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.

You can use a Power of Attorney to give someone the ability to pay your bills while you’re on vacation for example, or to act on your behalf during a financial or real estate negotiation.

But unless the Power of Attorney is “durable,” it expires if you become incapacitated. This is an important point to remember because many people use Powers of Attorney specifically for the purpose of protecting against disability.

There are two basic types of durable Powers of Attorney: one that works for financial matters as outlined above and the other for health care decisions. In order for these documents to protect you if you are incapacitated, they must both be durable.

Then, should you become unable to handle your own affairs, the Durable Power of Attorney for finances would allow your appointed agent to handle your financial affairs for you. They can pay your bills, access your checking and savings and even continue to negotiate financial and real estate transactions on your behalf, if you so choose.

The Durable Healthcare Power of Attorney enables someone to speak on your behalf with regard to medical decisions, such as treatments or medications you may or may not want.

In order for a Power of Attorney to be useful when you need it, you also need to know why some institutions will not accept them.  A Power of Attorney must be extremely comprehensive in order to adequately give authority to handle exactly the things your agent may need to take care of.  Some institutions require that a Power of Attorney be on their own form.  In addition, Powers of Attorney should be re-signed regularly as many institutions won’t accept them after a certain period of time (some insist that the Power of Attorney be no older than 6 months!). To learn more about Powers of Attorney and how to protect yourself in the event of incapacity, give us a call today.

• Significant weight loss and/or dehydration;
• Bedsores;
• Poor personal hygiene;
• Injuries or bruises from a fall due to lack of supervision or assistance; and
• Wandering or elopement – a patient repetitively moving throughout the home or being able to leave the home unattended.

Most nursing home neglect is the result of insufficient or poorly trained staff.  Often there is no malicious intent behind nursing home neglect, but victims can suffer significantly, and may not be able to communicate problems to their loved ones.

Recognizing neglect before issues become severe or even life-threatening is critical.  Residents with frequent and regular visitors have a better chance of being identified as a victim of neglect before the situation becomes critical.

Residents of nursing homes should enjoy the same comfort and constitutional and civil rights as they would at home. Because of their vulnerability, residents are protected by a specific nursing home law, which states that all residents in a nursing home are entitled to receive quality care and live in an environment that improves or maintains the quality of their physical and mental health.   Colorado has enacted a series of laws protecting the elderly, including:

• Suspected cases of elder neglect or abuse occurring in a nursing home must be reported within 24 hours to the appropriate law enforcement agency or county department;
• Suspected cases of financial exploitation must be thoroughly and promptly reported and investigated; and
• Specific abuses of the elderly are criminalized and given priority on the court’s docket.

Contact a Colorado nursing home attorney should you suspect your loved one’s rights have been violated.

You Have Your Debt under Control

Do you have a mountain of debt? If so, it is best to wait to invest until you have your finances under control, and here’s why: The more debt you have, the more interest you’re paying and the interest rate is probably much higher than what you’ll get in returns on your investments. Thus, the longer it takes you to pay off that high-interest debt, the more money you’re losing.

You Have Extra Money

You should wait to invest until you have a little extra money to do so. Surplus cash is money left over after you pay bills and contribute to your emergency fund. In case of emergencies, you should have enough money to cover all of your expense for at least three months, preferably six. A basic investment portfolio can begin with five hundred dollars. If you don’t have this, but you want to begin investing right away, some investments allow you to have small withdrawals taken from your account each month.

You Have Researched Your Options

Deciding what investments work best for you depends upon your personality, your investment goals and the current state of the economy. If you are a safety oriented person, you may prefer secure investments such as money market accounts and savings bonds. If, however, you don’t mind taking risks, stocks might be a better option for you.

Do you need to make money quickly or are you looking farther into the future? Investment goals are usually long term or short term and this will affect the type of investment vehicles you choose. You also want to make sure you keep your portfolio diversified so that your money isn’t tied up in one venue.

For more information on building a strong investment portfolio, consult with a qualified financial planner.  If you’re looking for financial planners to interview, we’re happy to provide names of advisors we trust.

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.

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.

And if that disability or incapacity prevents you from speaking on your own behalf, you would be powerless to make important decisions that affect your estate and your well-being.

Fortunately, there are things you can do now to prepare for disability.

Disability insurance, for example, can help cover your expenses when you’re unable to work.  This type of insurance is frequently provided at little to no cost by your employer however, you can purchase disability insurance directly from insurance companies. Short term disability can help cover your expenses while you’re recovering from an injury or are in the early stages of disability.  The time period can range from two weeks to as long as two years.

Long term disability on the other hand, is designed to cover more serious conditions and can replace anywhere from 50-70% of your salary.

In addition to disability insurance, you should have your estate planning attorney help you draft a set of Advanced Directives that include a Living Will, a Healthcare Power of Attorney and a Durable Financial Power of Attorney. The Living Will tells your healthcare providers how you would like to be treated in certain situations. It also allows you to specify what medical treatments you do or don’t want.

A Healthcare Power of Attorney grants authority to someone of your choosing to make medical decisions on your behalf in the event that your specific condition is not covered in your Living Will.

The Durable Financial Power of Attorney grants similar authority but only with respect to your financial affairs. This document allows someone to pay your bills, access your financial accounts and take care of your day-to-day finances.

For more information on incapacity planning, contact our office today.

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.

• Your wishes involving cremation or burial;
• The location of the service;
• The type and size of service;
• Casket preferences (open vs. closed);
• Pallbearers;
• Music preferences;
• Flowers or donations requests.

Some choose to even write their own obituary or provide details that they would like included, even the photograph they would like used.

Providing these details will ensure that your wishes are carried out, as well as save your family from having to make these difficult decisions during a time of grief.  While these letters are not typically legally binding documents, they do provide guidance and clarify your wishes to your loved ones.

As for planning for your funeral expense, many incorrectly assume that social security benefits cover the cost of burials.  Social security provides only a one-time payment of $255 paid to a surviving spouse. If there is no surviving spouse, the payment is made to a child who is eligible for benefits at that time.  Obviously, this benefit will not fully cover the cost, so additional financial planning is needed.

Many choose to set aside the cost of a funeral in a ‘payable upon death’ account, also known as a totten trust.  Others choose to prepay their funeral expenses, which is not recommended – consider the consequences should you choose to relocate or the company goes out of business.  There is also a newer tool called the Funeral Trust, which allows you to set aside money to be used for burial and funeral expenses, but the money can be used to pay expenses with any company rather than being tied to one specific mortuary or funeral home.

Taking the time now to document your wishes and plan for the expense of a funeral or other memorial service can both ensure that your wishes are carried out and provide tremendous relief for your loved ones.  It is just one more reason to have a comprehensive estate plan to ease the burden of your passing.

• 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.