The Pitfalls of DIY Estate Planning

Estate planning is an essential aspect of financial and legal preparedness, ensuring that your assets are distributed according to your wishes upon your passing. It encompasses a range of considerations, from drafting a will to setting up trusts and healthcare directives. In an era where DIY solutions are increasingly popular, individuals are tempted to navigate the complex waters of estate planning without professional assistance. This trend towards DIY estate planning, facilitated by online tools and templates, promises cost savings and convenience. However, the intricacies of estate law, coupled with the unique nuances of each individual’s situation, present significant challenges that a one-size-fits-all online tool cannot adequately address.

In this article, we'll explore:

• The Complexity of Estate Law: How state-specific regulations and legal intricacies can complicate DIY estate planning.

• One Size Does Not Fit All: The limitations of generic planning tools in addressing unique personal, familial, and financial situations.

• Potential for Errors and Omissions: Common mistakes in DIY estate plans and their potential impacts on the plan's validity and effectiveness.

• Unintended Legal and Financial Consequences: How errors in estate planning can lead to disputes, financial losses, and unintended distributions.

• Missing Out on Advanced Estate Planning Strategies: The benefits of sophisticated estate planning techniques that DIY approaches often overlook.

• The Value of Professional Advice: The irreplaceable role of an estate planning attorney in navigating legal complexities and ensuring a tailored, effective estate plan.

The Complexity of Estate Law

Estate planning is a multifaceted process that intertwines with various aspects of law and finance, making it inherently complex. This complexity stems from the personal and unique circumstances of each individual, coupled with the state-specific nature of estate laws. Understanding the breadth and depth of estate law demands a comprehensive grasp of how these laws interact with individual goals, family dynamics, and financial strategies.

State-Specific Variations

One of the primary challenges in DIY estate planning is the variation in laws from one state to another. Estate and probate laws are not uniform across the United States; each state has its own set of rules governing wills, trusts, powers of attorney, and healthcare directives. For instance, the process to declare a will valid differs significantly between states, with some requiring specific types of witnessing and others mandating notarization. Similarly, the rules around the creation and administration of trusts can vary, affecting how assets are managed and distributed upon death.

Legal Nuances and Updates

The legal landscape is not static. Laws related to estate planning are subject to change, influenced by new legislation, court rulings, and even shifts in tax codes. Keeping abreast of these changes is crucial to ensure that an estate plan remains valid and effective. DIY estate planning tools may not always be updated promptly to reflect these legal shifts, leading to outdated strategies that could compromise the estate's intentions.

Complex Family Situations

Modern family structures can add another layer of complexity to estate planning. Blended families, non-traditional relationships, and international ties can create scenarios that generic estate planning tools are ill-equipped to handle. For example, ensuring that children from a previous marriage are adequately provided for while balancing the needs of a current spouse requires careful legal crafting. Similarly, considerations for a family member with special needs necessitate specific trust arrangements to not jeopardize their eligibility for government benefits.

Business and Asset Considerations

For individuals with business interests or diverse asset portfolios, estate planning can become even more complex. Protecting a business and ensuring its smooth transition upon the owner's death involves legal mechanisms like buy-sell agreements and business succession plans. Additionally, estate plans must consider the tax implications of transferring assets, including real estate in different states or countries, to minimize the tax burden on the estate and its beneficiaries.

One Size Does Not Fit All

The allure of do-it-yourself (DIY) estate planning is often rooted in the perception of simplicity and cost-effectiveness. Many online platforms offer templates for wills, trusts, and other estate planning documents, suggesting a straightforward solution to complex planning needs. However, this approach can be misleading, as estate planning is not a one-size-fits-all endeavor. The uniqueness of each individual's life circumstances—encompassing family dynamics, asset distribution, and future aspirations—demands a tailored strategy that generic templates cannot provide. 

Understanding the Limitations of Generic Templates

Generic estate planning templates are designed to cover the most basic scenarios, often ignoring the nuanced details that define our lives. While they may seem sufficient at a glance, these templates can fail to address specific legal, financial, and familial circumstances. For instance, a simple will template might not provide options for creating trusts for minor children, managing the distribution of a family business, or ensuring that a cherished family home remains within the family. Moreover, they may not include provisions for digital assets, such as social media accounts or cryptocurrency holdings, which are increasingly significant parts of modern estates.

The Importance of Tailored Estate Plans

Every individual's situation is unique, with distinct considerations that need to be addressed in their estate plan:

• Family Dynamics: Blended families, estranged relatives, or the desire to leave assets to friends or charities instead of family members are scenarios that require careful planning and clear directives.

• Business Interests: Business owners need to consider succession planning, shares distribution, and the continuity of the business, which may involve complex legal structures.

