Whether your life insurance proceeds can be used to pay the debts of your estate depends on whether you’ve named a designated beneficiary.

What is a Designated Beneficiary?

If you complete a form for the purpose of specifying the name of a beneficiary for your life insurance policy then the beneficiary is known as a designated beneficiary in legal language.

If there is a designated beneficiary for an insurance policy then, at your death, the proceeds from that policy belong to the beneficiary. Unless you’ve named your estate as the beneficiary, your life insurance money cannot be used to pay your creditors or any of the bills of your estate. Also, the account would not pass through the probate process even if the rest of your estate is probated. However, if you don’t fill out a designated beneficiary form, or if your beneficiaries don’t survive you, then the insurance money would be included in your estate. This means it would go through the probate process and could be used to pay off the bills of your estate.

Part of establishing and maintaining a solid estate plan is making sure that your life insurance policy is up-to-date, and knowing where the money will go in the event of your death.  An estate planning attorney can help you with these tasks.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Medicaid is a state-run program funded with both Federal and State funds to provide health care benefits to those who meet the need-based eligibility requirements.  For senior citizens,  Colorado Medicaid benefits are normally used within the state’s Long Term Care Medicaid Program, which includes monthly benefits not only to help pay for nursing homes, but home and community-based services so medical providers can come to a patient’s home and assist them.  This helps keep a disabled person in their residence longer rather than putting them immediately into a nursing home or hospital.

In 1992, Colorado established an Estate Recovery Program mandated by Federal Law that requires states to recover some of the costs of the benefits paid to Medicaid recipients.  After the death of individual who has received Medicaid benefits, the law requires that their assets be used to repay the Colorado Department of Health Care Policy and Financing to offset the cost of the benefits used.

To recover the costs of benefits from an estate, Colorado uses a third party contractor.  The contractor will either place a lien on the deceased’s property or file a claim against the Estate of the deceased.  There are several instances in which the State of Colorado will NOT pursue a claim against an estate, for example:

• If there is a surviving spouse;
• If there is a blind or disabled dependent of the deceased; or
• If there is a child under the age of 21.

In addition, the Estate Recovery Program allows exceptions when a person moved to the deceased’s residence prior to their admittance to a nursing home to help care for the individual.  This exception covers siblings and children who have continuously lived in the home for at least two years, and in the case of children, helped provide care that allowed the individual to live in the home longer rather than enter a nursing facility.  In these cases, the state may seek recovery from assets from the estate, but the home itself will not be subject to the recovery program.

As you can see, Medicaid law can be complex and confusing.  For assistance, it’s best to work with a Colorado Medicaid attorney who has experience and expertise in this complex area of law.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Creating an estate plan is a big decision, but deciding on who you want to share it with is equally important.

Once you’ve created a plan, you should ideally share it with family members so that they know what to expect. A trust for example requires a trustee to oversee after you’re gone so at the very least, you’ll want your successor trustee to be aware of the responsibilities that lie ahead.

Additionally, you may want to explain to your heirs why you’ve divided up your estate the way you have to help prevent any family disputes after you’re gone.

Of course, sometimes you may not want to share the details of your estate with your entire family. Maybe one heir is receiving less than another and you don’t want to strain the relationship anymore than it is now while you’re alive. Just remember that “surprises” can often result in a contest of your Will so the more up front you are now, the less shock your family will receive later.

Other people feel the need to keep their estate plan a secret because they don’t want their family members knowing their true net worth. This is a decision that only you can make but again, the more honest you are about your estate now, the less chance there is for a contest later.

Ultimately, it all depends on your individual family and personal situation. You alone can decide whether you should or should not share your estate plan but discussing it with your estate planning attorney is a good way to choose who else should be brought into the loop.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Just because you haven’t reached retirement age doesn’t mean it’s too early to begin planning your estate. Your estate plan will help resolve your debts and distribute your assets upon your death. And though we all hope to live a long and happy life, we also know that the future is not guaranteed. Planning your estate now ensures that your estate and your loved ones are protected after you’re gone.

Last Will and Testament

The best tool to begin planning your estate is a Last Will and Testament.  This is a basic estate planning document that allows you to name heirs for all of your belongings and stipulate an executor to settle your estate and pay your final debts.

Guardianship

If you have minor children, it is vital to name a guardian in case both you and your spouse should pass away. You can include your guardian plan in your Last Will and Testament or in a Living Trust. A guardian plan ensures your children are looked after by a skilled and willing caregiver without enduring a lengthy court custody battle. Creating a guardian plan will give you the peace of mind to know your children are being cared for. And here’s an extra tip: Don’t forget to name a back-up guardian in case anything should happen to your first choice.

Disability Plan

If you saw the news reports on Terry Schiavo, then you can understand how important it is to create a mental disability plan. Such a plan allows you to name someone to speak for you in the event that you are no longer able to make your own medical or financial decisions. With a disability plan you can name someone to handle your financial affairs, made medical decisions on your behalf and even let your healthcare providers know how you want to be treated in certain end-of-life situations.

