The Law Office of Richard Biel, P.C.

What is an Estate Plan?
An estate plan is a series of documents in which you provide instructions and declarations regarding your care if you were ever mentally incapacitated and how your assets are to be distributed upon your death. A good estate plan provides both financial and personal benefits. A comprehensive plan will address the preservation and growth of your assets both while you are alive and for your beneficiaries after your death, and should include legal strategies to minimize tax liabilities at death. In addition to financial benefits, a thorough estate plan includes documents such as powers of attorney and advanced medical directives that allow you to document and control decisions with regard to who should speak for you when you are unable to and who is to care for you and your assets.

Transfer of Property at Death
At death, assets are transferred in three primary ways:
1. Through the probate of a Will;
2. If you die without a Will, through the court and Colorado statutes; or
3. Through a contract agreement, such as a revocable living trust, beneficiary designation, or joint tenancy ownership.  

Will-Based v. Trust-Based Estate Plans
While your estate plan will likely include several documents, estate plans are usually centered around a Will or a Revocable Living Trust (“RLT”). While both types of plans utilize similar documents, the use of these documents may be different. 

Will-Based Plans—A Will-based plan uses a Will as the primary set of instructions the Personal Representative is to follow to settle your estate when you die. Since a Will is only effective after someone dies, it does not allow for any disability planning while the Will-maker is alive. Therefore, under a will-based plan, it is necessary to utilize powers of attorneys and advanced medical directives to address pre-death mental incapacity issues. 

Revocable Living Trust-Based Plans—An RLT-based plan generally uses the living trust as the primary set of instructions for both disability and death. While an RLT may be sufficient to allow a Trustee to gain control in order to protect your assets and pay for your care upon mental incapacity, it generally does not contain advance medical directives or grants of authority to make medical decisions, and therefore powers of attorneys will likely also be used. It is important to note that, in an RLT-based plan, the attorney may also have you execute a Will that directs any assets not properly titled in the name of the trust be given to your trust (this is called a “pour over” Will) and names guardians for minor children. 

Taxes
While the most important feature of an estate plan should be peace of mind that your family has the proper tools to take care of you if you become mentally incapacitated and to settle your estate in the most efficient manner, a comprehensive estate plan also includes tax planning. Estate tax liabilities can be reduced and, in some cases, eliminated through some advanced estate planning techniques.

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