ESTATE PLANNING ATTORNEY IN THORNTON, COLORADO

What is an estate plan and why do I need one?  

It is a term used to describe a legal strategy to take care of your assets while you are alive and to distribute them after your death.  Most of these strategies are anchored by either a will or a revocable living trust and include medical and financial powers of attorney and a medical directive (also known as a “Living Will”).  A plan may also include irrevocable trusts, special needs trusts and/or charitable trusts. In any case, everyone has an estate plan after death. If you haven’t made a plan of your own, you have, by default, chosen to have your estate handled in probate court according to the laws of intestacy in the state where you live and in any state where you have property.

Your Last Will

Your last will is just one part of a comprehensive estate plan. If a person dies without a Will they are said to have died "intestate" and state laws will determine how and to whom the person's assets will be distributed. Some things you should know about wills:

• A will has no legal authority until after death. So, a will does not help manage your affairs if you become incapacitated, whether by illness or injury.

• A will does not help an estate avoid probate. A will is a legal document submitted to the probate court, so it is an "admission ticket" to probate.

• A will is a good place to nominate the guardians (or back-up parents) of your minor children if they are orphaned.  All parents of minor children should document their choice of guardians.  If you leave this to chance, you could be setting up a family battle royal, and your children could end up with the wrong guardians.

Trusts: Revocable Living Trusts, Irrevocable Trusts, Testamentary Trusts, Special Needs Trusts, etc.

There are many "flavors" of Trusts. They can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity with at least three parties involved: the trust-maker (also known as “Settlor” or “Grantor”), the trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. In the case of a revocable living trust, for example, a person may create a trust (the trust-maker) and name themselves the current trustees (trust managers) who manage the trust assets for their benefit (trust beneficiary).

Depending on the situation, there may be many advantages to establishing trust, including avoiding the need for probate. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the trust maker(s) with no probate required. Certain trusts also may result in tax advantages both for the trust-maker and the beneficiary. Or they may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust-maker(s) and the named beneficiaries. A well-drafted revocable living trust can provide for effective management and protection of your assets during your incapacity, as well as after your death.

Powers of Attorney

A power of attorney is a legal document giving another person (the agent or attorney-in-fact) the legal right (powers) to do certain things for you. What those powers depend on the terms of the document. A power of attorney may be very broad or very limited in scope. 

All powers of attorney terminate upon the death of the maker and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. Durable Powers of Attorney should be frequently updated because banks and other financial institutions may hesitate to honor a power of attorney that is more than a year old.

Health Care Documents (or Advance Medical Directives)

An advance medical directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive, and this document is legally binding in Colorado. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery.

A document that goes hand-in-hand with your advance directive is a HIPAA authorization, which, when given to your medical providers, allows specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision-maker.  HIPAA authorizations should always be included in a Medical Durable Power of Attorney and may also be included in a General Durable Power of Attorney.

Health Care Documents (or Advance Medical Directives)

An advance medical directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive, and this document is legally binding in Colorado. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery.

A document that goes hand-in-hand with your advance directive is a HIPAA authorization, which, when given to your medical providers, allows specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision-maker.  HIPAA authorizations should always be included in a Medical Durable Power of Attorney and may also be included in a General Durable Power of Attorney.

What Happens If You Don't Have Advanced Directives?

As you age, you may lose the capacity to take care of yourself and your assets. If you don’t have an estate plan when you lose capacity to make your own decisions, it is too late to make an estate plan and you may then find yourself in need of what we call “living probate”, which is a lawsuit brought against you, paid for by you, requesting a court to find you incompetent and appoint a guardian and/or conservator to take control and care of you and/or your assets. This guardian/conservator may be a family member, some you would not have chosen yourself, or even a stranger.

See Questionnaires Page for Estate Planning Questionnaires

Estate Planning Sheet (Married) 

Estate Planning Sheet (Single)

PROBATE & TRUST ADMINISTRATION ATTORNEY IN THORNTON, COLORADO

What is Probate?

Probate is the legal process used to distribute property after a person dies. This process is overseen in Denver County by the Denver Probate Court, and in all other Colorado counties in the District Courts.  Probate is required if a person dies with a will (testate) or without a will (intestate) and has real property or property over a threshold amount ($68,000 in 2019).

When probate avoidance planning has not been implemented prior to death, the state will require a probate court proceeding if the deceased was a resident or owned assets in the state. If a property is owned in multiple states, probate will be required in multiple states. Probate can be supervised or unsupervised. In an unsupervised probate, the appointed estate administrator manages assets, pays any debts, files required tax returns and various court documents, and distributes the estate assets. However, the court may at any time require the process to be supervised (usually when someone expresses concern about the estate administration). In a supervised probate, the probate judge must approve every detail of the estate administration

Probate Avoidance

Because probate can be a lengthy, costly and public process, many people choose to avoid it. There are a number of legal strategies that will allow you to pass property to another person after death, without going through probate.

