What is the Purpose of an Estate Plan?
Most people would never give someone else a gift and then ask the recipient to pay money in return. But that is a very broad example of what could happen in an inheritance situation if there is no estate plan.
An estate plan goes beyond the creation of a will – an estate plan can outline how you want your assets distributed as well as instructions for the care of minor children but it can also protect your heirs from being subjected to paying estate taxes, court costs and other fees associated with their inheritance. It is wise to create an estate plan if you have a very large estate, wish for your estate to be kept private, you own a business, have retirement accounts or have other special circumstances.
If the value of your entire estate will exceed the federal tax exclusion amount of $11.58 million (for individuals) and $23.16 million for married couples, your estate and in turn your heirs could be hit with serious estate taxes. In fact, they may have to liquidate assets to pay taxes. However, a smart estate planning attorney can help you devise ways to reduce your estate value by giving tax-free gifts and giving assets to your loved ones while you are still living. You can also create specialty trusts to transfer life insurance policies to trusts, remove death benefits of life insurance policies from the estate, leave a trust to a charity or remove your home from your estate – an estate planning lawyer can explain all of the options that exist.
Wills are not private documents – after you pass away, the contents of the will become open to the public in the probate court. If you do not wish for relatives and creditors to have access to your wishes, you may decide to create a trust instead so it can be kept private. Trusts also do not go through the probate courts.
If you own a business, it’s important to have a formal business entity established (such as a Limited Liability Company or a Family Limited Partnership). There are estate planning techniques such as transferring interests in the business to reduce your estate that still allow you to have control. This may also protect your business from lawsuits and creditors. There are many ways to set up your business, so it is advisable to consult with an attorney to choose the right designation for your business.
Families with minor children or adult children with special needs may also wish to designate a conservator (in addition to a guardian) to help manage the assets that you pass down to them or you can set up a trust for their benefit. Blended family situations can also get very complicated when it comes to estate planning. If there are stepchildren and ex-spouses involved, it may be wise to consult with a professional to set up a plan to avoid potential infighting in regard to inheritance.
There are ways to set up financial accounts to have a transfer of death (TOD) or payable on death (POD) beneficiary so they pass directly to your beneficiaries without having to go through probate. A Denver estate planning lawyer can help you identify which accounts to update and the steps necessary to do so.
Estate Planning Help in Denver is Available
There are a lot of steps to estate planning and it’s not a once-and-done process. As you grow older and your family life changes, your estate plan should be updated. It is advisable to hire an experienced estate planning lawyer to help you understand the intricacies of this legal process.
The Denver estate planning attorneys at The Brown Law Firm, LLC have helped clients in all tax brackets plan for their families’ futures. Contact us at (303) 339-3750 or send us a message online to start the discussion.