• Special Bequests: Individuals may have specific wishes for certain assets, such as family heirlooms, real estate, or significant charitable donations, necessitating detailed instructions in their estate plans.

• Tax Implications: Estate planning should also consider potential tax implications, aiming to minimize the tax burden on the estate and its beneficiaries. This involves strategies beyond the scope of generic templates.

The Consequences of a One-Size-Fits-All Approach

Relying on a generic estate planning approach can lead to significant issues:

• Ambiguity and Disputes: Ambiguities in a will or estate plan can lead to disputes among heirs, potentially resulting in costly and emotionally taxing legal battles.

• Misaligned Intentions: A generic plan may not accurately reflect an individual's wishes, leading to assets being distributed in ways that were not intended.

• Overlooked Assets: Without a customized plan, certain assets might be overlooked or improperly handled, such as digital assets or specific types of property.

Potential for Errors and Omissions

In the realm of DIY estate planning, the likelihood of errors and omissions is a common reality. These missteps can range from minor oversights to significant legal blunders, each carrying the potential to undermine the effectiveness and validity of an estate plan. Without the nuanced understanding that comes with professional legal expertise, individuals embarking on DIY estate planning ventures often find themselves navigating a minefield of potential errors, the consequences of which can be far-reaching.

Common Mistakes in DIY Estate Planning

• Improper Document Execution: The legal formalities required for executing wills, trusts, and other estate planning documents vary significantly by jurisdiction. Failing to adhere to these formalities, such as the number of witnesses required or the need for notarization, can render a document legally invalid.

• Failing to Address All Assets: A comprehensive estate plan should account for all of an individual's assets, including real estate, personal property, digital assets, and jointly held assets. DIY estate planners often miss including certain assets or fail to specify how each should be distributed, leading to potential conflicts or probate issues.

• Incorrect Beneficiary Designations: Misnaming beneficiaries or failing to update designations following life changes (e.g., marriage, divorce, birth of children) is a common error. Such mistakes can cause assets to be distributed in ways that contradict the decedent's wishes.

The Impact of Errors on Estate Planning

The implications of errors in DIY estate planning can be profound:

• Invalidation of Documents: Even minor mistakes in the execution of estate planning documents can lead to their complete invalidation by a court, forcing the estate to be settled as if no planning had been done at all.

• Disputes and Litigation: Errors and ambiguities can fuel disputes among potential heirs, leading to costly and protracted litigation that depletes the estate's assets and sows discord among loved ones.

• Unintended Asset Distribution: Omissions and inaccuracies in how assets are addressed can result in unintended beneficiaries receiving assets, directly contradicting the decedent's final wishes and potentially bypassing those the decedent intended to provide for.

The Risk of Omissions and Their Consequences

Omissions in an estate plan—such as neglecting to designate a guardian for minor children, failing to consider the tax implications of asset transfers, or overlooking the need for specific directives for digital assets—can lead to outcomes that profoundly misalign with an individual's intentions. These gaps not only create logistical and legal headaches for survivors but can also lead to situations where the decedent's wishes are not fully realized, affecting the welfare of loved ones and the legacy left behind.

Unintended Legal and Financial Consequences

Disputes Among Heirs

One of the most immediate and distressing outcomes of an error-ridden estate plan is the ignition of disputes among heirs. Ambiguities or contradictions within the estate documents can open floodgates to legal challenges, as beneficiaries may have differing interpretations of the decedent's intentions. Such disputes not only delay the distribution of assets but also erode familial relationships, often resulting in costly legal battles that can deplete the estate's resources.

Unintended Tax Liabilities

Estate planning is intricately intertwined with tax law, with the structure of an estate plan directly influencing the tax liabilities imposed on the estate and its beneficiaries. DIY planners, lacking in-depth knowledge of tax implications, may inadvertently create plans that subject their heirs to higher taxes. Without strategic planning to leverage tax exemptions or to structure assets efficiently, the estate may face a larger tax burden, significantly reducing the value of the inheritance passed down.

Assets Passing to Unintended Beneficiaries

Mistakes in beneficiary designations or failures to update estate documents to reflect life changes can lead to assets passing to unintended beneficiaries. This misdirection can completely undermine the decedent's wishes, with assets potentially going to former spouses, estranged family members, or bypassing dependents who were meant to be provided for. The process to rectify these errors—if at all possible—can be legally complex, time-consuming, and emotionally taxing for all involved.

Missing Out on Advanced Estate Planning Strategies

Advanced estate planning strategies, often overlooked by DIY estate planners, play a crucial role in achieving the objectives of a comprehensive estate plan. Sophisticated approaches offer benefits that extend beyond the basic will, addressing specific concerns such as asset protection, tax efficiency, and charitable giving. 

