Don’t let difficult decisions keep you from creating an effective plan.

Foundational and Advanced Estate Planning

Life & Legacy Planning, Ltd., will conduct a thorough analysis of your assets and liabilities, including the exposure to transfer and income taxes in Colorado and other jurisdiction, to customize a personal estate plan for you and your family.  Below is a general overview when considering whether you want a Will or Trust based estate plan.

We also help clients with advanced planning beyond the foundational estate plan that requires specialized trusts and creating business entities to assist with tax planning and transferring wealth. These strategies must be specifically tailored to each client based on a person’s assets, future goals, and family dynamics. There is more on this under Asset Protection and Wealth Preservation below.

Wills and Trusts

Both of these documents provide for a distribution of your assets upon your death. A Will allows you to name a guardian for any children under the age of eighteen (18) and provide for testamentary trusts (created after your death) to hold assets for children or any other beneficiaries. Probate in Colorado is relatively straightforward and inexpensive, therefore creating a revocable trust (also referred to as a living trust), may not be necessary as it is in some other states with higher probate costs. A revocable trust offers several advantages to a Will and is a better estate planning tool for certain estates in the following circumstances: if you want comprehensive management of your assets during your lifetime or in the event you cannot make your own decisions which can happen in the event of an illness, frequent travel, memory loss normal as we age, diminishing capacity, or any other reason you wish for a co-trustee to take over the management of your assets; other reasons  may include, if you own real property in another state, have children under eighteen (18) years old, want your designations to remain private or want to hire a professional to manage your assets.

The Mechanics of a Revocable Trust

Creating a revocable trust provides a separate entity to hold, manage, and distribute your assets. The trust creator, also known as the grantor or settlor, may act as sole trustee, or may elect to name a spouse, child or other fiduciary as co-trustee. Having a co-trustee or successor trustee, one who would only step in the shoes of the trustee if the serving trustee could not act, allows for a seamless transition in the management and administration of the trust upon absence, temporary illness, or incapacity and eventually death of the serving trustee. Property can be transferred to trust directly by the grantor during life, by an agent serving under a power of attorney for the grantor, or by a “pour over” Will upon the grantor’s death. The Will used with a Revocable trust is referred to as “pour over” Will because it simply pours any assets owned by the decedent into his or her trust. There are no income or estate tax advantages or disadvantages to having a revocable trust, however, probate can be avoided if most of the grantor’s probate assets are transferred to the trust during the grantor’s lifetime.

Advantages to Creating a Revocable Trust

  1. You are Concerned About the Effective Management of Your Assets. One of the best reasons to create a revocable trust is to provide for the management of trust assets by the acting trustee or co-trustees. This can be especially important for sole proprietors or those with complex assets to manage, or if the task of managing your finances is becoming too much for you to handle on your own.  Initially, the trust creator may act as sole trustee, or may elect to name a spouse, child or other fiduciary as co-trustee. Having a co-trustee or successor trustee, one who would only step in the shoes of the trustee if the serving trustee could not act, allows for a seamless transition in the management and administration of the trust upon absence, temporary illness, or incapacity and eventually death of the serving trustee. A co-trustee’s role can be limited to only making certain decisions, only acting if there is unanimous or majority agreement among all co-trustees, or may be unfettered so that the co-trustee may act with the same authority as the grantor.
  2. You Own Real Property In More than One State. If you own real property in a state other than Colorado (this includes timeshare ownership and oil and gas interests, but excludes stocks or interests in an LLC or family partnership), you will need to probate your Will in each state where you own real property. Probating a Will in more than one state is problematic because you must find a good attorney in a state where you may have few contacts to assist you, that state may have an expensive or difficult probate process, and it can add to the expense of administering your estate for your personal representative or executor. These problems can be avoided by transferring any out of state real property to your revocable trust or an LLC during your lifetime.
  3. Avoiding the Delays of Probate. Property placed in trust can be transferred quickly to beneficiaries following death without going through the probate process. Unlike New York, California and Florida, which have the most challenging and expensive probate proceedings in the county, Colorado has one of the most efficient probate processes in the county, so avoiding probate is not as big a concern in Colorado.
  4. You Have Children Under Eighteen (18). By avoiding the delays probate can cause on the transfer of assets, your trustee will have immediate access to pay for any expenses required for the care of your children. Additionally, if you are injured and alive, but do not have the capacity to handle your affairs, a Trustee can follow the guidelines of your Trust to administer your assets and care for your dependents with clear legal guidance and fiduciary duties.  Compare this to having a Will and Power of Attorney, where there is minimal fiduciary guidance on how to care for your dependents until your death (because the trust set up for your children in your Will is not effective until your death), and an agent under a power of attorney is given very broad powers that do not have the same fiduciary obligations as a Trustee.  A fiduciary is someone who has the legal obligation to care for another and hold that person’s best interest above the fiduciary’s own interests.  Fiduciary obligations include the duty of care, duty of loyally and avoidance of self-dealing.
  5. You Want to Keep Your Designations Private. If a Will is lodged with the probate court, it becomes part of the public court record and can be seen by anyone who requests to see it. All estate plans should have a Will, however, if you wish for your designations to remain private by creating a revocable trust, the Will simply states that all assets are transferred to trust and the trust provides for the specific designations to each beneficiary. This can be important if you are disinheriting a relative or are concerned about a Will contest due to conflict within the family, which may arise if your family has a conflict with your partner or lifestyle.

