you to move your assets under the control of a trustee in order to avoid any Medicaid look-back. In addition, trusts can protect your assets in other way as you age.

Even if the purpose of your trust is not to preserve assets, it can still help your family avoid probate after death. In that case, your trust can be revocable to allow you to exercise maximum control over it. Colorado law also allows for the formation of dynasty trusts in order to yield the most effective tax planning strategy.


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Wills

Wills involve who will inherit your property after you are gone. It is absolutely vital that your wishes in this area be transcribed on a legally valid document that is operative. The alternative is that there will be a costly and possible contentious process called probate that will need to unfold before your heirs can touch your property.

In Colorado, there is no such thing as a verbal will. Everything must be in writing and, if not, it is as if the will does not exist. The will must be signed by the testator in order to be legally binding. A Not only must a will be in writing, but it also must be signed in front of two witnesses. If the will does not meet legally defined criteria, probate will be a necessity. Assuming the will exists, it must be filed with the court within ten days after the testator has deceased. If a will has been executed in another state, it will be valid in Colorado. However, if the will is not in writing or properly signed, it will not be legal in Colorado.

In Colorado, there are some special rules. The testator and the witnesses must be in the same room when the will is signed. The testator must physically see the witnesses sign. In other words, the signatories need to be in the line of sight. The notary must be present in the same room as well.

The will serves as the guidance for the distribution of the testator’s property after they have died. The executor of the will oversee the distribution of the property and executes the deceased’s preferences. In Colorado, the executor of the will must be a Colorado resident.

Wills are not just limited to division of one’s property after death. There can also be living wills that governs medical treatment when one is still alive. Unlike a traditional will, a living will is in effect when one is still alive. This will traditionally cover decisions such as whether to continue life support when one is in a persistent vegetative state.

A Colorado estate planning attorney can advise you further on any special rules that are found in Colorado.

Trusts

As mentioned above, sometimes there is a need to change the legal form of assets in order to protect them. For example, as one ages, there may be a need to create a trust to preserve assets in the event that long-term care is needed. Seniors are expected to use their own assets to pay for nursing home care and can only qualify for Medicaid after their assets are exhausted. With that in mind, families will set up a trust in order to change control of the assets, but not necessarily the beneficial ownership. So long as the assets are moved into the trust prior to a certain "look back" period, the senior can qualify for Medicaid assistance while the assets are safeguarded for the beneficiaries in the trust. The look-back period for Medicaid is five years.

There are several different types of trusts that can be established. The important thing is that the trust has to be irrevocable. In other words, the trust cannot be amended or changed once it is established. A revocable trust would mean that there is still some control that can still be exerted over the trust since it can always be amended.

A trust does not have to be simply for preserving the assets if a nursing home is needed. The trust could be structured to spend a senior's assets for their own benefit when they are aged and cannot make their own decisions. It is one way to entrust someone else with some of the financial decisions that must be made for the senior's benefit. This is known as a testamentary trust, and it is one way to make a senior less vulnerable to financial abuse and fraud. At the same time, it is another means of preserving an inheritance for those who would ultimately be the beneficiaries of the estate.

In general, trusts are a way to help smooth the orderly transfer of assets after one dies, such that the property can be passed down to the beneficiaries without the need for a probate process and the accompanying fees and taxes.

Estate Planning

In general, the final document that manifests the estate planning decisions will be the will. Prior to that, there are years of planning that are required resulting in the choices reflected in the will. Estate planning will help put you in a more advantageous position by the time your will goes into operation.

There are various tax considerations that will come into play for an estate. The obvious focus is the estate tax, but even estates that do not reach the threshold for the estate tax will have tax planning considerations. There are both state and federal tax issues when it comes to estate planning.

Estate planning is largely a function of the three things mentioned above. You need to have a plan for your medical decisions and your assets while you are still alive and guidance for what happens to your property after you are no longer here. Estate planning is largely a combination of wills, trusts and advance directives that you formulate while you are still of sound mind and body. There will be decisions to make such as designation of executors, trustees and beneficiaries, but the end goal is making any transitions as orderly as possible.

Estate planning should also factor any needs that you have as you age such as medical costs and decisions. It should also consider any special situations such as minor children to support or any beneficiaries with special needs. All of these scenarios can be addressed through the arrangements that become part of your estate plan.

Not only will your money be covered by your estate plan, but the plan can also reflect your values as well. You can devise an estate plan that can benefit charities of your choice and establish lasting arrangements to help others. A Colorado estate planning attorney can help you establish the right kind of structures that will both create a lasting arrangement as well as receive the most favorable possible tax treatment. Estate planning is an area that requires specialized skills and an estate planner with deep familiarity with Colorado law is an absolute must.

What are the Dos and Dont's of Delegation?

Delegation allows a trustee to entrust certain responsibilities associated with the estate to others. In Colorado, delegation is governed by Section 736.0807 of the Colorado Code. Specifically, that section requires that the trustee exercise reasonable care, skill and caution when delegating any decisions for the trust. What constitutes reasonable care and skill in delegation is a matter of fact and circumstances, and there are no hard and fast rules for what is considered reasonable. However, trustees should follow some basic guidelines when delegating in order to make sure that they follow Colorado law.

Do - Thoroughly investigate any investment professional. It is not enough to simply entrust trust assets to someone to invest. As the trustee, you have a fiduciary obligation to the trust to make sure that the investment professional is qualified.

Don't - Neglect to scrutinize decisions made by the delegee. When one is a trustee, their fiduciary responsibility remains, even if they have executed a delegation of certain powers. The trustee may still end up responsible for a poor decisions if the delegee has been left on their own without the trustee exercising any oversight.

Do - If you delegate, make sure that you still keep the beneficiaries abreast of whatever decisions the delegee makes. It is the trustee who still has the duty to provide the necessary information to the beneficiaries and this does not go away even when a function is delegated.

Don't - Perform functions as the trustee for which you have no expertise. In other words, sometimes, the most prudent decision to make as the trustee is to delegate a function to a professional who can help the trust by virtue of their specialized knowledge and training.

Do - Consult with a Colorado estate planning attorney if there is any doubt in this area. A trustee can be held personally liable if something goes wrong and an attorney's advice can be critical in helping a trustee avoid certain minefields.

Don't - Have an extensive business relationship with the delegee whereby you benefit from that relationship. This can open up the trustee for accusations of improper dealings if any decisions are questioned.

Durable Power of Attorney

A durable power of attorney grants someone the legal ability to make decisions on your behalf for certain specified purposes. Many people are familiar with the term "power of attorney" since it is a part of the established legal lexicon. There is not much difference when you add the term "durable" onto the front of that term. Essentially, a durable power of attorney means that the power of attorney remains valid and in effect in the event that you become incapacitated. A nondurable power of attorney will no longer be valid in the event that you are incapacitated and would end at that point.

From an estate planning perspective, a durable power of attorney is an essential tool in the process if there are any type of decisions that will need to be made as one declines. There are several different types of durable power of attorney that each govern a vital area.

A durable financial power of attorney will enable another person to make financial transactions on your behalf when you are no longer able to make sound decisions. This is extremely important given widespread patterns of financial abuse of seniors. The elderly are vulnerable to being taken advantage of, and it is vital to institute safeguards to provide them with protection. 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 areas of healthcare and other medical decisions. This is different than a living will because here the agent is making the decisions on their own as opposed to your wishes and decisions being set out ahead of time. To be clear, your power of attorney can put some parameters on the decisions that your agent makes, 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.

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