Is Your Estate Plan up to date?

Laws change.  The tax code changes.  Your personal, financial and living circumstances change.  Your estate plan must change as these and other areas experience change.

What is an Estate Plan?

An estate plan is a written plan of how you want your assets to be owned, managed and preserved during your lifetime and how you want them disposed of upon your death.  Often times your attorney designs an estate plan to incur the least possible taxes and other costs.

How is an estate plan created?

To put together an estate plan your attorney carefully looks at:

Your assets and how they are owned (real estate, securities, business interests, life insurance, retirement plan benefits and other property) and other instruments that may meet your needs.  Your attorney will want to discuss wills, trusts, business interests, life insurance, Social Security benefits, long-term care, charitable giving, special needs for disabled or elderly, taxes, estate administration and other related issues.  By looking at all of these issues, you may be able to minimize various taxes, the costs of administering your estate upon your death and ensure the welfare of your family and the education of your children.

Many of the subjects involve legal and tax questions of great importance to you.  Your decisions should be made with the confidential advice of your attorney, aided in many cases by an accountant, trust officer, insurance adviser or investment counselor.

The Centerpiece of Your Estate Plan

The centerpiece of an estate plan will either be a will or a revocable living trust.  These documents contain instructions for disposition of your assets upon your death.  A revocable trust-based estate plan does not eliminate the need for a will, because a trust cannot do certain things.  For example, you may not be able to nominate guardians for minor children in a revocable trust.  Conversely, while a will-based estate plan is often simpler, wills often contain one or more trusts that are created on your death.

It’s best for both wife and husband to have a will or revocable trust, even when all significant assets are held in joint tenancy.  This private and personal document can be changed, as desired, during your lifetime.

With a will or revocable trust, your assets can be distributed under your own plan, subject to certain rights of your spouse, which your attorney can explain. You can select your own beneficiaries and  place some or all of your assets in trust for certain individuals and for various purposes.  You may designate the person or banking institution you want to administer your estate, and decide who should serve as guardian for your minor or incapacitated children.

Without a will or revocable trust, the law dictates how your assets will be distributed.  Wills and trusts are only two of several legal devices used in a carefully planned estate plan.

Life Insurance

Life insurance may be an extremely important asset in building your estate plan and should be coordinated with that plan.  Tax consequences should be discussed with your attorney.  Cooperation between your life insurance underwriter and your attorney is important in getting the best planning in place.

(2009) The information above is provided as a public service by the Colorado Bar Association.  Its purpose is to inform citizens of their legal rights and obligations and to provide information regarding the legal profession and how it may best serve the community.  It is not intended to be legal advice as everyone’s estate may be different.