Powers of Attorney, and Health Directives or Living Will

General (Statutory) Durable Power of Attorney. Much more important then a Will while you are alive if you are ever unable to handle your affairs for any reason. A general durable power of attorney allows your attorney-in-fact to handle your affairs. Without a current signed power of attorney in place, a conservator would have to be appointed by the court to manage your assets or those assets outside of your trust if you have created one. Under Colorado law, a principal must specifically grant certain “hot” powers to be exercisable by the agent, rather than as a broad general grant of power. This document should generally be updated at least every five (5) years.

Limited Power of Attorney. A general power of attorney grants very broad powers, however, if you only need your agent to perform a specific task or want to limit the amount of time the agent can exercise authority over your assets, a limited power of attorney will provide for a temporary or restricted grant of power over your assets. For example, a limited power of attorney could be used if you needed to be hospitalized for a short time and needed someone to look after your affairs for a few only a few weeks, or if you wanted your investment advisor to make decisions on investing a certain amount of cash held by your revocable trust but did not want his authority to extend beyond those decisions.

Medical Power of Attorney. The Powers of Attorney described above only allow the person designated to conduct your financial affairs and limited personal matters. The Medical Powers of Attorney allow the person designated to make medical decisions for you, including the withholding or removal of life support, in the event you are unable to.

Advanced Directive for Medical or Surgical Treatment (Living Will). The Living Will instructs a physician how you wish to be treated if you require life support and you have a terminal condition or are in a persistent vegetative state. This is different from the Medical Power of Attorney which names someone to make all medical decisions for you if you are unable to do so. Under Colorado law, a Living Will controls over a Medical Power of Attorney unless you indicate otherwise.

HIPAA Authorization. This form authorizes your agents to obtain your medical information in order to determine if you are incapacitated or what treatment you need. It is also a good idea to have your agents sign such a release so it can be determined if his or her capacity can be evaluated if there is a problem.

Declaration of Last Wishes. This document allows you to provide for any ceremonial or burial instructions and wishes regarding organ donation.

Tax Planning and Advice

Existing estate plans should be reviewed every 3 – 5 years to determine if your current plan continues to minimize tax liabilities, maximizes asset protection and modern tax planning, and effectively accomplishes your goals under the constantly evolving tax rules.  A full description of current tax numbers in effect for 2024 are under our Area of Practice Estate Planning tab. The Applicable Exclusion Amount (AEA), also known as the Unified Credit, is the amount each person can have in their estate at death or give away during life without incurring any tax consequences. The 2017 Tax Cuts and Jobs Act increased AEA amounts until December 31, 2025. On January 1, 2026, the AEA will return to the previous amount, which is $5 million indexed for inflation from 2010. This is estimated to be around $7 – $8 million at this time

Retirement Assets, Joint Assets and Life Insurance

Certain types of property are “non-probate” assets which pass according to the provisions of the contract instead of under your Will. Real property held as joint tenants or a joint bank account with rights of survivorship, accounts that transfer on death (TOD) or assets with a named beneficiary, retirement accounts (such as IRAs), and life insurance policies are the most common of these types of assets. The ownership and beneficiary designations for such property should be coordinated with your overall estate plan. If you have minor children, these beneficiary designations should never name your children outright, rather the separate trusts created for your minor children should be named to avoid having to establish a court conservatorship.

