Estate Planning in Colorado: FAQ

It can be challenging to know where to start when it comes to estate planning. Since each individual’s circumstances are different, there can be many different options for estate plans. Having a comprehensive estate plan in place can protect you and your loved ones as well as your family’s assets.

An estate plan also allows you to make provisions for who will look after your affairs should you become incapacitated or pass away. Most of all, an estate plan can give you peace of mind that your loved ones are protected and your assets will go where you intended. Unfortunately, individuals who fail to create adequate estate plans could end up leaving it to the state and courts to decide how assets will be distributed.

We understand that you may have many questions related to your estate planning needs. This FAQ collects questions we often hear in our practice, covering what an estate plan can do and how an attorney helps. However, you should consider consulting with an experienced estate planning attorney who can advise you thoroughly and create the right plan for your unique circumstances.

What Is an Estate Plan?

An estate plan details the transfer of a person’s assets, such as real estate, investments, and retirement accounts, after they pass away. Estate plans can vary greatly and involve trusts, wills, powers of attorney, and healthcare provisions. However, many Americans delay making plans for their estate.

One misconception we frequently encounter is that estate planning is only for the wealthy. While estate planning is certainly a must for those with a considerable portfolio of assets, having a solid estate plan can be beneficial for each and every individual. Even if you do not own any assets other than a house, car, and bank account, having an estate plan can have many benefits.

If you do not have a valid estate plan, you risk your state deciding what happens to your assets should you unexpectedly pass away or become incapacitated. At Johnson Law Group, Colorado estate planning starts with a review of what you own, how each asset is titled, and who you want to provide for.

What Should an Estate Plan Include?

An estate plan can be personalized depending on the wishes and circumstances of the individual and their family. However, generally, a comprehensive estate plan can include the following:

Wills and Trusts

A Last Will and Testament (will) directs how the assets in your estate are distributed to beneficiaries according to your wishes following your death. Wording matters, but validity also depends on how the will is signed. Colorado’s execution rules call for two witnesses’ signatures or a notary’s acknowledgment, with separate rules for a will written in your own handwriting.¹

You could also consider establishing a revocable or irrevocable trust, depending on your personal circumstances. Trusts can manage assets for beneficiaries over time, and some are used for federal estate tax planning, since Colorado has no estate or inheritance tax of its own.² Choosing between a revocable and an irrevocable trust comes down to how much control and flexibility you want to keep.

In some cases, it may make sense to have both a will and a trust. Every person will have different circumstances and estate planning needs.

Beneficiary Designations

Retirement accounts, life insurance, and payable-on-death accounts pass to the people named on their beneficiary forms rather than under your will.³ That is why those forms need a review after a marriage, divorce, birth, or death.

Divorce needs particular care. Colorado law generally revokes a former spouse’s designation when the marriage ends.⁴ Federal law overrides that rule for employer plans governed by ERISA, such as many 401(k) plans, so a former spouse still named on one of those forms can collect.⁵

Naming a trust as beneficiary can also control timing. For example, a parent can have a child’s share held in trust until age 30 rather than paid to a young adult outright.

Durable Power of Attorney

Adding a designation for durable power of attorney to your estate plan can be extremely important as it allows you to assign a person you trust as your agent. They can then act on your behalf if you become incapacitated. Not having power of attorney means that a court could decide what happens to your assets.

Many individuals choose their spouse as their designated agent; however, you could also choose a trusted advisor or friend.

Medical Power of Attorney

It can be an excellent idea to add a healthcare power of attorney to your estate plan. The agent you name is typically a spouse or close family member, or anyone else you trust with your life. They can then make medical decisions for you if you become unable to do so yourself.

A living will is a separate document. It records the treatment you would or would not want at the end of life, so the people deciding for you are not left to guess.

Guardianship Designations

Guardianship designations only apply if you have any minor children (or older children with special needs) to consider. Selecting a guardian in case of your and your spouse’s death or incapacity is a critical and important decision. The failure to name a guardian means that a court could rule where your children will live and with whom in a Colorado guardianship case.

