If you have considered recently whether you need a will and estate plan you might want to remember the following:
Even small estates can often benefit from proper estate planning. Of course, if you have a taxable estate (in 2008 this may mean assets of more than $1,000,000) you should have an estate plan drafted by an experienced legal professional who knows the laws of your state (unless you just enjoy giving extra money to the government in taxes).* However, even for smaller estates, there are many situations you might not have considered where you and your business might benefit from proper estate planning.
Although there are many will documents out there on the web and do-it-yourself will kits, books and manuals, this is an area where there are many pitfalls for the unwary. Every state has different laws and they change periodically. A generic will or other documents may not work properly in your state or may not have the effect that you want them to, and no-one would ever know until the will is admitted to probate. Don’t leave your children or heirs with a big mess!
In Colorado you should consider the following:
* If you or your spouse have children by a previous marriage, you need a properly drafted will to make sure your assets are properly distributed at your death, so that such children are not inadvertently disinherited.
* If you are not married to your partner, you definitely need a will. Under the intestacy laws (for people who die without a valid will) the State of Colorado will inherit all your assets before your partner, who might have lived with you for years. This may not be at all what you intended! This especially applies to gay relationships which are not recognized under Colorado law.
* Generally speaking, while state probate laws are better than they once were they are still not tailored to unusual situations:
For instance, have you considered what happens if you or your spouse are disabled and not able to make critical medical and financial decisions? Who would you want to handle such matters? Normally, your spouse or family member must petition the court for an emergency temporary conservatorship or guardianship. This proceeding is expensive and can be time consuming. Worse, suppose you want your unmarried partner to make financial or medical arrangements rather than your parents or adult children? The law doesn’t recognize your partner’s rights. Who will have access to your bank accounts? Who will make important medical decisions? A durable medical and durable financial power of attorney, plus a Colorado living will can easily be drafted to handle such situations, but only before, not after an emergency! If you are unconscious for instance, you cannot sign legal documents! Then it will be too late and you or your family may be stuck with needless delay and thousands of dollars in unnecessary legal fees!
The important point to consider here is that proper planning empowers you! You make the decisions in advance instead of leaving critical decisions about your life to others, even family members!
Business and Succession Planning: Another area that can routinely benefit from proper estate planning is planning for your business. What happens if you or your business partner were to die or become seriously disabled, who would inherit there share of the business? Have you got key person insurance to handle the distribution of assets to your partner’s spouse or heirs?
These matters may seem unduly remote, but suddenly finding yourself in business with your former partner’s spouse or heirs or having to sell off the business to satisfy the claims of your partner’s estate or creditors can be devastating. What if it’s a bad time to sell? What if you want to continue in business, but lack the capital assets to continue after division and sale of the business?
There are many other similar contingencies. This is where proper succession and business planning go together to protect your assets. Do you want your children to have a share of your business while you are alive, but you want to maintain control?
If you are in business you got an estate plan to cover these and other contingencies?
There are solutions to these and other problems that can easily arise. Proper business planning is essential to avoid difficulties in the future. Consulting experienced legal counsel can be essential in dealing with these and a host of other issues surrounding your small business. A free initial consultation may help you decide whether these or other business planning techniques are right for you or your business.
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*As of December 2008 it appears that President Obama will allow the Bush tax cuts to expire. If so, this would mean that the tax threshold for estate tax would revert to the situation in 2001, which would be a $1,000,000 exemption. Anyone with more than this amount could potentially be subject to tax. This area of law is most uncertain, so maximum flexibility in creating an estate plan is necessary.