Wills and Estate Planning- An Overview
Creating a plan for the eventual transfer of your assets to your family and loved ones is essential no matter what stage of life you are in. A carefully crafted estate plan will allow you to bestow a legacy to your family and will provide direction about what happens to your assets in the event of disability, incapacity, or death. A properly drafted plan can also provide you with the peace of mind that your intentions will be followed and that your family will be well taken care of in your absence. The Scriptures remind us that "A good man leaves an inheritance for his children's children" (Proverbs 13:22a - NIV). RockyMountainWill™ is designed to help you do just that.
The Importance of Proactive Planning
All adults should have an estate plan. One of the most loving things a person can do is provide clear direction to guide his or her loved ones in the event of illness, incapacity, or death. After all, an estate plan is not really for you. Creating an estate plan is a selfless act of love that will lessen your loved ones' burdens during one of the most challenging times of their lives. Additionally, most people find that peace of mind and satisfaction result from putting their affairs in order. Do you want the State of Colorado's court system to determine where your assets will go after your death? Do you want a stranger from the court system deciding who will make decisions regarding your medical care in the event that you are not able to speak for yourself? If you are a parent, do you want a judge to determine who will be the guardian for your children, or would you rather choose the person who will take care of their health, safety, and well being if you are not able to be there for them? An estate plan gives you the freedom to make these critical decisions and prepares you and your family for the future. It is often said that everyone has an estate plan because when a person dies intestate (without a will) the courts are required to follow statutory guidelines to determine the disposition of your estate. Deciding to proactively create an estate plan allows you and not the court system to make these all important decisions, and it will give you confidence that your affairs will be properly administered according to your desires. Furthermore, having an estate plan accomplishes several important goals, including:
- Written Documentation of Your Wishes
- Prevents Family Disputes
- Establishes A Neutral Administrator To Settle The Estate
- Provides For the Needs of Loved Ones
- Establishes a Guardian for Minor Children
- Reduces Delay in the Distribution of Your Estate
- Reduces Estate Administration Costs
- Vehicle for Charitable Giving
- Provides Peace of Mind That Your Estate Affairs Are In Order
Last Will & Testament
A will is the foundational document for most estate plans. It is a legal instrument specifying how a person's property and assets should be handled after death. A testator (the person making the will) can give instructions on how the property should be divided, who should receive what portions or specific items, and even who will take care of any surviving minor children. A will can also establish a trust or make gifts to charity. Without a will, the state determines how property will be distributed. A carefully drafted will eases the transition for survivors by transferring property efficiently and avoiding many financial and administrative burdens. Despite these advantages, many estimates figure that at least seventy percent (70%) of Americans do not have valid wills. Wills vary from extremely simple single-page documents to elaborate volumes, depending on the estate size and preferences of the person making the will. Wills describe the estate, the people who will receive specific property, and may even provide special instructions about care of minor children, gifts to charity, and the formation of testamentary trusts.
Appointing a Personal Representative
A will usually appoints a personal representative (or "executor") to perform the specific wishes of the testator after he or she passes on. The personal representative need not be a relative, although testators typically choose a family member or close friend, as well as an alternate choice. The chosen representative should be advised of his or her responsibilities before the testator dies, in order to ensure that he or she is willing to undertake these duties. The personal representative consolidates and manages the testator’s assets, collects any debts owed to the testator at death, sells property necessary to pay estate taxes or expenses, and files all necessary court and tax documents for the estate. The choice of a personal representative should include considerations of trustworthiness, personality, competence, integrity, willingness and ability to serve, business skills, and knowledge of the family.
Choosing a Guardian
Testators who have minor or dependent children may use a will to name a guardian to care for their children if there is no surviving parent to do so. If a will does not name a guardian, a court may appoint someone who is not necessarily the person whom the testator would have chosen. Again, a testator usually chooses a family member or friend to perform this function, and often names an alternate. The guardian(s) should be informed that they have been chosen and they should fully understand what may be required of them.
Financial Power of Attorney
A financial durable power of attorney is a document which authorizes an “agent” or an “attorney- in- fact” to make financial decisions on your behalf, particularly when you are not able to do so yourself. A durable power of attorney can be effective upon execution or it can be a “springing” power of attorney to be triggered only in the event of the client’s incapacity. Creating a durable power of attorney for financial decisions avoids the possibility of the court system appointing a conservator to make decisions for you during incapacity. You and not the court system get to decide who will make important choices for you when you are not able to make them yourself.