• Joint Tenancy

  Adding another person to your assets as a joint owner or "joint tenant with rights of survivorship" will allow your property to pass to them upon your death without going through probate. There are pitfalls to this strategy, however, to include subjecting such assets to any claims (such as lawsuits) against the co-owner and making them available to the co-owner's creditors -- all while you are still alive and planning on using the assets yourself.

• Beneficiary Designations  

  Colorado allows Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to be added to bank accounts. Beneficiary designations like these are preferable to joint tenancy in that they allow you to transfer property only upon your death without giving away current ownership. One of the drawbacks, however, is that it can be difficult to obtain an equitable distribution of property among your heirs by utilizing beneficiary designations. Also, putting a beneficiary designation on real property may disqualify the owner from Medicaid services, if those become needed later on.  Additionally, understand that if you have beneficiaries listed on your assets, those assets will be distributed upon your death to the listed beneficiaries, even if your last will and testament states otherwise.

• Revocable Living Trust

  A Revocable Living Trust is a legal document that allows you to establish a separate entity (the trust) to "hold" legal title to your assets while you are alive, and to name trustees to manage those assets according to the trust terms. Typically, you serve as the trustee while you are alive, managing your assets for your own benefit. Upon your disability or death, the trust terms appoint your successor trustee who then continues to manage -- or distribute -- the assets held in trust. A properly drafted trust can accomplish many goals, including guardianship and probate avoidance for your estate and bloodline, marital and creditor protection for your children.

Colorado Estate and Trust Administration

A properly drafted and funded trust will generally avoid probate. The trust need not be filed with the probate court, so the value and disposition of assets remain private. Nonetheless, there are still steps necessary to administer the trust: beneficiaries must be contacted; assets must be gathered, valued and managed; potential creditors must be notified; debts, taxes, and final expenses must be paid; and, ultimately, any remaining income and assets must be distributed in compliance with the trust terms. Successor trustees often lack the time, resources or knowledge to personally administer the trust, and therefore may call upon legal, accounting and investment professionals for assistance. Oftentimes, a corporate fiduciary (e.g., a trusted company) is an excellent alternative to relying solely on busy family members or friends to serve as trustee. We can help your successor trustee(s) deal with the complexities of administering your trust. Please call our office and we will be happy to schedule a consultation, whether or not our office has drafted the original trust.

Colorado Estate and Trust Administration

A properly drafted and funded trust will generally avoid probate. The trust need not be filed with the probate court, so the value and disposition of assets remain private. Nonetheless, there are still steps necessary to administer the trust: beneficiaries must be contacted; assets must be gathered, valued and managed; potential creditors must be notified; debts, taxes, and final expenses must be paid; and, ultimately, any remaining income and assets must be distributed in compliance with the trust terms. Successor trustees often lack the time, resources or knowledge to personally administer the trust, and therefore may call upon legal, accounting and investment professionals for assistance. Oftentimes, a corporate fiduciary (e.g., a trusted company) is an excellent alternative to relying solely on busy family members or friends to serve as trustee. We can help your successor trustee(s) deal with the complexities of administering your trust. Please call our office and we will be happy to schedule a consultation, whether or not our office has drafted the original trust.

See our Probate Questionnaire in the Downloadable Worksheets under the Questionnairs Tab  

Probate Questionnaire

ESTATE PLANNING FOR PROFESSIONAL ADVISERS ATTORNEY IN THORNTON, COLORADO

At Tirey Law Firm, we work closely with other professional advisors, including Certified Financial Planner™ Practitioners, investment advisors, financial consultants, insurance professionals, Certified Public Accountants, and tax advisors as part of the estate planning team. We believe the team approach provides our mutual clients with the most comprehensive, realistic and effective estate plan.

Our Approach

Our approach is to provide our clients with a questionnaire. We ask our clients to fill out this questionnaire and send it to us prior to or bring it with to the first consultation. This not only facilitates a more productive first meeting but helps our clients focus on the issues and decisions they must make in order to develop the most effective plan to meet their goals. We are happy to have this consultation in the advisor’s office if requested by the potential client.

At the initial consultation, we provide the client with our general recommendations and a free quote for the services we will be providing.  If the recommendation is for a will, we may proceed directly to the planning stage, time permitting. The client will be provided with an engagement letter and terms of engagement which may be signed at the meeting, or when appropriate may be taken with them for review and signature. At the end of this meeting, a date for drafting meeting is generally set.