Life Insurance

If you pass away, who will help your spouse pay the bills? How will your children go to college? Life insurance is a financial safety net for family members who depend upon you as a source of income.  It is best to purchase a life insurance policy in your twenty’s when your premiums will be much lower, and you will have a better chance of being approved.

To learn more about building your own estate plan, contact our office today.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

One area of expertise for an estate planning attorney is probate, which is the legal process involving the administration of a deceased person’s will or the estate of a deceased person without a will (known as dying intestate).  Probate is carried out within a Probate Court and varies by state.  In Colorado, probate is divided into three types:

• Small estates worth under $50,000 with no real property;
• Informal probate for uncontested estates; and
• Formal probate for estates that are contested and/or have invalid or questionable wills.

The specific tasks that are carried out in the probate process include:

• Declaring a will valid or invalid;
• Transferring title of property from the deceased to an heir or beneficiary;
• Giving an executor of an estate legal standing to handle the estate’s business;
• Paying off liabilities of the deceased’s estate;
• Distributing the assets of the estate.

Often the purpose of a comprehensive estate plan is to help avoid the costs and time of a complex probate process, but probate cannot be completely avoided with a will.  All wills must be probated in Colorado if you own real estate or have more than $50,000 of property without beneficiary designations, but the involvement of the probate court varies by the complexity and size of the estate.

There are ways to avoid having your family going through probate, which helps keep the administration process shorter and less expensive.  Some choose to use a revocable living trust instead of a will to dispose of their property upon death. Assets transferred to the revocable living trust before a person’s death are not subject to probate and can be distributed upon the their death without probate. However, the trust only controls assets which have been transferred to the trust during the deceased’s lifetime and, therefore, a person should still have a will to dispose of any assets which—either intentionally or inadvertently—are left out of the trust.

While probate can be costly and complex, an estate plan can significantly simplify and reduce the costs of this process.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Calculating your net worth every year is a good way to help keep your estate plan up to date. Knowing the value of your estate if you were to die is an important part of the planning process.

Your net worth is the total amount you get after you subtract the total value of your liabilities from the total value of all of your countable assets upon death.

You’ll need some basic financial information to calculate your Net Worth and you can easily do it by yourself. Here is a step-by-step method to calculate your net worth:

1- List all your main assets like home, vehicles, antiques, etc. Total their value in dollars and be sure to calculate the value of each as accurately as possible.

2- Collect all the financial statements of your liquid assets like savings accounts, cash, other investments etc.

3- Add in the death benefit of all life insurance.  This includes policies you have personally purchased, as well as those policies you may have through your employment.  If you have the right to choose the beneficiary, you must count the death benefit as part of your estate.

4- Make a list of personal items of value that may be worth at least $500 or more.

5- Now, add the value of all the assets you have listed in the first three steps.

6- List the value of all major liabilities like mortgages, car loans etc.

7-Next list the value of all your personal liabilities like loans, credit card outstanding etc.

8. Now, add the value of all your liabilities.

9. Simply subtract the total value of your liabilities from your assets and you would get your Net Worth.

You can repeat this process every year to evaluate your financial progress. If you need any help then you can easily contact a good attorney.

When calculating your net worth, always make your estimates as accurate as possible and be sure to share your new estimates with your estate planning attorney when you review your estate plan.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

The Family Wealth Trust secures more than money and property – it also protects your memories. Many tools exist to preserve the moments from family holidays, birthdays and vacations. Scrapbooks, videos, journals, and family trees become part of the trust to be passed through the ages. Each generation can add their own memories to the trust for the entire family to cherish. Heirs enjoy knowing the joys and the sorrows their family has lived through, and a strong family history gives the family members a strong sense of self.

Try these record-keeping tools for securing the family moments and history:

Scrapbooks

One of the best tools for preserving the memories of your family through the ages is a scrapbook. Scrapbooks contain photos, papers and little bits of nostalgia collected from events and family members. Scrapbook making parties can bring together family members with their collected photographs, documents and little items saved from a moment in time. The family arranges the page layouts, swaps photos and supplies, all while swapping stories. If family members are miles apart, they can create virtual scrapbooks online.

Handwritten Journals

Stories written in the penmanship of ancestors; fountain pens to ink pens to gel pens. The end of the pages yellow with age, and the books become treasured vaults of ancestors’ stories. A handwritten journal provides the reader with the innermost thoughts and experiences of the writer. Events are captured in a way no photograph could relate. These journals often record more than family events, they record moments of world events. Imagine reading an ancestor’s Civil War experiences or learning what a great-grandfather felt about being so far from his wife and children during wartime.

If you don’t know where to start with a journal, many bookstores carry guided journals with question prompts and space to write your responses. Sometimes the prompts jog your memory into remembering so much more than free-form writing.

Family Tree

Tracing the family tree can involve tracing the family genealogy through the ages. Some discover interesting relatives important to the history of the country; others find out they are related to royalty. Studying the genealogy of your family gives you insight as to where, and whom, you came from. By researching the family’s origins family members might also research the times and conditions in which they lived. Children can relate the history lessons in school to the history of their family.

