Creating a will is the cornerstone of estate planning, don’t underestimate the need for a valid, legal will. It is necessary, even if you have a living trust, to name an executor for your estate, to name a guardian for any children under the age of 18 and to distribute or ‘pour over’ any property not owned by a living trust.

The popularity of do it yourself will kits and forms has increased over the past decade, but there are four things that may be missing from this estate planning document that can make a big difference on how smoothly your estate is ‘settled.’

Successor Executors and Guardians

Naming an executor and a guardian is an important part of drafting a will, but what happens if your choices are unwilling, unable or even unavailable to serve in that capacity? Naming backups, or successors, is critical to keeping these choices within your control.

Bond Waivers

Many probate courts require the executor of an estate to post a bond to ensure the estate and its assets are protected and debts are paid. Without a will that explicitly waives the need for a probate bond, courts may mandate their purchase, meaning more time and expense for your executor and your estate.

Contingent Beneficiaries

Unfortunately, wills aren’t updated as often as they should be. Life changes, and your estate planning documents should change with it. A will should have ‘backup’ beneficiaries in case one or more of your named beneficiaries has since passed away.

Self Proving Affidavits

A will needs to be properly witnessed by at least two parties. A self proving affidavit is an attached document signed by a notary public that shows the will was properly signed and witnessed and that it is the will of the person who signed it. Many states accept these affidavits in lieu of actual witness testimony, and it avoids the time and expense of the executor having to track down the witnesses.

An estate planning attorney can help you create a will that not only has all of the aspects that help your loved ones get through the administration of your estate, but they can work with you on other estate planning tools that meet your needs.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

There are several ‘myths’ and misinformation that surround wills and estates. Perhaps because it is not a popular conversation topic or perhaps due to incorrect information passed along by others. We ‘debunk’ several common will myths:

If I have a will, my estate avoids probate.

Unfortunately, this is not true, in fact, part of the process of probate is validating the will of a deceased. There are other estate planning tools that do allow certain types of property to avoid probate, such as using a living trust, but you will still need a will to name an Executor for your estate and a Guardian for minor children.

If you do not have a will, the State takes your estate.

If you do not have a will, which is known as dying intestate, the state laws of intestacy determine who inherits your estate based on their relationship to you. The Colorado law governing intestate distribution is written to reflect what most people would put in a will if they had actually written one. The distribution is a matrix of who is entitled to the property based on how closely they are related to you, however, if no living relatives can be identified or located, the estate may ‘escheat’ to the state.

Wills begin with “I, __________, being of sound mind and body”.

This phrase is often used for theatrics, and is not normally the actual first line of will. In fact, the first line or phrase of a valid will is known as the exordium clause which identifies the maker of the will, declares that the document is meant to be a will and declares the testator of the will intends to revoke prior wills.

To disinherit a child, leave him or her just $1 in your will.

It used to be thought that by leaving a pittance to a child within a will you would prove that the parent did not unintentionally overlook the child’s inheritance while preparing the will. In a modern will, a provision would be drafted within a will acknowledging the existence of the child and stating that you intentionally are not providing for the child in the will. This provision can only be used for adult children, as many states have laws in place that do not allow minor children to be entirely disinherited.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Creating a will allows you to distribute your property and possessions, creating an ethical will allows you to pass along much more to future generations – like your cherished memories, your dreams and your values. In today’s fast paced society, values and those one-of-a-kind family stories can be lost in the shuffle of the modern world. An ethical will allows you to pass along those treasured memories, and even hopes and dreams for future generations.

An ethical will certainly does not replace creating a legal will for your estate, in fact it is not a legally binding document, but it is gaining in popularity in estate planning. From handwritten notes to a biographical video, the ethical will can be used not only after passing, but many are choosing to share it during life.

There is no set format for an ethical will, it is as personal as the author, but some of the most popular forms are:

• Writing a family history;
• Autobiographies;
• A statement of family values and beliefs;
• Important lessons of life; and
• Hopes and dreams for future generations.

A valid will is going to take care of your possessions when you pass, the ethical will can offer the personal touch that will ease the pain of your passing on loved ones. Consider adding an ethical will to your estate planning tasks, it can offer valuable insight and life lessons to your family.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Creating a will is the cornerstone of estate planning – it distributes your property as well as names a guardian for your children and executor for your estate. If you take these five steps before meeting with an estate attorney and drafting a will, the process will be much smoother.

1. Evaluate your net worth

Make a list of your assets, including your home, vehicles, retirement plans, business interests, jewelry and other personal property. Your net worth also includes the death benefit on all of your life insurance policies. Even though life insurance does not have to pass through probate, it does count as part of your taxable estate. List your liabilities – including your mortgage, vehicle loans, credit card debt and any money owed. Your net worth is the total of your liabilities subtracted from the total value of your assets.