Trusts for Asset Protection and Control

Trusts are a foundational component of advanced estate planning, offering a flexible tool for asset management and protection. Unlike a simple will, trusts can provide detailed instructions for asset distribution over time, protect assets from creditors, and even offer tax advantages. For example, a revocable living trust can help bypass probate, allowing for a more seamless transfer of assets to beneficiaries, while an irrevocable trust can protect assets from legal judgments and reduce estate tax liabilities.

Strategic Tax Planning

Tax planning is another critical aspect of estate planning, aimed at minimizing the tax burden on the estate and its beneficiaries. Advanced strategies include the use of annual gift exclusions to reduce the taxable estate, the strategic allocation of assets to take advantage of lower tax rates, and the creation of charitable remainder trusts to generate income, obtain a tax deduction, and ultimately benefit a charity. These strategies require a nuanced understanding of tax law and its implications for estate planning, which DIY solutions cannot adequately provide.

Charitable Giving and Legacy Building

For many, estate planning is also an opportunity to leave a lasting legacy through charitable giving. Advanced planning options allow for the incorporation of philanthropy in a way that benefits both the estate and the chosen charities. Techniques such as naming a charity as a beneficiary of a retirement account, creating a charitable lead trust, or establishing a donor-advised fund can achieve philanthropic goals while providing tax benefits to the estate or the donors during their lifetime.

The Benefits of Advanced Strategies

The incorporation of these advanced strategies into an estate plan offers numerous benefits:

• Asset Protection: Trusts and other mechanisms can shield assets from creditors, legal judgments, and even divorce proceedings, ensuring that wealth is preserved for future generations.

• Tax Savings: Through careful planning and the use of tax-advantaged vehicles, an estate can significantly reduce its exposure to estate, gift, and income taxes, maximizing the inheritance left to beneficiaries.

• Legacy Building: Advanced planning allows individuals to create a lasting impact, supporting charitable causes that reflect their values and interests, while also providing for their loved ones.

Value of Professional Advice

Understanding the full value of professional estate planning advice is essential. It extends well beyond the drafting of legal documents, diving deep into an individual's personal, financial, and familial landscape to ensure that the estate plan aligns precisely with their wishes and goals. Estate planning attorneys, with extensive knowledge of state and federal laws affecting estates, trusts, taxes, and inheritance, are invaluable. The expertise allows for the smooth navigation of legal complexities, ensuring that your estate plan not only meets current legal standards but also anticipates and mitigates potential issues.

For those seeking expert guidance in these matters, RBS Law is here to help. Our team of seasoned estate planning attorneys can provide the tailored advice and sophisticated planning strategies you need paired with an empathetic and understanding touch. If you're looking for a partner to guide you through the complexities of estate planning, we invite you to contact RBS Law.

Wrapping Up the Downfalls of DIY Estate Planning

The value of consulting with an estate planning attorney cannot be understated. As we've discussed, the expertise and personalized advice provided by a professional are indispensable in crafting a comprehensive, legally sound, and effective estate plan. An attorney's deep understanding of the law, coupled with their ability to tailor an estate plan to the unique needs and goals of an individual, ensures that the plan is not only compliant with current legislation but also optimally structured to protect assets, minimize taxes, and build a lasting legacy.

Don't leave your legacy to chance. Secure the future of your assets and the well-being of your loved ones by consulting with an estate planning attorney today. By taking this important step, you can have peace of mind knowing that your estate plan is not only tailored to your unique situation but also crafted to withstand the test of time. Contact RBS Law to schedule a FREE consultation and begin the journey toward a secure and effective estate plan that honors your legacy and protects those you hold dear

Disinheriting a Spouse or Child in Colorado: What You Need to Know

Can you disinherit a spouse or child in Colorado?

No. It’s not that easy.

In life's grand tapestry, family ties can sometimes get knotted up in unexpected ways. Take, for example, the tricky business of deciding to omit a spouse or child in your will in Colorado. In simpler terms, disinheriting is when you intentionally decide a close family member isn't getting a slice of the inheritance pie. This big call can stem from personal reasons, money matters, or legal issues.

When it comes to Colorado inheritance rights, disinheriting is not as straightforward as writing them out. Colorado has some protective layers, like the spouse’s elective share, ensuring partners aren't left out in the cold, even if the departed might have wanted it that way.

So, if you call Colorado home, or if you've got some hefty assets tucked away here, it's super important to get cozy with these local laws. Because at the end of the day, estate planning isn’t just about divvying up your stuff - it's about leaving a legacy that meshes with both your personal wishes and the law of the land.

Steering through these legal waters might feel overwhelming, but with the right knowledge and a helping hand, you can make choices that truly mirror your heart's desires and also look out for your family's rights. 

