Understand The Legal Ramifications Of Estate Planning

Did you know that a letter might be considered a Last Will and Testament? Or that a written statement identifying a personal representative (executor) can be a will?

During the last few years, there have been numerous instances where people have decided (right or wrong) to write their own wills, which led to legal fighting by surviving family members. Spicer Breeden and Bob Magness are two recent examples of Denver area men whose families and friends had messy legal battles because of wills that weren’t up to date or properly prepared.

Do you really need an attorney to write your will? Yes, and here’s why.

[sub]If You Don’t Have a Will

Generally, without a will, your immediate family members will be entitled to control and receive your property. That may be okay. However, you need to understand that laws controlling who will inherit your property may change. Two recent changes in Colorado include:

• If you’re married and have children (with no children from a previous marriage or relationship), your spouse will receive all of your property.
• If you are married and have no children, your property may be divided between your spouse and your parents.

[sub]What Can a Will Do?

Many people have a misconception that you only need a will if you have a lot of money. That’s not true. A properly drafted will includes a clearly stated designation of the estate’s representative. If applicable, the will also should have designation of a guardian for minor children, establishment of special trusts for minor children, designations of desired charitable gifts, or specific gifts of items to certain individuals.

In addition, if you (and your spouse, if you’re married) have assets (including life insurance and retirement funds) of more than $625,000, proper estate planning can minimize the amount of estate (inheritance) taxes. In essence, a well written will can help ensure that your property, regardless of the amount, goes to the right people at the right time in the right proportions.

An out-of-date will, however, can result in numerous problems and unintended results. In fact, an old will may be more dangerous than not having a will at all. Therefore, changes in tax laws, marriage, divorce, the birth of children and an increase in net worth are all reasons to have a will reviewed by a knowledgeable attorney.

[sub]Who Should Write Your Will?

An attorney who is educated in estate planning is the best person to write your will. Because a will is a legal document, it’s best prepared by an attorney who can identify and understand the legal and tax issues involved with your particular situation.

Do-it-yourself will forms and computer programs should be avoided. You get what you pay for, and only a qualified estate-planning lawyer can correctly prepare a will that complies with applicable Federal tax laws and state statutes.

[sub]Estate Planning

Proper estate planning includes an overall analysis of how you want your assets to be owned, managed and preserved during your lifetime and how you want them distributed upon death. A well-crafted plan can minimize taxes and other costs. It also includes planning for possible mental or physical incapacity.

Medical and financial powers of attorney enable you to decide in advance who will make decisions if you are unable to make them.