2. Choose a guardian for minor children

This step can stop many parents in their tracks, for it is difficult to imagine their children being raised by someone else. Talk with your selected guardians about your choice and make sure they are willing and able to take on the challenge of raising of your children. You should also name a backup choice should the original choice be unwilling or unable to take on the responsibility.

3. Choose an executor for your estate

An executor is responsible for carrying out your wishes and other administrative duties for your estate. The executor may be a spouse, family member or trusted friend, but it can also be an institution or professional. You should also choose a ‘backup’ executor should your first choice be unwilling or unable to carry out the duties.

4. Determine how you would like your property distributed, as well as any donations you would like to make.

Property is distributed to the named beneficiaries in a will when the debts of the estate are paid off.

5. Contact an estate planning attorney to sit down and determine the best way to carry out your wishes while addressing issues such as estate taxes and avoiding probate.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Many people think that estate planning is for the elderly and wealthy. You may feel a plan is not necessary because you are too young or you do not have enough assets. But any adult can benefit from estate planning. While you may not need to create a trust or even avoid probate, there are plenty of reasons to being estate planning now:

1. Loss of Capacity. What if you become incapacitated and unable to manage your own affairs? Without a plan, a court will select a person to manage your affairs through intrusive and expensive guardianship or conservatorship proceedings. With a plan, you can use a durable power of attorney to make that choice on your own.
2. Minor Children. A will is the cornerstone of estate planning, and it names a guardian for minor children. Without a will, a Probate Court will make the decision.
3. Dying Without a Will. Without estate planning, your assets will pass to your heirs according to your state’s intestate laws. Your family members will receive your assets without your input. With a plan, you decide who gets your assets.
4. Blended Families. What if your family is the result of multiple marriages? Without a plan, children from different marriages may not be treated as you would want, in fact your own children may be disinherited. With a plan, you determine what goes to your current spouse and to any children from a prior marriage.
5. Keeping Assets in the Family. Without a plan, your child’s spouse may wind up with your money if your child dies prematurely. If your child divorces his or her current spouse, many of your assets could go to that spouse. With a plan, you can set up a trust that ensures that your assets will stay in your family and pass to your grandchildren.
6. Financial Security. Will your spouse and children be able to survive financially without you? Without a plan, and an income replacement, your family may be unable to maintain its current standard of living. With a plan, estate planning tools such as life insurance can mean that your family will enjoy financial security.
7. Retirement Accounts. Do you have a retirement account? Without a plan, the designated beneficiary of your retirement account funds may not reflect your current wishes. With a plan, you can choose the beneficiary and an estate planning attorney can make sure it coordinates with all aspects within your estate plan.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

You often come across the terms ‘fiduciary’ and ‘fiduciary duties’ in the course of estate planning – but do you know exactly what these terms mean?

Fiduciary

A fiduciary is an individual, a business or even an association that holds assets or power for another party with the legal authority and duty to make decisions regarding finances and matters on their behalf. A fiduciary is expected to act with good faith and honesty and is normally chosen with the premise that they have more knowledge and expertise about the particular matters being handled. Typical fiduciaries that are encountered are:

• Attorneys;
• Financial advisors;
• Real estate agents;
• Bankers;
• Stockbrokers;
• Estate executors; and
• Guardians.

A fiduciary is always expected to act in the best interest of the person to whom they are providing services or care.

Fiduciary Duties

A fiduciary duty is an obligation to act in the best interest of another party, and as such, a fiduciary is held to a higher standard of both trust and conduct than a ‘regular’ person. While it seems that a fiduciary relationship is based primarily on trust between the two parties, there is also a legal obligation involved when a relationship involves trust, confidence and reliance on the fiduciaries’ expertise. In fact, in a fiduciary relationship, laws forbid the fiduciary from acting in any adverse or contrary manner to the interests of the client, or from acting for their own benefit.

Certain relationships in the estate planning process are regarded as fiduciary, these include:

• Attorney and client;
• Trustee and beneficiary;
• Executors and the heirs or beneficiaries of a decedent’s estate; and
• Conservators and the protected person.

The term fiduciary comes from the Latin term ‘fiducia’, which means trust. Fiduciary duties not only involve trust, but they are taken further to an obligation that is taken very seriously not only by estate planning attorneys, but by many in the legal, business and financial sectors.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Choosing an Executor to handle your estate is difficult, it is tempting to name a spouse or family member – but do you know the responsibilities and duties of an Executor?

An Executor (known in Colorado as a Personal Representative) is named within a will to administer an estate, and they will be tasked with several responsibilities during the probate process, which is the legal process that takes place in Probate Court that handles the administration of a deceased’s estate. So what will the Executor’s duties be? There is a long list, but the basics include:

• Compiling an inventory of assets and bills;
• Opening a bank account and getting creditors paid;
• Obtaining a federal tax identification number for the estate and preparing the estate’s tax return;
• Ensuring all legal paperwork is filed correctly and according to state deadlines;
• Locating potential heirs, beneficiaries and creditors; and
• Distributing the assets of the estate in accordance with the terms of the will.