Let’s dive deep into the nitty-gritty of how disinheriting works in Colorado, shining a light on all those legal loops, the what-ifs, and the bigger picture of real-life impacts.

A preview of what we’ll cover:

• The challenges of disinheriting a spouse in Colorado

• The implications of not having an estate plan

• Insights into the elective share and its practical implications

• The distinction between minor and adult children in inheritance laws

• Real-life implications of disinheriting, including family dynamics and potential legal battles

• The criticality of seeking professional advice and guidance in estate planning

Let’s start with disinheriting a spouse in Colorado. 

Disinheriting a Spouse in Colorado

Outright disinheriting of a spouse is not as simple as merely leaving them out of your will. In fact, you cannot legally disinherit a spouse entirely - unless otherwise dictated in a prenuptial or postnuptial agreement. Colorado recognizes the significant role a spouse plays in a marital partnership and has put mechanisms in place to protect the rights of surviving spouses.

However, this doesn't mean that an individual cannot have control over how their assets are distributed upon their death. IIt’s t's paramount to understand that these agreements must be just and fair, not violating any Colorado inheritance rights or other laws.

The Implications of Not Having an Estate Plan in Colorado

Not having an estate plan in place can lead to unintended consequences. Without a clear directive from the deceased, Colorado’s default inheritance laws take precedence. Typically, a surviving spouse stands to inherit a significant portion or even the entirety of an estate in the absence of a will.

Blended families, however, bring about unique challenges. For instance, when an individual with children from a previous marriage passes away without an estate plan, the division of assets between the surviving spouse and the children can become a contentious matter. This highlights the urgency of having a comprehensive estate plan, especially for those in non-traditional family setups. If you need assistance setting up a viable estate plan, reach out to us. 

Elective Share in Colorado

The term "elective share" might seem technical, but its premise is rather simple. In Colorado, a surviving spouse has the right to claim a certain percentage of the deceased spouse's estate, even if they've been left out of the will. This right is anchored on the notion that spouses typically contribute to the accumulation of marital assets and should, therefore, have a claim to them.

The intricacy comes in when calculating what comprises the "augmented estate." This calculation factors in not just the assets directly owned by the deceased at the time of their passing but also certain transfers made during their lifetime.

Yet, the elective share isn't a blanket percentage. It varies based on the length of the marriage. For shorter marriages, the share is understandably smaller, while spouses in longer marriages can claim a more significant portion.

Legal Procedures for Claiming Elective Share

For a surviving spouse to claim their elective share, they must follow specific legal procedures within the confines of disinheritance laws in Colorado. One of the most crucial aspects to be aware of is the timeframe. There's a set window within which this claim must be made - otherwise, the right can be forfeited.

Given the complexities of these laws and the potential consequences of missing out on critical deadlines or misinterpreting regulations, it's often advised for individuals to seek legal representation. A seasoned attorney can guide the surviving spouse through the claim process, ensuring they exercise their rights effectively.

Practical Implications for Estate Planning

Beyond the theoretical and legal aspects, there are real-world implications to consider. Joint assets, for instance, often bypass the will entirely. This means that properties, bank accounts, or investments held jointly will usually default to the surviving co-owner (often the spouse) upon one's death.

Additionally, individual assets play a significant role in estate planning. How these assets are titled and beneficiary designations on accounts like IRAs, 401(k)s, and life insurance can impact how they are distributed, potentially sidestepping provisions laid out in a will.

In light of these intricacies, estate planning in Colorado, especially regarding potential disinheritance of a spouse, requires a thoughtful and informed approach. The remainder of this article will delve deeper into the nuances of disinheriting children in Colorado and the real-life implications of these decisions. Remember, knowledge is power, and understanding your rights and options can empower you to make the best decisions for your unique situation.

Disinheriting a Child in Colorado

The familial bond between a parent and child is deep-rooted, intricately woven with emotions, love, responsibilities, and sometimes, complexities. While disinheritance is a topic many parents hope they never have to broach, there are occasions when it becomes a necessary consideration. However, in the state of Colorado, you cannot simply disinherit a child (when we’re speaking about minors, adult children is a different story). No matter what, a minor child is entitled to a portion of their parent’s estate - even if they are not covered in will. Whether driven by personal reasons, legal contingencies, or strategic planning, understanding the implications of disinheriting a child in the state of Colorado is crucial. 

The Distinction Between Minor and Adult Children

Colorado estate planning distinctly categorizes children into two main groups: minor and adult. Minors, typically those under the age of 18, are afforded certain protections by the law, ensuring their welfare and rights are prioritized. On the other hand, adult children, unless specifically provided for in a will or trust, have a more direct, albeit conditional, statutory right to inherit.

