What Single People Should Know About Estate Planning

Single adults who are not in a long-term relationship have unique estate planning concerns. If they are 18 and older, it usually makes sense for them to have estate planning documents in place.

Here are some common issues that come up for single people with estate planning. 8.3.16.EstatePlanning-For-Single-People.AndersenLawPC

YOUR DIVORCE: Colorado law automatically voids all appointments of and bequests to a former spouse in a will. It is critical that a divorced person prepares new documents that are wholly operational in this context. Continue reading “What Single People Should Know About Estate Planning”

6 Must-Know Facts About Durable Power of Attorney

What is durable power of attorney? A durable power of attorney allows an agent to do things on your behalf. It’s important to understand what those things are and how durable power of attorney works. Here are six facts about durable power of attorney that are important to know. 7.13.16.Andersen-Law-PC.DurablePowerofAttorney

1. WHY YOU NEED A POWER OF ATTORNEY: Just so you know, you are far more likely to be disabled or incapacitated than you are to die anytime soon. So your power of attorney documents are just as important as your will. In fact, if you think about it, your power of attorney is more important to you personally than your will because you will actually be alive when your power of attorney is being acted upon. You may well be in a health care situation, hospice or under care at home while your agent acts on your behalf. So you want to have some say now on how you will be treated then. A power of attorney allows you to do this.

2. WHY NO ONE EVER IS A POWER OF ATTORNEY: First, some quick vocab so, going forward, you can show how smart you are by using the words “power of attorney” correctly. Do not go around calling yourself (or anyone) a “power of attorney.” The document is called the “power of attorney” and the person appointing the agent named in the document is called the “principal.” The person appointed to act on behalf of the agent pursuant to the power of attorney document is called the “agent.”

3. WHAT MAKES A POWER OR ATTORNEY “DURABLE”: The word “durable” comes into play because the agent is allowed to act even when the principal is incapable of acting. It continues to operate after the principal comes incapacitated.

4. WHAT HAPPENS TO YOUR POWER OF ATTORNEY WHEN YOU DIE: A power of attorney operates when you are alive. Once you die, your power of attorney document no longer functions, and your last will and testament comes into play. If you do not have a will, then the laws of intestacy come into play. Powers of attorney are for people who are alive. When the principal dies, the agent’s authority to act ends too.

5. WHY YOUR AGENT HAS A RIGHT TO ACT ON YOUR BEHALF WHEN YOU ARE NOT INCAPACITATED: Many people think that they have something that is essentially a “springing” power of attorney that does not operate until a triggering act, such as the principal’s incapacity, happens. However, the standard durable powers of attorney do not need a triggering act. They are effective and give the agent power to act immediately upon signing, even when the principal is NOT capacitated and IS able to act on his or her own behalf. The reason for this is that an agent often needs to act right away. Waiting for a doctor to determine incapacity bogs things down and causes undue delay. It is more effective to allow the agent to act right away. The main thing is to choose an agent you trust and then trust that they will use their power in your best interest.

6. WHY YOU NEED TWO POWER OF ATTORNEY DOCUMENTS: The Colorado legislature created two different documents: the medical power of attorney and the financial power of attorney. This makes sense because you may not always want the same person to serve in financial and medical decision-making roles. Frequently, a person has one someone who is good at financial decisions and another person who is good at health care decisions. So too, you may not want your doctor to go over your financial power of attorney and may not want your banker reading all about your medical decisions. Two separate documents allow you to keep these discrete areas separate.

To learn more about durable power of attorney and how to ensure that your will and power of attorney documents are properly prepared, contact Andersen Law PC at 720-922-3880 or email me at beth@andersenlawpc.com.

Estate and Gift Tax: 12 Things Those Transferring Millions Should Know

When it comes to issues relating to family law and estate planning, it’s not usual to be unaware of how the system works until it’s your turn to be involved in it. And at times, particularly during an election cycle, gift and estate taxes are in the news with a lot of political arguments attached to them. But when these taxes affect you and your family, the facts are more important than the politics. So I wanted to share with you 12 facts about estate and gift taxes that you need to know when dealing with estate taxes and gift taxes. Estate-and-gift-tax.andersen.law.pc.5.2.16-2

  1. Estate tax and gift tax are different. Estate tax is a tax on transfers at the time of death. Gift tax is a tax on lifetime transfers. Colorado has not had an estate tax in over a decade. Other states may have an estate tax. Under federal law, transfer taxes occur on both combined IF they total over $5.67 million in a lifetime (over $11.34 million for married couples with portability).
  2. Estate and gift taxes are politicized. Congress changes these taxes over the years for different political reasons, so they are moving targets.
  3. Donor intent is irrelevant. In determining whether something is a gift, it does NOT matter whether the person intended to give a gift. If the parameters are met or not met, it is or is not a gift regardless of the intention of the donor.
  4. The identity of the beneficiary is irrelevant. It does not matter who the beneficiary is in determining whether there was a gift. It is simply that the owner retains the right to change the beneficiary that counts (see No. 5 below).
  5. The gross estate includes more than what you own. The gross estate includes all items owned at time of death plus items included by the Internal Revenue Code (IRC) such as life insurance, life estate transfers, the power to designate a recipient, transfers with retained powers, stocks given with retained voting rights, shell family “business” arrangements set up to avoid tax, revocable transfers, reversionary interests, reciprocal trusts, joint property, joint spousal interests, powers of appointment, annuities, qualified retirement plans and pensions. What do all these things have in common? The giver retains a power to make a change. So, when you think about it, the giver is also to an extent a “keeper” (retaining incidents of ownership) and therefore the items are rightfully included in the gross estate.Gifts made in contemplation of death are also included in the gross estate. The IRS wants to discourage death bed conveyances (within 36 months of dying.) However this has been chipped away at so now it generally only applies to life insurance as a practical matter.

