WILLS, TRUSTS &
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AREAS OF EXPERTISE
WILLS, TRUSTS & ESTATE PLANNING
WILLS are used to
• Nominate a personal representative (Colorado’s term for executor),
• Name beneficiaries
• Determine how your property is distributed among your heirs after your death, and
• Provide special provisions for your minor children
TRUSTS are a very flexible planning tool, which may be used
• To avoid probate - for personal/privacy reasons or to save time in the of distribution of assets
• To establish a specific plan to care for a child or dependent with a disability or other special needs
• To specify when and how much money a beneficiary will receive
• If you expect to accumulate more assets
• If you have a previous spouse
• If you own a business and/or real property located outside of Colorado
• To address many other specific individual needs
ESTATE PLANNING includes Wills & Trusts, and often goes further to maximize assets left to beneficiaries, minimize taxation of assets, and plan for the future of your health, your loved ones, and your business.
• A Living Will document helps you control your medical care. It outlines what medical procedures you approve of to attempt to preserve your life and it provides instructions for your end-of-life care.
• A Power of Attorney gives someone you choose the power to act in your place. They can, for example, pay your bills, manage your investments, or direct your medical care -- though in the event of emergency medical care, only if you are unable to do so yourself.
• A Durable Power of Attorney simply means that the document stays in effect if you become incapacitated and unable to handle matters on your own.
• A Health Care Power of Attorney (HCPOA) allows you to designate another person to make medical decisions for you when you cannot make decisions for yourself.
A Simple Will nominates a personal representative (Colorado’s term for executor), names beneficiaries, determines how your property is apportioned among your heirs, and can be used to designate a guardian for your minor children. A Simple Will may be sufficient if:
• You are under 50 years of age
• You do not have a taxable estate
• You have no children from previous marriages
• Your children are adults
A Complex Will may be necessary if you have considerable assets or a large family, or if you wish to set up estate instruments to avoid probate or minimize taxes. A Complex Will is appropriate if:
• You have a taxable estate
• You wish to establish a special needs trust for a child with a disability
• Your children are minors or otherwise of an age where you would not wish for them to receive their inheritance outright
• You expect to accumulate more assets
• You have a previous spouse
• You want to create a joint estate plan with your spouse
• You own a business
Our firm will determine which is best for you, and draft the documents to best protect and provide for your loved ones. There are no estate planning forms available on the internet that can provide the knowledge and discretion of an experienced attorney. We offer the distinct advantage of having a CPA/Attorney on our team.
A Trust is a fiduciary arrangement which provides for a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts are more complex than Wills. Wills include instructions of distribution, whereas Trusts include instructions for retention, administration, and distribution. Types of Trusts include:
Revocable Trusts are created during the lifetime of the trust maker and can be altered, changed, modified or revoked entirely. Often called a Living Trust or "Inter Vivos" Trust. A Revocable Trust is most helpful in Colorado for control of property located outside of the state, tax planning, privacy, and flexibility. In some states, a Revocable Trust is a useful means of avoiding probate; however, in Colorado, the probate process is relatively efficient and inexpensive.
Irrevocable Trusts cannot be altered, changed, modified or revoked after their creation. Once a property is transferred to an irrevocable trust, only the trustee can remove property from the trust. Irrevocable Trusts must be designed properly with specific guidelines which are carefully followed. An example of an Irrevocable Trust is one designed to hold survivorship life insurance (an ILIT - Irrevocable Life Insurance Trust) which may help reduce the size of your estate (and tax liability) and protect the cash flow of your insurance policy from creditors seeking to settle debt.
Living Trusts are created for the purpose of estate planning while an individual is still living. Living trusts - both revocable and irrevocable - avoid probate of the property they hold because the trust entity (not the decedent) technically owns that property. A Living Trust designates a successor trustee to administer trust property upon the death or incapacity of the initial trustee/settlor.
Testamentary Trusts are those funded at death and often continued within a Will. A Testamentary Trust is sometimes referred to as a “Trust Under Will" or simply a "Will Trust". You may design the terms of the trust during your lifetime, but the trust is not established until after death, during probate. A Testimentary Trust may be helpful to:
• Preserve assets for children from a previous marriage
• Protect your spouse's financial future by providing lifetime income
• Ensure that a special needs beneficiary will be taken care of
• Prevent your children from receiving their inheritance before they are ready
• Leave a portion of your estate to heirs other than your surviving spouse
TYPES of TRUSTS
Solem Woodward & McKinley has expertise drafting an implementing the following types of trusts:
• Special Needs Trusts - "SNT" or "Supplemental Needs Trust" - is a discretionary, non-support trust used to deliver supplemental care (items and services) to a beneficiary receiving means-tested public benefits such as Supplemental Security Income (SSI) and Medicaid.
• Disability Trusts - Establish care for a disabled person in the event of their caretaker's death.
• Marital or "A" Trust - Designed to provide benefits to a surviving spouse; generally included in the taxable estate of the surviving spouse
• Bypass or "B" Trust (Credit Shelter Trust) - Established to bypass the surviving spouse's estate in order to make full use of any federal estate tax exemption for each spouse
• Testamentary Trust - Generally included in a will and funded after death
• Irrevocable Life Insurance Trust (ILIT) - Irrevocable trust designed to exclude life insurance proceeds from the deceased’s taxable estate while providing liquidity to the estate and/or the trusts' beneficiaries
• Charitable Lead Trust - Allows certain benefits to go to a charity and the remainder to your beneficiaries
• Charitable Remainder Trust - Allows you to receive an income stream for a defined period of time and stipulate that any remainder go to a charity
• Generation-Skipping Trust - Using the generation-skipping tax exemption, permits trust assets to be distributed to grandchildren or later generations without incurring either a generation-skipping tax or estate taxes on the subsequent death of your children
• Qualified Terminable Interest Property (QTIP) Trust - Used to provide income for a surviving spouse. Upon the spouse’s death, the assets then go to additional beneficiaries named by the deceased. Often used in second marriage situations, as well as to maximize estate and generation-skipping tax or estate tax planning flexibility
• Grantor Retained Annuity Trust (GRAT) - Irrevocable trust funded by gifts by its grantor; designed to shift future appreciation on quickly appreciating assets to the next generation during the grantor's lifetime