Wills Trusts Probate Guardianships Conservatorships
Do I need a will?
It depends on your specific situation. Not everyone needs a will. However, most people can benefit from having a one. The usual situations in which you need a will are discussed below.
1. You Have Minor Children. If you have minor children (under age 18), you will want to name a guardian for your children in your will. A guardian is the person with whom your minor children will live if both parents die. In addition, a trust should be established to manage their assets and you will want to name a trustee for the trust. If you do not choose a guardian and trustee, the court will appoint them. Also, in the absence of a trust, the child will receive all assets outright at age 21 (a concerning thought to many parents). When you establish a trust in your will, you may choose an age older than 21 for your child to receive his or her assets and stipulate other terms that may be important to you.
2. Children (or Other Beneficiaries) Are To Be Treated Unequally. If you want to treat children (or other beneficiaries) unequally, you need to have a will. For example, if you have given one child a down payment for a home you may want to equalize gifts to your other children at your death. In addition, a disabled child may need more assets than other children.
3. You Do Not Prefer Intestate Succession (the statutes that governs if you pass without a will). If you do not prefer the intestate succession laws, you need to have a will. For example, if you are single and your parents have adequate assets, you may want to leave your property to brothers and sisters. Under intestate succession, however, your assets would be given to your parents.
4. You Are In A Second Marriage with Children from a First Marriage. If you are married for the second time and have children from a prior marriage, you almost always will want a will. Under intestate succession, a portion of your assets and your half of joint assets pass outright to your second spouse who may then give the assets to his or her children (or even to a subsequent spouse). You should consider a trust with assets available to your spouse for his or her life and the remainder then passing to your children at your spouse’s death. Your estate planning may need to be coordinated with any prenuptial planning you may have done for your second marriage.
5. Tax Considerations. For couples with estates between $7,000,000 to $10,000,000 (President Biden has not yet decided), tax savings can be achieved through wills.
6. You Have Other Special Circumstances. If you own a business or a family farm, out-of-state property or oil and gas interests, have large retirement plans or a large estate, have diseases such as Alzheimer’s in your family history, or have a disabled child, you will need special estate planning considerations. Generally, if you own property, have minor children, or wish to distribute your property in a certain way, you should have a will. Otherwise, the court will distribute your property according to state law and will appoint a guardian and conservator for your minor children.
Why not just use one of those “do it yourself” Wills or Trusts?
Rarely will a generic form will or trust take into account Colorado’s legal requirements. No matter how hard you try, you cannot force a form into taking into account your individual wishes. They rarely accomplish what the drafter intended. In the long run, unraveling the problems created by a “do-it-yourself” will or trust can be far more expensive than initially consulting a lawyer who would have drafted the will or trust to your specifications.
What happens if I die without a will?
If you do not have a will, your “probate property” (the assets in only your name) will be distributed according to intestate succession, which is the pattern of distribution found in the Colorado statutes.
What if I change my mind about something or what if my circumstances change after I sign my will?
A will or revocable trust can be changed up until you lose mental capacity or die. Simple changes can be accomplished with a codicil (an amendment to your will) and more extensive changes can be made by executing a new will.
You always want to review your estate plan every 3 years or so or when your life circumstances change (death of a loved one or anyone else named in your estate plan, significant change in assets (increase or decrease), move out of state, birth of new family members, etc.)
Do all assets pass by my will?
No. Property that passes by a will is called “probate property.” Probate property generally includes assets that are titled only in your name and do not have a beneficiary designation. Property that does not pass by a will is called “non-probate property.” The four major kinds of “non-probate property” are life insurance, retirement plans, trusts, and property owned in joint tenancy.
1. Life Insurance. Life insurance proceeds are paid to a named beneficiary and do not pass by the terms of a will. For this reason, you must verify that your beneficiary designations are up to date. Do not guess. Call your insurance company.
2. Retirement Plan. Retirement plan benefits also are paid to a named beneficiary. Retirement plans may include IRAs, Keoghs, profit-sharing plans, pension plans, SEP plans, and 401(k) plans. IRA’s and some other plans require that you name your spouse unless he or she waives this right. Again, you must verify that your beneficiary designations are up to date.
3. Joint Tenancy Property. Property owned in joint tenancy passes automatically by operation of law to the surviving joint tenant. Both real property and personal property (such as a bank account) can be placed in joint tenancy. For example, if you own a cabin in joint tenancy with your friend Amy and your will states that you leave the cabin to Courtney, the cabin will pass to Amy, not Courtney. Joint tenancy is different than tenants in common. Property owned as tenants in common passes by a will. In this example, if the cabin is owned as tenants in common with Amy, and your will states you give the cabin to Courtney, your one-half interest will pass to Courtney.
4. Trusts. A trust is an entity in which a trustee holds title to certain assets and manages them for the benefit of another. When a trust is created, it states who will receive the property and when the trust will end.
Should all assets pass by my will?
It depends on what types of assets you own, how they are currently titled, and the overall size of your estate. If you have accurately explained your wishes in a will, it is important to have your property be “probate property” so that it passes under the terms of your will. For example, if your will states your child’s money is to be held in trust until age 35, it is important that the beneficiary of your life insurance proceeds be that trust (and not your child), so the proceeds pass by the terms of the trust in the will. If the proceeds are payable to the child outright, he or she will receive the life insurance proceeds at age 21.
What does a Personal Representative actually do?
A personal representative administers the decedent’s (the person who passed away) estate. The personal representative identifies the estate’s assets, pays off its debts, and files government forms, including taxes. The personal representative also distributes assets to the rightful heirs and beneficiaries according to the specifications in your will and other estate documents. The following is a detailed, but not exhaustive, list of responsibilities of a personal representative:
- Locate the will
- Retrieve the death certificate
- Hire a lawyer and tax consultant if necessary
- Apply to appear before the probate court
- Notify beneficiaries named in the will
- Send death notices to the post office, utilities, banks and credit card companies
- Complete a Change of Address form at the post office so that future mail addressed to the deceased is forwarded to the personal representative
- Arrange for publication of notice to creditors and mail a notice to each known creditor
- Pay valid claims against the estate
- Collect debts owed to the estate
- Check with the deceased’s employer for unpaid wages, insurance, and other employee benefits
- List contents of safe deposit boxes
- Check insurance coverage of the deceased and file the appropriate claims
- Inventory all assets and have them appraised, stored and insured as necessary
- Determine a preliminary estimate of the estate’s value
- Collect data on all property owned by the estate that will pass outside of probate
- File income and estate tax returns
- Distribute assets and obtain receipts from beneficiaries
- File all required paperwork to close the estate, including an accounting of all transactions involving estate assets
Whom do I choose as my Personal Representative?
This is different for every individual and every family. You must choose a person who is honest and who you can trust to carry out your wishes. Some people choose a spouse, grown child, sibling, or other relative while others select friends or business associates. It is not highly recommended, but you may have co-personal representatives. Financial institutions can also be named as a co-personal representative to act jointly with family members. You should talk to the person you choose to serve as personal representative and ask whether he or she would be willing to accept the position.
Can I disinherit my spouse?
Not completely. If you do not give your surviving spouse adequate assets in your will, he or she has the right to “elect against the will.” This means your surviving spouse may take up to one-half of your “augmented estate,” depending on the length of your marriage. You can change these rights with a marital agreement.
Can I disinherit a child?
Yes. If you have a will, a child can be disinherited. In rare cases, a child may have a right to “elect against the will” (for example, if it appears that you did not know about a child or if the child was born after the will was signed). If you decide to disinherit a child, it is best to include a short explanation to prevent a will contest.