A parent can name a guardian for a minor child in a will or another signed writing.⁶ The appointment does not override the parental rights of either parent, and a child 12 or older can refuse to consent to it.

An estate plan can also include other important designations and documents. Not sure which of these documents you already have, or whether they still say what you want? Johnson Law Group offers a no-pressure consultation to review them with you, so schedule a consultation and bring whatever paperwork you have.

What Happens If I Do Nothing?

If you die without a will or trust, Colorado’s intestate succession statute decides who inherits the property that passes through your estate. It follows a fixed order set by the legislature, not your wishes. Descendants, in the statute’s terms, means your children, grandchildren, and later generations.

A surviving spouse takes the whole estate in two situations. One is when you leave no descendants and no surviving parent; the other is when all your descendants are also your spouse’s, and your spouse has no others.⁷

In other family situations, the spouse takes a set dollar amount plus a share of the rest. Those amounts are adjusted for cost of living every year, which is why Colorado intestate succession figures depend on the year of death.

Where there is no spouse or designated beneficiary, your descendants inherit, with children sharing equally and grandchildren stepping in for a child who died before you.⁸ With no descendants, the estate goes to your parents and their other descendants, such as your siblings, then to grandparents and their families. Only if no one in those lines survives you does the estate pass to the State of Colorado.⁹

Two other documents matter as much as the will, because they cover incapacity rather than death. Without a financial power of attorney, your family may need to ask a court to appoint a conservator to manage your money.¹⁰ Without a medical power of attorney, the people close to you are asked to agree on a proxy decision-maker, and a disagreement can lead to a guardianship case.¹¹

How Do I Raise Estate Planning With an Aging Parent?

Start with documents rather than money. Ask whether there is a will or trust and where it is kept, and who is named as personal representative to manage the estate. Ask whether there are medical and financial powers of attorney, and who their attorney and accountant are.

Those questions are practical enough to answer without the conversation feeling like a negotiation over inheritance. Once you know what exists, the questions that shape the plan itself are about care and control:

• Who do you want to be your primary caregiver?
• Where do you want to live as you get older?
• What end-of-life treatments do you want and not want?
• How do you plan to pay for health care expenses?
• Do you have certain assets that you want to be handled in a certain way?

The answers carry legal weight only once they are written into signed documents. That work has to happen while your parent can still make and communicate decisions.

Do I Need an Attorney for Estate Planning?

When you start to research estate planning, you will likely come across internet sources and downloadable forms. These can give you a general idea of the documents involved, but a do-it-yourself plan can run into serious legal problems later.

An attorney familiar with Colorado and federal law can draft the documents and oversee the signing so they meet the legal formalities. A missed signature or unclear wording can create significant problems for your beneficiaries, potentially leading them to spend hundreds or thousands of dollars on attorneys to get their inheritance.

If an individual’s situation is somewhat complicated, the assistance of an estate planning attorney can be crucial. Careful drafting and signing make a will harder to challenge, although no plan can stop someone from filing a contest.

An attorney can also structure your plan so more of your assets pass outside probate, through beneficiary designations, joint ownership, or a funded trust. That can save your beneficiaries time and fees, because the cost of probate in Colorado depends heavily on what the estate holds. If you set up your estate plan with an experienced estate planning attorney, you could potentially save your loved ones considerable legal challenges after your death.

Contact Johnson Law Group Today for Help

You likely have many more questions with respect to your individual needs for your estate plan. While this estate planning FAQ can give you a general idea of certain types of estate planning documents, an experienced attorney can offer you individual care and attention. Johnson Law Group is here to help you build a plan that fits your family.

The attorneys at Johnson Law Group will give you a clear read on which documents you need and what each one does. Schedule a free consultation through our Colorado offices, and we will serve as your North Star from here.

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