It's pivotal to understand this distinction, as it forms the foundation of Colorado inheritance rights related to children. While a parent can straightforwardly disinherit an adult child, it cannot be done with minor children, primarily due to the inherent protective nature of disinheritance laws in Colorado.

Disinheritance of Minor Children in Colorado

Colorado, like many states, establishes laws to ensure the well-being and financial security of minor children in the face of parental death. Even if a parent wishes to disinherit a minor, the child is entitled to Exempt Property and Family Allowances. These allowances ensure that minors’ needs are cared for in the absence of an inheritance.

Furthermore, in the case of an estate's debts, there is a hierarchical priority for claims. This hierarchy places the needs of minor children high up, ensuring their financial security isn't compromised.

Exceptions and Procedures for Minor Children Inheritance

While Colorado's laws are designed to protect minors, there are still procedures and exceptions that parents should be aware of. For instance, there are time frames within which claims for Family Allowances should be made. Additionally, if a parent believes the minor child should inherit under specific conditions, it's paramount to craft a will or trust that not only conveys this intention but also holds up under legal scrutiny.

Ensuring minor children are adequately supported, even in the case of disinheritance, can involve establishing trusts, naming guardians, or setting aside specific assets for their benefit.

Alternative Actions for Parents

For parents wary of the implications of complete disinheritance, there are alternative courses of action. Some choose to leave a nominal amount to their child, symbolically without significant financial weight. This approach can clarify intent and sometimes avert potential legal challenges.

Others might leverage protected trusts that allow assets to be set aside for a child's use, but under strict conditions or upon specific milestones. For instance, a trust could be established to disburse funds when the child reaches a certain age, completes education, or meets other pre-defined criteria.

In essence, Colorado estate planning offers a range of options for parents, allowing them to balance personal wishes, a child's rights, and the intricate legal landscape that underscores the whole process. Parents considering such significant decisions are strongly advised to seek professional counsel. Proper guidance ensures the estate plan is not only legally sound but aligns with the intent and desires of the parent while considering the well-being of the child.

Remember, the decision to disinherit isn't a straightforward one. It's a path layered with emotional, legal, and financial considerations. By comprehending the depth of Colorado's inheritance landscape, parents can make informed, compassionate decisions that align with their wishes and the well-being of their loved ones.

Real-life Implications and Considerations

Behind the legal terminology, the meticulous planning, and the myriad of choices presented by Colorado estate planning, are the lived experiences of families — each with its own dynamics, stories, and intricacies. exploring the decision to disinherit a spouse or child not only requires an understanding of Colorado inheritance rights but also an awareness of the real-life implications these decisions can have on families.

The Impact of Family Dynamics

Disinheritance, while primarily a legal procedure, cannot be disentangled from the emotional and relational fabric of families. Especially in the backdrop of Colorado’s inheritance laws, family dynamics play a profound role.

Blended families: As more families become blended with stepparents, stepchildren, and half-siblings, the complexity surrounding inheritance escalates. In blended family situations, clear communication and legal documentation are imperative. Without a solid estate plan, misunderstandings or presumed entitlements can arise, causing rifts among family members.

Estranged family members: Disinheritance often intersects with the difficult reality of estrangement. When family ties have been strained or broken, the act of excluding a family member from a will can either be seen as a final act of severance or as a means to prompt reconciliation. In either scenario, the decision’s emotional weight is significant.

The Legal Rights of Disinherited Individuals

While the intention to disinherit might be clear in your mind, disinheritance laws in Colorado ensure that the rights of potential heirs are not trampled upon.

Potential heirs, whether inadvertently overlooked or intentionally disinherited, have avenues to contest a will. These legal battles can be lengthy, emotionally taxing, and financially draining. Especially when it comes to the nuances of the elective share in Colorado, challenges can arise that might lead to outcomes different from the original intent of the will.

However, it's crucial to remember that while individuals can contest, it doesn’t guarantee a favorable outcome for them. The strength of the estate plan and the clarity of the deceased’s intent play significant roles in the court's decision.

Professional Advice and Guidance

Every family’s situation is unique, colored by individual relationships, past events, and future aspirations. As such, navigating the waters of disinheritance requires not just personal introspection but professional guidance. If you’re looking for an estate attorney who can help you build a plan with empathy, reach out to RBS Law. We understand the complexities of family dynamics and navigating legacy planning.

In summary, while the law provides the framework for disinheriting a spouse or child in Colorado, the human elements — the relationships, emotions, and dynamics — infuse the process with complexity. It's not merely about legal rights or assets - it’s about people. It’s about stories that have shaped a family and the legacies that individuals wish to leave behind. 