Video Storytelling

A wonderful gift to your family after you pass on is a video recording of you telling family stories. Family members have a piece of you to view and treasure forever as you relate stories of your childhood, adolescent years and adulthood. These stories become treasures for telling again and again, and there is no asking, ‘how’d that story go?’

In whatever way you choose to document and preserve your memories for future generations, involving your family can allow them to contribute their own stories and memories and make a great foundation for your Family Wealth Trust.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Sure, there’s 101 other things you could be spending your money on, but life insurance may need to be at the top of your list. Want to know why?

You Can’t Predict the Future

Do you have a magic ball that lets you see what surprises might be waiting around the corner? Probably not. Every day someone dies and while we don’t want to believe it could happen to us, the fact is that it could. I regularly meet with families grieving the loss of a loved one who was young and vibrant.  Tomorrow it could be you, no matter what your age. Since you can’t predict the future, it’s important to get a life insurance policy started as soon as possible.

Lower Premiums Today

The younger you are when you purchase a life insurance policy, the lower your premiums will be and the better likelihood you will have of being accepted by an insurance company.  Premiums are low for those who are in good health and practice healthy living such as not smoking and limiting alcohol.

Quick Money after Your Death

When you pass away, your estate may have to endure probate, a lengthy court process to validate your Last Will and Testament and pass your belongings to your heirs. This process can last months or even years. So, what will your family do in the meantime to cover your funeral expenses and pay off any last debts you have? A life insurance policy allows your beneficiaries quick access to money to cover estate bills while other assets are tied up in court.

Long Term Income for Your Family

Life insurance can offer your loved ones an alternative source of income when you pass away.  If you have no life insurance and your pay makes up a portion or all of your family’s income, your family may experience a drastic change in lifestyle after your death.   Even the loss of a stay-at-home parent has a drastic financial impact on a family, as the surviving parent may have new child care expenses he or she didn’t previously have to worry about. To ensure your family doesn’t suffer financial hardship after you are gone, you should get a policy started quickly.

Allow Your Children to Go to College

If you should pass away before your children reach the age of eighteen or while they are still in college, they may not have a way to pay for school if they were reliant on your income.  A life insurance policy can provide money for your children’s higher education.

How does life insurance fit into your estate plan?

Estate planning isn’t just about distributing your assets after you’re gone – it’s also about protecting your family and helping you reach your financial goals. Call us today to learn more about what a complete estate plan could do for you.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

An important aspect of planning your estate is naming fiduciaries.

Fiduciaries – in legal language – are people who make decisions on your behalf and in your best interest. All of us have fiduciaries in our life like our banker, our real estate agent, or our attorney.

When you make your estate plan, you need to specifically name some people as fiduciaries for various aspects of your Estate.

You may name an individual, such as a spouse, adult child, or good friend.  In some situations it is best to name an institution like a bank or Trust as a fiduciary instead of a person. Whenever choosing fiduciaries, you should consult your attorney. A fiduciary has to be someone who:

• can shoulder responsibility
• is  sensible and practical about making various decisions
• is tough enough to handle invalid claims from creditors
• is able to organize all documents, consult the right experts etc.

Your estate plan may call for different types of fiduciaries, but often you can name just one person to fill all the different roles.  You will also need to name backups for each fiduciary role in your estate plan, so that your plan will still work if something happens to the person you have named.

Some fiduciaries you’ll likely need to name include:

• someone to look after your minor children in case of your death
• someone to handle your estate
• someone to look after your Trust
• someone as a healthcare representative to make medical decisions for you in case you become incapacitated
• someone to handle financial decisions on your behalf if you become unable to do this for yourself
• someone to make decisions in case you fall mentally ill and cannot look after your estate

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

In order to distribute your assets to your heirs after you pass on, your estate typically must go through a legal process known as probate. This can be a lengthy and expensive process, so many people look for ways to avoid – or at least streamline – the probate process.

A trust is one way to do this but you can also use payable on death (POD) accounts to bypass probate on certain assets such as bank and investment accounts.

Also called transfer on death (TOD) accounts or trust for accounts (ITF), these accounts allow you to include a beneficiary designation as part of the account documents. After your death, your beneficiary can simply go to the bank or the investment company with proof of your death (a death certificate) and can access the account.

Disadvantages of Payable on Death Accounts

Unlike a typical joint account, the beneficiary of your POD account cannot place any claims on the funds in the account while you are alive. However, the method is not without drawbacks:

• When you are naming a single beneficiary of your POD account, you are in effect disinheriting your other heirs which can create a rift in the family.
• If your beneficiary dies before you and you fail to update your account, then the account will be added to your estate at the time of your death and go through probate. If you have named two or more beneficiaries and the death of one beneficiary precedes yours, the bank/investment company will face a problem in dividing the account.
• If you later decide to make changes to your POD account, such as shifting it into your Revocable Living Trust, some institutions might want you to get the consent of the beneficiaries as well.
• Naming a beneficiary does not allow anyone to manage your account on your behalf if you become incapacitated, so your family may have to go through a conservatorship/guardianship process to manage your account and other assets.

Ultimately, you should consult an estate planning attorney to determine the best way to title your assets and provide for your heirs.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.