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.

Leaving an inheritance to a disabled loved one can be a tricky thing to do. On the one hand, you want to provide for them as best you can. But leave behind too much, and you risk endangering their eligibility for important government assistance programs such as Supplemental Security Income and Medicaid.

But with a Special Needs Trust you might be able to avoid some of the problems that an inheritance can create for a disabled person receiving benefits.

A Special Needs Trust allows you to leave property to the trust instead of directly to the disabled beneficiary. With this type of trust you will need to name a trustee that will oversee the trust and spend the money on the beneficiary for what they need. Due to the fact that the beneficiary will not have direct control over the money, Social Security will not count it against their eligibility. The trust will last as long as it is needed; when the money is gone or the beneficiary dies, the trust will end.

How Can The Trust Money Be Spent?

Although the trustee cannot give money directly to the beneficiary, they can spend the money to pay for home health care or personal assistants, vacations, medical expenses, clothes, education, and more. Just keep in mind that if the trust purchases something that requires a deed or a title, it must be in the trust’s name, and not the beneficiary’s name.

Who Should Be Trustee?

Choosing a trustee for a Special Needs Trust is important; the person you choose will have to be someone that you can trust completely. This is especially important if the beneficiary is mentally handicapped and will not be able to recognize if there are any problems with the trust. Most people will choose a parent or sibling of the disabled person to act as trustee, but you can name anyone you want to be trustee.

No one wants to pass over a loved one just because they are disabled and receiving government benefits, and if you go through a Special Needs Trust you won’t have to.

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

Having a valid Will is an important aspect of ensuring your estate plan does what it’s supposed to do. That means you need to ensure your Will is updated on a regular basis and has been reviewed by your estate planning attorney to make sure it still complies with state laws.

There are some circumstances that can affect the validity of a Will, including:

• Changes in Family Status – If there has been a marriage, a divorce, the birth of a child, or if beneficiary has died, this affects how the assets are distributed and the Will should be modified accordingly.

• Illegal Terms – In estate planning, “illegal” doesn’t necessarily mean criminal. If there are terms in the Will that requires that you dispose of property that is held by someone else for example, this won’t be allowed by the probate court. You also cannot give assets to a named beneficiary if there is another legal document naming someone else as beneficiary to those assets. A Will also cannot name a beneficiary to property that is held in a trust, and is ineffective in passing property owned in joint tenancy when one tenant passes away.

Can the Will be Challenged?

Wills that appear completely legal and binding can still be challenged. This could happen if there is any question as to the Will makers mental capacity at the time they signed the Will, such as if they were suffering from mental illness, Alzheimer’s, etc.

For a Will to be legal it must be in writing, as well as signed and dated. In Colorado, there must also be two witness signatures and a notary. A Will can be generated by computer as long as all of the legal criteria are met. A holographic Will, or handwritten Will, is valid in Colorado only if all of the important parts are in your own handwriting and it has a self-proving affidavit.  If the will seems to be added to, such as some of it being handwritten, and some computer generated pages, this may cause some legal problems and should be remedied now.

If the Will could have any of these issues, the best course of action would be to consult with an estate-planning attorney to ensure your loved ones don’t experience probate problems after you’re gone.

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

If you’re wondering what should go in your Will and what shouldn’t, there’s an easy way to answer that – start simple.

There are four basic components that every Will should have:

• Your Assets – List out all the property you want to include in your Will. Keep in mind that some property, such as life insurance policies, retirement plans and joint property with rights of survivorship – don’t go into a Will. Items such as your house, your car and any personal belongings are all fine.
• Your Beneficiaries – Who do you want to leave your assets to? How do you want to divide up your property? Will all your heirs receive equal shares? If so, make a point of spelling out what goes in each person’s share to avoid arguments during the probate process.
• Your Executor – If you have a Will, you need someone to oversee your estate and ensure the terms of the Will are carried out. In the legal world, that person is called your executor. Choose someone who is intelligent, reliable and honest – you should always trust your executor’s judgment.
• Your Signature – A Will must be signed to be valid and it must have at least two witnesses as well. Your estate planning attorney can help you find two witnesses that will be considered neutral third-parties, exactly what you want in case your Will is ever contested.

What if you have kids?

Then there are two more components you need: a guardian to oversee your children’s care until they reach the age of majority and a conservator to oversee their assets until they are of legal age to inherit.

To ensure your Will meets state law and addresses all your needs, consult with an experienced estate planning attorney.

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

A Revocable Living Trust is one of the most efficient ways of avoiding Conservatorship. If you are in a debilitating accident, suffer a stroke, develop Alzheimer’s or other dementia otherwise become incapacited, a Successor Trustee of your choosing would manage the assets instead of a Court-appointed conservator.  As many of you know, when my mother developed early-onset Alzheimer’s I had to hire an attorney, go to court, ask to have her publicly declared incompetent, and then follow the court’s investment instructions and file annual accountings and reports with the court.  This court oversight continues for the rest of your life.  The Revocable Living Trust avoids all of the legal hassle, and allows someone of your choosing to continue to manage your affairs according to your instructions, rather than the court’s.