Asset Protection and Wealth Preservation

There are a number of strategies that can be employed for asset protection and wealth preservation beyond a foundational estate plan as part of a strategy for tax planning, transferring wealth and business succession planning. These strategies must be specifically tailored to each client based on a person’s assets, future goals, and family dynamics. We are happy to discuss and advise on these advanced planning techniques which my include:

  • Forming, then transferring assets to a Limited Liability Company or Family Limited Partnership; further planning may include gifting or transferring a portion of this company to your descendants or other beneficiaries.
  • Creating a specialized trust such as an irrevocable grantor trust (IDGT); spousal lifetime access trusts (SLAT), irrevocable life insurance trust (ILIT), qualified personal residence trust (QRPT), charitable trusts intended to benefit the charity during your lifetime or after (CLT and/or CRT), and other forms of dynasty trusts.
  • For clients who own businesses, we can plan to fairly include both participating and non active family members in the estate distribution to avoid conflict and protect the business as a successful and ongoing entity.

Small Business Law and Succession Planning

Owning and operating, as well as establishing or dissolving, a small business has many responsibilities. Whether you are in the conceptual phase, winding down a company or wish to pass ownership to your family, employees or a unknown third party Kristin Dittus can help you through each of these milestones. Services for businesses include information and advice on the following:

  • Entity formation, including the consideration of which type of business organization, an s-corporation, corporation, a limited liability company (LLC), family limited partnership, or other entity, suits your needs best
  • Drafting the required formation documents, such as articles of incorporation, articles of organization, by-laws, operating agreements, etc.
  • What the filing requirements are for Colorado and the IRS
  • Which professionals, accountant, banker, insurance agent, financial planner, are needed to assist you with your business
  • Required records, such as keeping company minutes, documents, and other records
  • How to limit your liability as a business owner
  • Important considerations when hiring employees or independent contractors

Special Needs Planning, Advising for Disabilities and Elder Care

A special needs trust (“SNT”) can be created for a person who has special needs or is disabled and requires governmental assistance for his or her care. A SNT provides benefits to a beneficiary that are beyond the means of the governmental assistance and will also protect the beneficiary’s eligibility for programs such as for Supplemental Security Income (SSI) or Medicaid. This type of planning is also important for an anticipated disability, even if your loved one does not currently require any government assistance.

A special needs trust (“SNT”) can be created for a person who has special needs or is disabled and requires governmental assistance for his or her care. A SNT provides benefits to a beneficiary that are beyond the means of the governmental assistance and will also protect the beneficiary’s eligibility for programs such as for Supplemental Security Income (SSI) or Medicaid. This type of planning is also important for an anticipated disability, even if your loved one does not currently require any government assistance.

As part of our approach to disability planning we consider how to plan for clients who may need long term care, the potential need to qualify for Medicaid and how to protect assets from the cost of long term care.  The type of planning required will depend on the specific circumstances of each client, including marital status, monthly income, and the total assets a client and spouse have between them.

Probate and Trust or Estate Administration

After a person’s death, probate is the process of winding up the decedent’s affairs, handling any outstanding creditor obligations, and transferring ownership of property to the legitimate beneficiaries. The executor of the estate, known as the personal representative in Colorado, can be held personally liable for mistakes or mismanagement while administering the estate.

Once you are appointed as the personal representative, your role is to administer the estate and wind up the decedent’s affairs. This involves the assembly, collection, and valuation of the decedent’s assets, the payment of debts, expenses of administration and taxes, and the distribution of the remaining assets to the persons entitled to them. Your legal responsibilities include (1) treating the beneficiaries with impartiality and avoid favoring one over the other; (2) administering the estate for the benefit of the beneficiaries; (3) to act prudently and reasonably when making any decisions; and (4) tracking your time and expenses when serving as the personal representative to be fairly compensated. Having a trusted advisor is vitally important to navigate this sometimes complex area of the law.  Please be aware, our firm does not handle probates where there is a conflict among the parties or potential litigation.