Next comes the drafting meeting, during which we will obtain additional information from the client, clarify goals and information, and discuss options and tradeoffs. Sometimes additional information is needed and will be requested.  We use all appropriate avenues of communication: phone, email, messaging through a secure server and in-person meetings. We firmly believe that ongoing communication is an essential element of developing an effective plan and building a life-long relationship with our clients.

We also believe that no client should sign any document without a comprehensive understanding of its content and the ramifications thereof. To that end, we dedicate a significant amount of time to the signing of documents. It allows us to explain each section of the plan, and answer any questions that have come up in the process.

If a trust is prepared and the client has engaged us to help in funding the trust once documents are signed, we work directly with our clients, or with you, or both, to ensure funding. We encourage yearly or bi-yearly reviews of estate plans and also keep our clients and advisors regularly informed through newsletters. Through these regular touchpoints, we keep clients informed about changes in the law that might affect them and remind them to monitor their plans with regard to major life events.

Your Approach

Every professional organization has different processes and different methods for interacting with clients. We are happy to work within your processes or blend our respective methodologies. Our primary goal is to serve the needs of clients and we welcome the opportunity to serve them within the team environment.

Resources

Joint Marketing

• Client Education: Please visit our Blog for an online library of articles on issues related to estate planning. We have posted a number of articles suitable for use as client education.

• Joint Marketing: We are happy to work with you to speak to your clients or prospects on estate planning issues, including basic estate planning, charitable giving strategies, generation-skipping and other advanced topics, business succession, or asset protection. Please call the office if you would like to plan a workshop or a "Client Appreciation Event."

Monthly Estate Planning E-Newsletter: Each month we produce an electronic newsletter, on estate planning issues, for professional advisors like yourself. You may subscribe online and we will add you to our monthly e-mail list.

BUSINESS SUCCESSION PLANNING ATTORNEY IN THORNTON, COLORADO

It would be an understatement to say that family businesses are the backbone of the American economy. Some 90 percent of all businesses in this country are either family-owned or family-controlled. They come in all shapes, sizes, and colors, representing all sectors of our economy. From agriculture to services, technology, and manufacturing, family businesses generate an estimated one-half of the U.S. Gross National Product and pay half of all wages earned in this country.

Not all family businesses are traditional small businesses either. In fact, about one-third of all businesses included in the Fortune 500 are family businesses. But not all of the family business statistics are rosy.

Family businesses tend not to outlive their founders. At any given moment, 40 percent of family businesses are in the process of transferring their ownership. Unfortunately, two-thirds of all initial transfers fail. Of the one-third that survives an initial transfer, only one-half will survive a second transfer.

Why Family Businesses Do Not Survive

Why such a dismal success rate? The reasons are as varied and unique as the businesses and business owners themselves. Nevertheless, many of the failed transfers can be traced to three causes: people, taxes, and cash.

Family Business Owners and Estate Planning for the Family

The family element in every family business can mean the difference between its success or failure during the transfer process. The retirement, disability or death of the business owner are all common events that can trigger a business transfer.

Tough questions must be asked and answered. Otherwise, a business that took decades to build can be destroyed overnight.

For example, who will run the business after you? Will it be your spouse, one of your children or a non-family member key employee? If your spouse will not run the business, will he or she still be financially dependent on it... or can you make arrangements to ensure they are financially independent of it?

What arrangements have you made for the inheritance of your children who are not active in the business? Have you in-law proofed your estate?

Thinking ahead to the second-generation transfer of your business, what provisions have you made to encourage thrift and industry among your grandchildren?

Estate Tax Uncertainty

The only certainty about the federal estate tax is its uncertainty with each change in Congress and the White House. Additionally, some states now impose their estate taxes, independent of any federal estate taxes.

Accordingly, careful monitoring of the economic, political and legal climate is required. Why? Without proper estate-liquidity planning, your family may have to sell the business just to meet an estate tax cash call.

Coordinating Financial and Estate Plans

If your financial and estate plans are not carefully coordinated, there may not be enough cash to fund your objectives. An appropriately-funded estate plan can meet all of your people-planning objectives and provide liquidity for estate taxes (and business debts). Life insurance, owned in the proper amount, type and manner, may be effectively used to fund such money matters.