How to Set Up a Revocable Living Trust

A Trust requires three parties – Grantor (also known as settlor or trustor), Trustees and Beneficiaries. Initially, all three parties are the same person – you.

When you set up the Trust, you continue to handle all your assets in the same manner as you normally would – they are just in the name of the Trust instead of you as an individual.

In the event that you become incapacitated, your Successor Trustee would step in and manage the assets for you. Since all the assets are funded into the Trust, there is nothing in your name as an individual and nothing for the court to address.

You will still of course, need to include Advanced Medical Directives in your estate plan to ensure that all your wishes regarding medical care and treatment are honored.

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

There are two distinct aspects to successful estate planning: planning and maintenance. Unfortunately, many people ignore the second piece and end up with estate plans that are out-of-date and sometimes even declared invalid.

So, why does your estate plan require maintenance?

Our lives are always changing. We marry, we divorce, we have children and grandchildren. We buy new homes, new cars and new jewelry and over time, we may accumulate new investments and property.  As a result, the estate plan you have today may no longer suit your needs this time next year but the only way to know for sure is to review your plan on a regular basis.

The first step to updating your Last Will and Testament is determining what changes need to be made.  Do you have new beneficiaries in your life, or has a beneficiary passed away? If so, you must update your Will to be certain there will be no confusion of property division during probate. You should also update this estate document any time you buy or sell property that is or should be listed in your estate plan.  If the circumstances of any beneficiaries have changed, you may want to change your plan.  A beneficiary who is getting divorced, has become disabled, or is having financial problems can have special protections to ensure their inheritance is preserved.

Once you have determined what you need to change you should meet with your attorney to determine your best course of action. There are two ways to change a last Will and Testament: – amend with a Codicil or create an brand new Will.

A Codicil is best for small changes such as beneficiary name changes due to marriage or changing your estate executor. If you wish to make large changes such as adding a spouse or drastically redistributing your assets your attorney may advise you to create a new Will. Your new Last Will and Testament will state that you revoke all previous Wills. This is an important feature to help avoid any confusion during estate probate.

Once you have updated your Will, you should safely store it and notify your estate executor of the location. If you have created a new Will, be sure to destroy all copies of old Wills. If you do not, there may be uncertainty at probate. This could occur if an old Will is found by your executor or other loved ones. They may assume there is no additional Will, and your official final wishes will not be considered.

The final step to updating your Last Will and Testament is to update all other estate documents to mirror those changes. This may include a Revocable Living Trust, powers of attorney, beneficiary accounts, and life insurance policies.

We recommend reviewing your Will or other estate plan with your attorney at least once every three years.

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

Understanding the difference between a living trust and a testamentary trust is essential to creating a trust that meets your goals.

A living trust is one that you establish and that takes effect while you’re alive.  In order to create a living trust, you’ll sign a trust document that identifies you, as well as the trustee you’ve chosen to manage the trust (usually yourself), and the beneficiaries of the trust.  The trust document also spells out the purposes of the trust, and lists the trustee’s powers and duties.  Once the trust document is signed by both you and the trustee, you’ll have to fund the trust.  This means transferring ownership of the property you want held by the trust into the name of the trustee.  Once this is done, everything is business as usual.  The beauty of a living trust is that if you become incapacitated, and when you die, there is no need for the legal probate process.

A testamentary trust is created under your will and doesn’t take effect until you die.  If you want to establish a testamentary trust, you’ll use your will to identify the trustee, the beneficiaries, and the purposes of the trust.  You’ll also identify the property to be held by the trust.  Once your will  goes through probate, the trustee will take control of the property and manage it on behalf of the beneficiaries you’ve identified.

An estate planning attorney can advise you as to which type of trust best meets your individual goals and needs.

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

A trust is essentially a “box” that can hold your assets. Instead of having the deed to your house titled in your name for example, the deed would be in the name of the trust, such as the Smith Family Trust.

This small change in how your assets are titled can provide some extensive tax breaks and can also protect your estate from going to a non-family member during a divorce or being seized in a lawsuit.

And here’s how it works:

There are three basic parties to a trust:

• The Trustor (also called a “Settlor”) who establishes the trust and provides the assets it holds
• The Trustee who manages the trust and its assets. This can be a person, a business or an organization.
• The Beneficiary who receives the benefit of the assets in the trust.

Now, these three parties do not have to be different people – quite the contrary, you can be the Trustor, the Trustee and the Beneficiary, allowing you to have complete control over your assets while still protecting them from a variety of third party claims.

The trust can be revocable, meaning you can change or even cancel it at any time, or irrevocable, meaning that once the trust is established, it’s there for good.

Trusts can also be used to provide for disabled dependents after you’re gone, by allowing them to benefit from the assets in the trust without affecting their eligibility for government-assistance programs.

Trusts can also help you avoid probate, a lengthy and often costly process of distributing assets after you pass on.

To learn more about trusts and decide if there’s one right for you, give us a call today.

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