Q.        Is it necessary to list all of your property in a Will?

 A.        No. If, however, you have specific items of property you wish to give to certain individuals, you will need to list those specific items in the Will.

 

Q.        Is there a simple way to make specific gifts of personal property like jewelry, family heirlooms, etc.?

 A.        Yes. Attached to each Will that we prepare is a sheet entitled "Memorandum for Disposition of Tangible Personal Property." You can list items of personal property on this Memorandum to any beneficiary you desire.  It is completed in your own handwriting, can be changed at any time on your own and requires only your signature and a date to be valid.

 

Q.        Where is the best place to store a Will for safekeeping?

 A.       In a safe deposit box. Another good alternative is a fireproof box or home safe.

 

Q.        Isn't there an "official" place where a Will must be filed after it is drafted?

 A.        No.  The Will is a private document and is not filed or recorded with any government agency or court.  It is, however, lodged with the Probate Court after your death.

 

Q.        Does the state freeze joint accounts after the death of one of the joint owners?

 A.        No.  All you need to do now is present a copy of the decedent's Death certificate and show proof of your identification. The funds will then be released to you immediately without delay or probate.

Q.        Is it best for married couples to title their major assets in joint tenancy?

 A.        Yes and no.  If the couples combined estate does not exceed $5,000,000 and they wish their property to pass 100% to the surviving spouse, joint tenancy ownership of property may be advisable.  For those with estates of over $5,000,000, joint tenancy can be devastating from an estate tax point of view and should be avoided.

 

Q.        What is the difference between holding title in joint tenancy and tenancy-in-common?

 A.        Property held in joint tenancy will automatically pass 100% to the surviving joint owner at the death of the other joint owner with no probate.  The Will of the decedent cannot change that result.  Property held in tenancy-in-common will pass to whomever the decedent directs under his will, subject, however, to probate.  There is no automatic transfer of the property interest to the surviving owner.

 

Q.        What is probate?

 A.        Simply stated, probate is the court process of transferring clear title to assets from a decedent to the rightful beneficiaries.  The executor of the estate (now called a personal representative) is given the power by the court to make the transfers by deed or other forms of conveyance.  During the probate process, the personal representative is also responsible for paying off the decedent's debts and satisfying any claims that may exist.  If estate taxes are due against the estate, the personal representative is responsible for filing the proper tax returns and paying the taxes out of the estate assets.  The probate process can take as little as five months to complete; however, complicated estates can remain "open" for years.  Probate and death taxes are related but totally separate issues that need to be addressed independently of each other.

 

Q.        What is a Codicil?

 A.        An amendment to a Will.

 

Q.        Is a handwritten Will valid in Colorado?

 A.        Yes. All that is required for validity is that the Will be written in the hand of the decedent and signed. It does not need to be dated, witnessed or notarized!  But beware- there is more litigation over handwritten Wills than any other estate-related issue.

 

Q.        How many witnesses to a Will are required in Colorado?

 A.        Two. No witnesses are required for a handwritten Will.  A typed Will or a Will written in the hand of someone other than the decedent requires two witnesses.

 

Q.        Do the witnesses need to testify in court as to the validity of the Will?

 A.        Generally, no. If the Will has a "self-proving" affidavit attached to it, the witnesses are not required to testify.

 

Q.        How do people know what assets a decedent owns at death?

 A.        If records and files are poorly organized, it may be extremely difficult for the personal representative to gather up and identify all of the assets.  The more organized the better.  We have a helpful do-it-yourself "asset locator" sheet which we will be happy to give you.

 

Q.        Will heirs have to pay estate or inheritance taxes?

A.        Generally, no tax will be due against any estate that is under $5,000,000. Regardless of how large the estate may get, there is generally no tax between husband and wife when one spouse dies leaving all or most all of the property to the surviving spouse.  Estates over $5,000,000 which are passed to a non-spouse will be taxed at the rate of approximately 35% of the estate in excess of $5,000,000.  The tax we are talking about is the Federal Estate Tax. Colorado has no inheritance tax (although some states do).