The Business Buy-Sell Agreement (BSA)

A BSA is a lifetime contract providing for the transfer of a business interest upon the occurrence of one or more triggering events as defined in the contract itself. For example, common triggering events include the retirement, disability or death of the business owner. An interest in any form of business entity can be transferred under a BSA, to include a corporation, a partnership or a limited liability company. Also, a BSA is effective whether the business has one owner or multiple owners. As a contract, a BSA is binding on third parties such as the estate representatives and heirs of the business owner. This feature can be invaluable when the business owner wants to ensure a smooth transition of complete control and ownership to the party that will keep the business going. Subject to certain Family Attribution Rules under Internal Revenue Code § 318, a BSA can help establish a value for the business that is binding on the IRS for federal estate tax purposes as provided under Internal Revenue Code § 2703.

Entity Buy-Sell, Cross-Purchase Buy-Sell, and Wait-and-See Buy-Sell Agreements

A BSA is commonly structured in one of three general formats: An Entity BSA, a Cross-Purchase BSA or a Wait-And-See BSA. Under an Entity BSA, the business entity itself agrees to purchase the interest of a business owner. Conversely, under a Cross-Purchase BSA, the business owners agree to purchase one another’s interests. The Wait-And-See BSA gives the entity a first option to purchase the interest before the remaining business owner(s).

In addition to these three general formats, a One-Way BSA may be used when there is one business owner and the purchaser is a third party. The selection of the appropriate BSA format is critical for a variety of tax and non-tax reasons beyond the scope of this discussion. However, no BSA is complete without a proper funding plan. Like a beautiful automobile without fuel in the tank, a BSA without cash to fund the purchase is going nowhere.

Funding a Buy-Sell Agreement

Some common options to fund the purchase obligation under a BSA include the use of personal funds, creating a sinking fund in the business itself, borrowing funds, installment payments and insurance. Of these options, only the insured option can guarantee complete financing of the purchase from the beginning. Accordingly, a proper BSA will include both disability buy-out insurance and life insurance. Since the health of the business owner determines their insurability, any delay in acquiring appropriate coverage could be fatal to the success of the BSA and, with it, the survival of the business itself.

LONG-TERM MEDICAID ATTORNEY IN THORNTON, COLORADO

What is Colorado Medicaid?

Medicaid is a joint federal-state program, managed by the state and, subject to rules established by the Federal Social Security Administration. Unlike Medicare, Medicaid is a needs-based program a form of welfare. To receive Medicaid in Colorado, an application must be made to and approved by the county office of the Colorado Department of Health Care Policy and Financing (HCPF). There are many Medicaid insurance programs available in Colorado, from basic medical coverage to long-term nursing home programs. These programs have income and asset restrictions and, with limited exceptions, payback is usually required under the Colorado Medicaid Assistance Estate Recovery Program.

Who is Eligible to Receive Medicaid Benefits?

There are two areas or eligibility that must be met –Medical and Financial.  In other words, to qualify for Medicaid you have to be sick enough and poor enough. 

Medical The applicant must show that they are sick enough – that they require the help of another person to perform the basic activities of daily living. The Colorado HCPF defines the need as:

• Requiring the aid of another person to perform personal functions required in everyday living, such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices or protecting himself/herself from the hazards of his/her daily environment, or

• Being blind or nearly blind, or

• Being bedridden, in that his/her disability or disabilities requires that he/she remain in bed apart from any prescribed course of convalescence or treatment, or

• Being a patient in a nursing home due to mental or physical incapacity.

Financial The applicant must also be poor enough - qualifying under an asset test and income test. After the applicant meets the medical and financial requirements (sick enough and poor enough), then HCPF will look to see if the applicant made any gifts within the 5 years prior to meeting the medical and financial requirements and a penalty period will be assessed.  Basically this entails taking the amount of the gift and dividing it by the average cost of nursing home care in Colorado (the divestment penalty divisor) to determine the number of months of nursing home costs the gift would have covered.  Once the penalty period is assessed, it is up to the applicant to determine how they are going to manage during the assessed period. Once the penalty period is passed, Medicaid will begin contributions to pay for services.

GUARDIANSHIPS & CONSERVATORSHIPS ATTORNEY IN THORNTON, COLORADO

When your family member becomes incapacitated or reaches an age when he or she is no longer able to make decisions for himself or herself they may need a Guardian or Conservator to help them. In Colorado, when an individual becomes incapacitated, the Court will appoint a Guardian to make decisions regarding the personal and medical care of the individual and a Conservator to manage the individual’s finances.

The Guardian and Conservator may be the same person or different people depending on the circumstances. We often refer to this process as “Living Probate.” Our firm increases your odds of avoiding this type of lawsuit by providing advance planning. Nevertheless, there may be circumstances when a Guardianship and/or Conservatorship is necessary. In which case, we can take your case to the Court to secure a Guardianship and/or Conservatorship for you or your loved one.