This process may take months, or even years to complete, and unfortunately, the process also coincides with a time of grief for loved ones. But an Executor does not have to do this alone, a Probate Attorney is able to assist them with the various administrative and legal tasks that take place in probate. In fact, a probate attorney may perform nearly all of the functions of the executor, although the Executor may still have to sign off on court documents, and the fees for the Probate Attorney can be paid from the estate.

Choosing an Executor who can handle these tasks is going to be difficult, and it is best to discuss your choice with the person you choose. It is also important to give a second choice within your will, should the first choice be unwilling or unable to serve in that capacity.

Executor duties can be time consuming and difficult, make sure to speak with an estate planning attorney to discuss estate administration options.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

A trust can be a powerful estate planning tool – it allows property to avoid probate, and in the case of living trusts, can establish a method of managing property and finances in case of incapacitation. While a trust attorney works with you to create a trust, there are several questions that you will need to address in the process….

1. Who are the beneficiaries? In the case of living trusts, you may be a beneficiary, but will still need to name successor beneficiaries for the trust.

2. Who will be the trustee? Again, in the case of living trusts, you may handle the trustee duties, but will need to name a successor trustee that can take over duties upon a specified event, such as your incapacitation or death.

3. When will the trust make distributions? Often trusts begin making distributions to beneficiaries when they reach specified ages.

4. How should the trust assets be invested? Depending on the goal of the trust, you may want to advise how the portfolio will be invested, such as for growth, value or to generate income.

5. What are the trustee’s powers when it comes to making distributions? You may make these powers either broad, allowing the trustee to exercise discretion, or narrow, such as paying out income for specific purposes such as educational expenses.

6. Can the beneficiaries remove and replace the trustee? This should be spelled out within the trust documents.

7. How long should the trust last? A trust can be set up to end with a specified event, such as a beneficiary reaching a certain age, or to continue for a longer timeframe for asset protection purposes.

Creating a trust can benefit many estates, but a trust attorney can best advise you of which trust will best meet your estate planning goals.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

There are several forms of ownership for property, whether it is real estate or personal property, and how your property is owned impacts what happens to it when you pass away. It will also impact your estate planning tasks. Two forms of co-ownership in property are tenancy in common and joint tenancy, and it is important to know the difference, particularly when it comes to estate planning.

Tenancy in common involves undivided ownership interests. Joint tenancy is the other system of co-ownership in addition to tenancy in common and has been the more popular form of co-ownership. With joint tenancy, as with tenancy in common, two or more people own property together. Each has an undivided interest in the property. Each owner has the right to request a court order for partition and sale if he or she wants to terminate the arrangement, such as in the case of a divorce of a married couple. The major difference between joint tenancy and tenancy in common becomes clear at the death of one of the owners.

With joint tenancy, there is a right of survivorship that controls disposition. When property is held in joint tenancy and one of the owners dies, the property goes to the surviving owner. An ordinary will does not impact the disposition of property owned in joint tenancy at the death of the first joint tenant. When property is held in joint tenancy, in essence, there is a “built in” will operating on the death of the first joint tenant to pass away.

On the other hand, if that property was owned under a tenancy in common arrangement, when one owner dies, that person’s interest in the property goes to the heirs under state law if the person has no will. If the individual has a will, the deceased’s ownership interest passes under the will to the named beneficiaries. The heir or will beneficiary then owns the undivided interest in the property with the living co-owner.

There are benefits and drawbacks to each form of ownership. It is important to understand the consequences of the different types of property ownership, particularly when it comes to estate planning. Working with an estate planning attorney not only ensures you understand the terminology used, but it ensures that all aspects of your estate plan coordinate to meet your family’s needs.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

You’ve received an inheritance, or you think you did, you were named as a beneficiary of a trust. So is that the same thing as being a beneficiary in a will and inheriting property?

No, it’s not, and here’s why:

1. A person can create a trust in countless ways. The only restriction is that the trust may not function for an illegal purpose, so the door is left wide open. For example, a trust can be created to hold money or property until you reach a certain age, or even until you achieve a certain goal, such as graduating from college. On the other hand, if you were to inherit money from a will, you normally receive your inheritance when the estate is settled.

2. A trustee is the person who manages a trust, they not only manage the property held by the trust, but they can also determine the best time and method for distributing the assets, as long as their decisions are made for the benefit of the beneficiary and in accordance with trust documents. There is not that level of oversight and control with an inheritance received as a bequest within a will.

3. A trust can help protect the assets held within the trust from your creditors. While you may not be able to access funds when you want them, neither may your creditors in some instances. Therefore, a trust can act as an asset protection device for you, while a will cannot do so.

While it may seem there are strings attached to being the beneficiary of a trust, the trust does act within the best interests of the beneficiary – you. If you need assistance with creating a trust, leaving an inheritance or even estate litigation, an estate planning attorney can help you.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.