On May 4, 2013

By drafting a common document, namely an estate plan, families in Colorado can prevent major headaches when a loved one dies. A recent New York Times article discusses the fact that most families fall well below the financial threshold for paying an estate tax. Even for families that may not be considered wealthy, the article advises filling out beneficiary designation forms and drawing up a will. This can ensure that the deceased’s estate, commonly known as the person’s assets and belongings, go to the legally designated party.

Some forward-thinking families draft a living will for parents, leaving a clause allowing a designated family member to make revisions later if they have health issues rendering them incapable of making their own decisions. These types of documents should be accompanied by a healthcare power of attorney authorizing someone to make legally binding health care-related decisions if a loved one is incapacitated. This could save thousands in medical bills, sparing the family the threat of bankruptcy.

Drawing up a will years in advance is smart, but the will may need to be revised. Updating the estate plan is important as families move from one cycle to another. Children grow up, young adults marry and couples divorce. An estate plan drawn up to set aside funds to care for children under the age of 21 is good for a few years, but when they become adults the document should be updated.

An estate plan prevents the state from seizing the deceased’s assets in an attempt to divide it up, as some families that have failed to write one have learned the hard way. In Colorado, as of 2013, if the total estate value is less than $63,000 and does not include real property, the heirs can claim their shares through an affidavit for small estates. There are specific details to include when drafting a plan strong enough to stand up in court, and although it can be done online, many families turn to an attorney for assistance.

Source: The New York Times, “An Estate Plan for the Not-So-Wealthy,” April 26, 2013

Categories: Estate Planning

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