Conclusion

Navigating the complexities of Colorado estate planning and making the decision to disinherit a spouse or child is not a journey one should embark upon lightly. As we've explored deep into the maze of disinheritance laws in Colorado, several key takeaways emerge, underlining the importance of a well-thought-out approach to such weighty decisions.

Here’s the recap…

Disinheritance is complex: While the idea might seem straightforward, the actual process, especially in Colorado, is layered with legal intricacies. Especially when considering the elective share for disinheriting a spouse or minor vs adult children for disinheriting a child.

Understanding state-specific nuances: Colorado, with its unique set of inheritance rights and laws, exemplifies why one-size-fits-all advice is inadequate. Familiarizing oneself with Colorado inheritance rights is paramount to creating an estate plan that stands up to scrutiny and achieves the intended purpose.

The human element: Beyond the legalese and the numbers, estate planning, at its core, deals with relationships, emotions, and legacies. The decisions made, whether in the realms of spousal or child disinheriting, have real-life implications that reverberate through families, influencing dynamics and relationships.

Seeking professional guidance: Given the intricacies involved, the sage advice of an experienced estate planning attorney becomes indispensable. We can offer guidance tailored to the specificities of Colorado law, helping you avoid pitfalls and ensuring that your intentions are transparently and effectively captured.

Being informed is only the first step: Proactiveness in estate planning, especially in decisions as consequential as disinheriting, cannot be emphasized enough. It's about taking control, being purposeful, and laying out a legacy that resonates with your values, wishes, and the future well-being of those involved. As you ponder and plan, let knowledge be your compass and empathy your guide, ensuring that your choices in the realm of Colorado estate planning are both legally sound and emotionally considered.

Who to Designate as Your Fiduciary

One of the most underrated decisions you have to make when creating your estate plan is choosing the person, persons, or institution to be in charge of your estate. This may include them being in charge of the distribution of your estate by will (executor), trust (trustee) or both; being a guardian for your children; being a conservator for you if you become incapacitated; or being an agent for your powers of attorney. Each of these roles is filled by a designated fiduciary who will be legally empowered to act on your behalf in different capacities. You can also have more than one person fulfill a fiduciary role by naming co-executors, co-trustees, or co-agents to ensure that all of your needs are properly met. Each role has slightly different considerations depending on the responsibility delegated. In order to make a comprehensive choice that suits your situation, it is important to consider the pros and cons of your options. 

I.             The Role of a Fiduciary – What Do They Do?

            One thing that you should consider when choosing a fiduciary is what responsibilities they will have and which of your trusted family or friends could satisfy those responsibilities. 

·     Executor (or Personal Representative): 

This person will be responsible for overseeing and administering your estate through the probate process. This person may be responsible for tasks such as collecting and preparing an inventory of the estate assets and property, protecting the estate assets, paying valid claims against the estate, paying bills, paying taxes, making claims on behalf of the estate against others if necessary, and distributing the estate to the beneficiaries. They may have to sell some property (i.e. liquidate assets or property) to make payments or distributions or even invest money to be able to make payments or distributions.

·     Trustee

If you decide to set up a trust the trustee you name will take on the responsibility of managing the part of your estate that you put into that trust. A trust can either be designed to end and be distributed to the beneficiaries shortly after your death or to continue for years, in which case your trustee’s on-going job will be managing your trust. The duties of a trustee include several of the same duties as an executor would have and then more. The trustee will have to locate all the trust assets, collect the assets, take an inventory of the assets, possibly invest the assets, pay bills and file taxes of the estate, file accountings, communicate with the beneficiaries, and manage money for the beneficiaries. A trust that is designed to be on-going also means that the potential liability of the trustee to the beneficiaries is on-going and they can be held liable for any mismanagement of the trust.

·     Medical Durable Power of Attorney Agent

The agent or agents you designate under your medical durable power of attorney will have the responsibility of making medical care decisions for you based on your wishes when you are unable to make those decisions for yourself. This power lasts during your lifetime and terminates upon your death (i.e. ‘durable’). Your agent should be assertive enough to make sure that your wishes are respected, especially while facing persistent medical professionals with a different treatment plan or morals and/or family members fighting against those wishes. It makes sense that your agent should live close to you, at the very least in the same state as you so that they can be there to make those decisions in emergency situations or for on-going illnesses.

·     General Durable Power of Attorney Agent

The agent or agents you designate under your general power of attorney will have the task of managing your finances if you become incapacitated and are unable to manage your finances yourself. Like the medical POA agent, this power lasts a lifetime and terminates upon your death. You want to make sure that this person is someone that you can trust, who you like, and who understands your wishes. They should also be close in proximity so they can carry out their duties. If you name someone who is not a professional in finances, they should have some financial understanding (i.e. experience paying bills, balancing a checkbook, etc.), be responsible with money, be willing to serve, and be assertive.

