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Colorado Estate Planning And Estate Settlement Legal Blog

Take these steps to avoid life insurance taxes

Are you looking for a way to transfer your some life insurance proceeds to your heirs without subjecting it to taxation?

There are a number of ways to do it. There are also some fairly common mistakes that could cost your heirs plenty.

The pitfalls of your parents' estate can help you plan your own

Watching your parents age is difficult. After they are gone, you may be the one to handle their estate. Administering an estate can be a difficult experience, especially if your responsibilities overlap with your grieving process. Yet, it can also be a very enlightening process.

You may have thought that your parents had an ideal estate plan in place, only to realize during your work as an executor that many details were unaddressed or mishandled. Your parents later days may have been fraught with medical issues, further complicating matters. Frustrating experiences can help you learn how to avoid similar issues in the future.

Why not to use a do-it-yourself will

Preparing a "do-it-yourself" will when you are not experienced in estate planning is kind of like changing your own oil when you have never done any mechanical work. You may be able to do it, but chances are you are going to make mistakes and probably a mess as well.

Below are just a few of the common mistakes made by people who attempt to prepare their own do-it-yourself wills:

It's probably time to review your will

If you have already created your will, you are well ahead of most Americans. However, many people do not realize that wills must not only reflect their wishes, they must also abide by current laws and changes in their lives.

If the provisions laid out in your will do not align with your life circumstances and the current laws when you pass away, it may prove very difficult to execute your will efficiently. Avoid resources from being drained from your estate and potentially opening the will up to challenges from various parties by educating yourself about your options.

Colorado and Medicaid long-term care

Different states vary in eligibility terms for Medicaid long-term care. Some states allow Medicaid applicants to spend down their money on care until they are under the Medicaid limit. Then they can apply. Those states are considered non-income cap states.

Colorado is considered an income cap state. This means that Medicaid eligibility has a hard income limit. Anyone who has income that exceeds the allowed limit when they apply does not qualify.

Helping your parents make medical care plans for the future

As your parents are getting older, you might need to have some difficult discussions with them. One of these discussions is about what types of health care they want when they can't make the decisions for themselves.

Thinking about these matters isn't necessarily pleasant, but it is important so that you can make sure your parents only have the treatments they are willing to undergo. Here are some questions you may wish to discuss:

Internal Revenue Service inconsistent about estate reviews

There's an old saying that nothing is certain in life except death and taxes. However, if the latest reports from the U.S. Treasury are any indication, taxation after death may be less a certainty and more a result of a dice roll.

Investigations into the Internal Revenue Service (IRS) procedures for handling the reviews of gift and estate taxes say that the system is arbitrary at best and compliance efforts by examiners have debatable effects.

Do your homework before visiting your estate planning attorney

When you are ready to do your estate planning, you can always show up at your attorney's office and have him or her walk through the entire planning process with you, but there are questions he or she is going to have to ask. Having the answers ahead of time can streamline that process and help you avoid making snap decisions that you will have to change later.

You can start by making a list of everything that will be in your estate plan and determining its worth. Along with all of your property and assets, include intangibles such as life insurance policies, retirement plans, 401K's, individual retirement accounts (IRAs) and investments.

Review and update your estate plan regularly to ensure accuracy

If there's one common mistake people make when dealing with their last will or estate plan other than putting it off too long, it's treating the process like a one-time responsibility. Some people will create a basic last will, trust or estate plan and then move on, assuming that they no longer have to worry about their assets and end-of-life planning.

In reality, family, financial and social situations change frequently. Your last will and estate plan need to change and grow with your family, your business and your health. At least every year or two, you should review your last will, trust or estate plan for accuracy. Updating it as necessary can help avoid issues with your estate in the future.

Planning for your pet when you die

While most people think about their children and heirs when it comes to estate planning, pets often get left to anyone who will take them. This does not always fair well for someone's cherished companion. Many pets have known only one caretaker all of their lives and just like humans, they are going to experience a deep sense of loss.

If you have a beloved pet when you do your estate planning, you can include provisions for your four-legged friends. It is legal in Colorado to have a trust set up to care for your pets. Of course, you must also determine who will become its guardian. There are many options available to you.

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