 

Q.        Do beneficiaries have to pay income tax on the value of any assets and life insurance left to them?

 A.        No, but there may be tax issues with tax-deferred accounts such as IRAs, 401(k) s, etc.

 

Q.        Are the proceeds of life insurance subject to estate tax?

 A.        Potentially, yes. If the estate is under $5,000,000 (including life insurance), no tax is due. Estates over $5,000,000 may be liable for estate taxes. The use of special trusts can reduce or eliminate this tax in most situations.

 

Q.        Do I need to redraft my Will if I move to another state?

 A.        No.  There is a general misconception that a Will must be redrafted every time a move is made to another state. This is simply not the case.  While you may want to make minor changes such as naming a different guardian, personal representative or trustee, the general format of your Will is valid in all fifty states and most foreign countries.

 

Q.        Is it true that I must leave at least $1.00 to any close relative I want to disinherit?

 A.        No. Except for your spouse, you are generally free to disinherit anybody you like.  It is not advisable to leave anything to someone you wish to disinherit.  If you want to disinherit one or more of your children, it is best to mention the child in your Will and state that you intentionally make no provisions for that child in your Will.

 

Q.        Are Wills easily broken?

 A.        Poorly drafted or handwritten Wills are frequently challenged because of ambiguities.  A well drafted Will is rarely challenged or broken.

 

Q.        What is a Trust?

 A.       A Trust is a deferral mechanism.  If you, for example, don't want to leave a beneficiary an outright, immediate gift but wish, instead, to have the gift parceled out over time, you would create a Trust to accomplish this end.  The Trust would defer the payout to the beneficiary over time and give the manager of the Trust - the Trustee - the power to invest the Trust assets during the deferral period and distribute the funds to your beneficiary as you have directed in the written words of the Trust.  The uses of trusts are virtually unlimited and find a good fit for many families and individuals.  Trusts allow us to "rule from the grave."

 

 Q.        What are the most popular reasons people create Trusts?

 A.       Parents create Trusts to provide for the financial needs and education of their children if the parents die before the children grow up. People with estates of over $5,000,000 use Trusts to avoid federal estates taxes. Philanthropists use Trusts to fund the purposes of their favorite charities. Many people use Trusts to avoid the probate of their estates.

 

Q.        What should parents with minor children do to insure the proper appointment of a guardian and the proper handling of the financial affairs for the children in the event the parents die before the children are grown?

 A.        We recommend that each parent make a Will and Minor's Trust.  The Wills nominate who should be guardians.  The Minor's Trust will make sure money is distributed to or for the benefit of the children for college education, support, health needs and other special purposes.  If the Trust is properly drafted, the property in the Trust will be free of court control and will be managed by a trustee selected by the parents.  As an added benefit, the Trust can be structured so that the children will not receive their final distributions from the Trust until they are more mature and capable (e.g. one-half at age twenty-five, with the balance at age thirty).

Q.        Why have Trusts become so popular?

 A.        Trusts are more versatile than Wills, can defer a gift over a period of time, can be used to avoid probate, can dramatically reduce or eliminate estate taxes, are free of court control, can be managed easily by a trustee, are relatively inexpensive to create, and allow an individual to "rule from the grave" in many common and specialized situations.

 

Q.        What is the best way to select a guardian and/or trustee for minor children?

 A.        There is no "best way."  It is a difficult task, but you must select friends or relatives that hold your same basic philosophies, who would be willing to accept your children and who are reasonably capable of managing money. We generally advise that you select a first choice and an alternate choice or two.  You should always consider a professional trustee such as Members Trust Company, especially when you don't have family members adept at managing finances.  

 

Q.        Is it okay to name an out-of-state personal representative?

 A.        It is okay in Colorado, but some states require that an in-state personal representative be appointed.

Q.        Do trustees and personal representatives get paid for their services?

 A.        Yes, In Colorado, their compensation is usually based upon the amount of time spent on the estate, multiplied by a reasonable hourly rate.  In some states, rates are based on a percentage of the estate.

 

Q.        What is done when a person goes by more than one name?

 A.        When drafting the Will, we generally use the one name that the client uses most often or prefers.

Q.        What is the best way to set things up where husband and wife have children from previous marriages (and maybe even children from their current marriage)?

 A.        Because second and third marriages are so common these days, we see a wide variety of cases that need special attention.  There is no best way to handle the situation.  Each situation must be reviewed in detail and worked out according to the best interests of the clients and the children.