II.           Naming a Non-Family-Member Fiduciary

It may be the case for you that you do not have a family member that you can name for one or all of these fiduciary roles. Some of these roles may be more appropriate for family or close friends while others roles may be more properly fulfilled by a corporate fiduciary (i.e. a bank) or an independent professional fiduciary. There are companies and individuals who offer fiduciary services in the roles of powers of attorney, executor, trustee, and powers of attorney agents. In addition, they offer some of the services needed within these roles by themselves, such as day-to-day money management services, bill paying, tax document organization, asset inventory, relocation planning, care team planning, Medicare and social security consulting, and light forensic accounting services. This professional fiduciary is paid for by you or your estate to execute their assigned responsibilities, often having the necessary or expert experience to carry out the task. They can also offer these services in conjunction with you naming a family member fiduciary who will be the ultimate decision maker. For example, you can also have more than one person fulfill a fiduciary role by naming co-executors, co-trustees, or co-agents to ensure there is both an expert and trusted family member to carry out your wishes. If you do want to use a professional fiduciary you should do the necessary research and even interview potential agents to make sure that they are the right choice and offer the necessary services. The following are some factors to consider when choosing a non-family-member fiduciary for certain roles. 

·     Executor (Personal Representative)

The tasks of an executor, as mentioned above, may get complicated and perhaps may be too much work for your average trusted family member. It is often written into the provisions of the will that the executor is allowed to hire an expert professional to carry out the more complicated tasks and that the costs of that will be covered by the estate. You should keep in mind, however, that this option will leave less money in the estate to pay bills, taxes, and beneficiaries. 

            Choosing a professional fiduciary has several advantages no matter the specific circumstances. A professional fiduciary will have no potential conflicts of interest unlike a family member or spouse because they do not stand to gain from your will. People commonly name a family member or spouse to be the executor who is often also a main beneficiary under the will. Hiring a professional fiduciary will eliminate the possibility of dealing with a disgruntled family member or business partner who might accuse the executor of cheating or breaching their fiduciary duty. Naming your spouse is a popular choice but consider that they may be incapacitated for reasons such as illness, disability, or even grief. Consider such conflicts especially when the estate is larger and/or there are several beneficiaries. You want to make your passing as easy as possible on your loved ones, not an added burden. 

            If you want to name a professional fiduciary as your executor, remember that you will want to do some research and interview a few to find the best fit. (See the bottom of the article for a list of recommended professional fiduciaries to check out.)

·     Trustee

A professional fiduciary trustee eliminates many potential problems that might arise with family members named as trustee. For example, they are great to serve as an independent trustee because they can serve for decades and will be replaced by a new agent if the original one retires. Further, they are experts and know investment options, they are regulated by law (i.e. honest and reliable), and they can handle investments, tax preparations, accounting, and other necessary management tasks. [The downside to an institution serving as your trustee is that they can be costly, they are conservative in their investments, and they can be impersonal to deal with.] If you have a family member that is capable of handling the financial matters, has the time, and there is a small chance of family conflict then they might be a good choice for trustee. The downside to appointing a family member as a trustee is their lack of expertise, the potential for conflict, and possible unavailability when it comes time to serve.

[Another alternative is to name a family trustee and require that they hire out a financial advisor, accounting professional, or lawyer to execute the more complicated tasks. Further, you could name co-trustees who each have the necessary expertise to get the job done, such as a family member who is an attorney and one who is a financial advisor.]

·     Medical Durable Power of Attorney Agent

The advantages of hiring a professional fiduciary to serve are that they will remain in the same area and they will not defer to family member’s wishes, their own emotions, or medical professional’s recommendations. Another thing to keep in mind is that your medical power of attorney agent and your financial (general) power of attorney agent (discussed below) should get along if you choose not to name the same person. 

While naming a health care professional is not recommended, or not allowed in some states, some professional fiduciaries offer this role as a part of their services. If they do not have that expertise, they may out-source that role to a professional who does and is trustworthy.  

·     General Durable Power of Attorney Agent

            By hiring a professional fiduciary to fulfill the role as your agent has advantages because they will be highly experienced with not only serving as a financial (general) durable power of attorney agent, but they will also have a great deal of experience with finances. They are impartial and, therefore, more trustworthy than a family member who might be easily persuaded by other family members. In addition, they will be in close proximity to you to fulfill their tasks, they will have a duty to serve, and they will be assertive against adverse parties. 