Continue reading “Estate and Gift Tax: 12 Things Those Transferring Millions Should Know”

Yours, Mine & Ours: Estate Planning for Married Couples

When it comes time for couples to consider estate planning, there are several aspects of it that must be looked at and decided on. Below are 16 points of estate planning that you and your spouse may need to address, depending on your situation. YoursMineOurs.Estate-Planning-for-married-couples.AndersenLawPC.4.11.16

Preserving the Estate on the Second Death: If a spouse changes their will on a second marriage, it is possible that the children of the first marriage will not get anything. This happens because the first spouse’s children from a prior marriage did not inherit; their parent’s spouse got everything. That person may well remarry and leave everything to their new spouse, not to their stepchildren from a prior marriage. To avoid this problem, communicate, use a marital agreement, use life insurance, consider QTIP trusts.

Life Insurance: You may want to get a life insurance policy to protect your children from a prior marriage, naming them or a trust protecting them if they are minors, as the beneficiary of that policy. This way you protect “yours” from the scenario set forth in No. 1. Continue reading “Yours, Mine & Ours: Estate Planning for Married Couples”

Why Estate Planning is Critical for Unmarried Couples

Why Estate Planning is Critical for Unmarried Couples Andersen Law PC

Oftentimes, people don’t think about estate planning until they’re married. But the reality is that estate planning is just as important — and in some instances more important — when you are in a relationship but not married and especially if you are not planning to be married. Here are eight reasons why estate planning is important for unmarried couples.

1. Giving Each Other the Right to Inherit: In many unmarried relationships, neither partner is entitled to inherit under the Colorado laws of intestacy. This means that if either of you dies without a will, all property that passes through probate will go to any current spouse, children of the deceased, parents of the deceased then siblings (that is a general summation). You’ll notice that romantic partner is not on this list. If you want to protect your partner, you need a will to do it.

2. Defining Whether You are Married: In Colorado, you may be “common law” married without even knowing it. This is an issue of fact in Colorado and a short consultation is the best way to go over the facts in your case. If you are at risk of being common law married without having the intention to be married, a cohabitation agreement is in order. Remember that if you are “married,” then you have rights to inherit. Continue reading “Why Estate Planning is Critical for Unmarried Couples”

Before you draft your own will, read this

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I believe in people drafting their own legal documents but NOT their own wills using online programs and forms. As much as I want to empower people to take ownership and participate in their legal issues, I find this option to be a horrible disaster. And I have good reason for saying this: I have seen the absurd and unfortunate results of poorly drafted wills that are often unenforceable or lead to results that are the opposite of what the drafter intended.

Here are some of the unfortunate results I have seen when people tried to probate wills they drafted themselves:

– A will intended to leave real estate to the children and grandchildren but actually required that the real estate be sold.

– A will that gave all property to the party’s ex-spouse’s children when the intention was to exclude them.

– A will that mixed up the husband and wife’s names.

– A will that might be unenforceable in the event of simultaneous deaths due to both parties allegedly predeceasing each other.

– Many wills that were unenforceable due to improper witnessing.

Our estate planning package is highly affordable: $500 for a testamentary will with a springing trust for any children or grandchildren, medical durable power of attorney, financial power of attorney and living will. The same package is only $750 for a couple. This includes an initial meeting, supervised signing of the estate planning documents with objective third party witnesses provided by our arrangement, and a follow up re-signing in the event you want to make small changes. This is a price point many people can afford and helps ensure your estate planning accomplishes what you REALLY hope to achieve.

What to Consider When Writing a Will

Thinking about death and leaving loved ones behind is never easy and is unfortunately, something that many people put off because it’s just not a pleasant thought. But it is important and something people have been facing through the writing of wills since the earliest days of written history, according to the American Bar Association. Writing a will is imperative to easing the stress on your family as much as possible if something should happen to you, and it can give everyone (yourself included) peace of mind knowing there is a plan in place.

Done correctly, wills go far in ensuring that your assets are directed where you want them to be and that any possible disputes between surviving family members are minimized because all matters of your estate are clearly addressed.

When you’ve decided that it’s time to prepare a will, here are a few things to consider:

  • What type of funeral do you want?
  • Who will manage your money, debts and health care decisions?
  • What will happen to your home?
  • Who will care for your children and what are those caregivers’ names and addresses?
  • What are your main assets?
  • Are there gifts of personal property you want to leave to specific people?

Estate planning, including not only wills, but trusts and living wills are a specialty of mine, and I offer these packages at an affordable rate of $500 per person or $750 per couple. I encourage you to please contact me if you’d like to learn more.