An estate plan consists of the arrangements for distributing your property to your beneficiaries after your death and for giving other people during your lifetime the power to make decisions regarding your financial affairs or medical care when you cannot do so. Your “estate” is all the property that you own. It can include cash, jewelry, artwork, collections, household furnishings, cars, houses, real estate, savings accounts, investments, retirement accounts, and life insurance.
To make sure your assets are received by your beneficiaries after your death you can use a will, trust, lifetime gifts, beneficiary designations for insurance or retirement accounts, or a combination of these arrangements. A will is a legal document which permits you to make decisions about your estate and its distribution. It is especially important for individuals with children under 18 to prepare a will since it names a guardian for these children and also provides for the disposition of your assets for their benefit.
A trust is a legal document that specifies how your property will be held and managed by a trustee for the benefit of your beneficiaries after your death. Depending on your circumstances, a trust can be used to avoid the expense of probating a will and can be useful if a disability prevents you from being able to manage your own affairs.
While your will or trust controls the disposition of your assets at death, there are other parts of an estate plan that apply to the management of your assets during your lifetime or decisions regarding your healthcare. Most estate plans include:
- Financial power of attorney designating an individual to manage your financial accounts on your behalf when you cannot do so.
- Medical power of attorney designating an individual to make decisions regarding medical treatment or other healthcare decisions if you are unable to communicate your wishes.
- HIPAA authorization granting your medical agent and family members the right to have direct communications with your treating physician.
- Living Will giving instructions to your physician concerning discontinuing life prolonging treatment under certaincircumstances.
Additional documents may include specific final arrangements, such as whether or not you want to be buried or cremated or have a memorial or funeral service, and instructions regarding the distribution of certain tangible personal property to specified individuals.
What happens if I don’t complete an estate plan?
If you do not have the documents referenced above, the State of Colorado has developed an estate plan for you. Upon death, there are provisions in Colorado law that specify how your estate will be distributed based upon your marital status, whether or not you have children, whether those children are of the current marriage or a previous marriage, and other factors. What the law prescribes may not match your desires.
If during your lifetime you are unable to manage your assets due to a disability or are unable to make your own medical decisions, Colorado law requires the appointment of a conservator to manage your assets or a guardian to make medical and other healthcare decisions on your behalf. Conservatorship and guardianship proceedings can be time consuming and costly.
Appropriate planning with the assistance of an estate planning attorney can avoid undesired results.
For more information, visit: http://www.courts.state.co.us/Forms/Forms_List.cfm?Form_Type_ID=103