III.        Conclusion

            A professional fiduciary is a great option if you want to keep your family and friend’s involvement in the duties of managing your estate to a minimum. This option eliminates a lot of fighting, confusion, and mistakes, which will end up saving you and your family money as well. Just like your estate plan, you can tailor the services to fit your individual needs. It is highly recommended, and often required of the agent, that you meet with them so they can become familiar with you, your estate plan, your wishes, and your needs. 

            Every person’s situation is unique so you should consider all the relevant factors when deciding who will be the best fit to fulfill your wishes when you no longer can.

Professional Fiduciaries

·     CS Advocare, Inc.
-Services Offered: Daily money management, care team coordination and homeware management services, Medicare and social security consulting, professional fiduciary. 
-Location: Denver
-Website: https://www.csadvocare.com

·     Colorado Fiduciary Services, LLC
-Services Offered: trustee services, trust protector and advisory services, personal representative, executor services, agent/POAs, conservator services. 
-Location: Highlands Ranch
-Website: https://coloradofiduciary.com/about/

Going on Vacation? Four Estate Planning Must Dos Before You Leave

Although it is difficult to think about planning for the worst-case scenario before embarking on what you hope to be an enjoyable and relaxing family vacation, it is important that you ensure your estate plan is in order for the sake of you and your loved ones. Unfortunately, whether it is a transatlantic flight to Europe, a road trip to the beach for summer vacation, or a random accident while traveling, “what-ifs” can become a reality; and when they do, you want to have peace of mind that your family will not be left to clean up a mess of legal matters. The following are 4 estate planning tasks to check off your list before you leave for a stress-free vacation.

1. Complete or Update Your Estate Plan.

Many people will put off completing their estate plan for many reasons and now is the perfect time to either complete one or update an existing one. Starting with what you can afford is also a great option. For example, incapacity or end-of-life documents such as a General Durable Power of Attorney (for your finances), Medical Power of Attorney, and Advance Directive (Living Will) are a great place to start. These documents will ensure that your wishes about your medical treatment end-of-life care, and funeral instructions are known and followed. In addition, they take those weighty decisions off your loved ones during an already complicated time. Working with an attorney, rather than finding a do-it-yourself form online, is highly recommended.

You should consult an attorney to find out if a will or a trust is best for your unique situation. Even if you already have an existing will or trust, you should review it annually and update it as changes occur in your family, finances, tax law, or the willingness or mental capacity of your designated trustee or personal representative. Life events such as birth, sickness, death, moving, marriage, divorce, and remarriage will all have an impact on your will or trust. Take note of them and work with an attorney to make the appropriate changes to your estate plan.

Signatures. If you have been reviewing documents but have not officially signed anything, call your estate planning attorney to set up a proper execution meeting (with a notary and two witnesses), instead of putting it off until you return from vacation. You can always update your will or trust, but you need to make sure that any changes are valid and properly executed.

2. Designate Guardians for Minor Children.

If you are traveling with or without your children, you should complete or update the necessary documents containing your guardian nominations for the care of your children in the unlikely but possible event that something were to happen to you. You do not want to run the risk of this decision being left up to chance or to the court without your input. If you already have named guardians, are they still the right fit? Consider a change in circumstances, however small, such as you named the guardian when your children were infants and now they are teenagers with an established community. In addition, you should name a backup guardian in case your first choice is unwilling or unable to serve.

If you are traveling without your children, you should have a short-term plan with your caretaker to give them temporary legal guardianship and the ability to make healthcare decisions for your children in case of an emergency. Contact an attorney to help you prepare these documents.

3. Review and Update Beneficiary Designations, Titles, and Other Trust Funding.

Take a moment to review your IRA, 410(k), and life insurance beneficiary designations. If any of your beneficiaries are either minors or incapacitated, you should consider setting up a trust to ensure the court or someone appointed by the court won’t take control of the proceeds contrary to your wishes. And most of all, you don't want your 18 year-old inheriting your entire estate all at once!

Additionally, you should review the funding of any trusts with your estate planning attorney to ensure everything is in place. For example, if you have recently bought a new home or opened a new bank account, you need to make sure you have the proper title. Too often people forget to fund their trust which can cause problems and delay after you die or become incapacitated. There is no point in having a trust if it is not properly funded!

4. Organize Your Documents and Make Them Accessible.

Check that you have all your important documents in a safe location. Your loved ones will need your original will, so if you have misplaced it and need to execute a new one, do so as soon as possible. For some documents, including your Powers of Attorney or Advance Directive, you can have multiple copies and should provide your agents and family members with a copy.

Given the number of accounts managed online, you should have your usernames and passwords stored in a place where someone can find them.

Your Summer Vacation Awaits You But First. . . . Take the time to check these tasks off your list before you leave. Doing so will help you travel with peace of mind knowing that on the off chance a tragedy did occur, your wishes would be known and honored.

Have a safe and happy 4th of July!