Estate Planning

Why Should I Bother?

 By Mark E. Henze

        Estate Planning is not necessary at all IF YOU WANT STATE LAW TO DECIDE WHERE YOUR ESTATE WILL GO. Without any estate planning, your property will go to whatever heirs exist to be divided up according to rules of descent. First, an Intestate (without a Will) probate case will need to be filed and will be significantly more expensive than a probate of a Will. Then, the COURT will decide who handles your affairs (often after a fight between your heirs as to who is to be in control). Finally, the COURT will decide how the property is to be split among your spouse and children (and if no spouse and children – among your brother, sisters and their kids). You won’t be able to control who gets specific heirlooms or pieces of property. You won’t be able to leave gifts to charities or non-relational friends. In short, you won’t be able to ensure that the estate is effective in properly providing for your spouse, relatives and other loved ones.

        Proper estate planning normally begins with a Last Will and Testament (Will). This document (if properly prepared) will name a person who you choose and desire to take care of the estate matters (Personal Representative). It will also describe where your estate property is to go. If relying solely on a Will, normally a Court Probate case will be required, but the chance of a fight between your heirs will be minimized and the costs of a Testate (with a valid Will) Probate is normally substantially less expensive than an Intestate Probate. However, sadly part of our firm’s practice is dealing with improperly drafted or executed Wills, so be careful about using “form” or “internet” Wills. Such a poorly drafted Will may cause more problems and expense than not having a Will in the first place.

        In addition to the Will, there are ways to direct where certain types of property go after your death without using the Will and without the necessity of a Court Probate to divide up this property. For example, real estate and even vehicles can be title in Joint Tenancy with right of survivorship. Here, if you pass away, the property automatically belongs to the survivor. Bank accounts can have named beneficiaries (payable on death accounts) and insurance policies can name a Beneficiary to be directly paid the death benefit upon your death. These items will be transferred upon death without concern for what a Will says and without a Court Probate. However, there are both benefits and detriments to using these methods, but they can form an appropriate part of a complete estate plan in addition to a Will.

        In some cases, a living or testamentary (created in a Will) trust is helpful. These are normally used in special cases where the beneficiary is incapable of caring for himself and the property that is left to him/her. It is also useful in certain tax situations and in cases of blended marriages where each spouse has a prior family that he/she wishes to provide for. However, beware! We see a myriad of people who spend extravagant money to have a Trust prepared and then either do not utilize it properly, or simply did not need a Trust in the first place. Note that in many cases (especially here in Colorado), the cost of preparing a Trust just to avoid a testate probate is far more expensive than simply paying the costs of the probate.

        Next, you should regularly re-evaluate and review your estate plan. As you accumulate more assets, if your intended beneficiaries become disabled or exhibit lack of responsibility, or if your family tends to live to an age where dealing with long term institutional or nursing home is warranted, you should review your plans and consider such planning as special needs planning or Medicaid planning. These are all types of planning that are much more difficult to do if the need has already arisen, and the failure to plan in these circumstances can effectively defeat your prior planning.

        Finally, estate planning is also helpful while you are alive. You may want to consider preparing a General Power of Attorney in the event that you should become incapacitated at a later date. Medical Directives or Powers of Attorney are helpful in deciding who makes health decisions on your behalf if you are not in a position to make those decisions. Finally, a Living Will may determine whether life support means are continued where all the medical authorities are doing is draining your estate for medical bills.

        In short, estate planning need not be complicated or expensive. But through experience, we can tell you hundreds of horror stories where the failure to spend a little time and funds to plan resulted in disastrous consequences. A simply wrong word on a Deed may leave the house in the wrong person’s hands or require it to be sold against the wishes of your spouse or children. The failure to leave a valid and well thought out Will may do the same and stimulate family quarrels and contests that could have easily been avoided. Be sure to schedule your initial free consultation and we’ll see what would make sense in your situation.