Estate Planning
If you wish to have any power and control over the distribution of your estate upon your death, then you need an estate plan. Estate planning is an overall picture regarding everything you own or in which you have an interest. Effective estate planning will bring everything together and make sure that all pieces are properly coordinated to work with each other.
If you have any property, real or personal, and wish to control where that property goes upon your death, then you need a will. If you die without a will, then everything you own or in which you have a beneficial interest will be distributed pursuant to Colorado law and distributed to family members in varying degrees depending upon the family members that are living at the time of your death. In the absence of a validly executed will, this is how your property will be distributed.
Simple Will
A “simple” will is a document that will direct how and to whom your property is distributed upon your death. This type of will does not incorporate trust or tax planning and is typically used by people owning assets that are significantly less than the current estate tax exemption. In order to be valid, a will must be signed by two witnesses and sign the will at the same time as the person making the will.
$1 Million Estate Tax Exemption
Currently, the federal estate tax exemption is repealed for the year 2010 but is scheduled to revert to the old exemption amount of $1,000,000 for 2011. This means that a person will owe taxes on the portion of his or her estate that exceeds the exemption limit in the year of his or her death.
Gross Estate and Taxable Estate
Your gross estate includes everything you own or in which you have a beneficial interest at the time of your death including life insurance proceeds. Your taxable estate will be calculated by valuing your gross estate and subtracting some deductions including, but not limited to, funeral expenses paid from your estate, debts you owed at the time of your death, the marital deduction which is generally the value of the property that passes from your estate to your surviving spouse, the charitable deduction which is generally the value of the property that passes from your estate to the United States, any state, a political subdivision of a state, or to a qualifying charity for exclusively charitable purposes, and the state death tax which is generally any estate inheritance, legacy, or succession taxes paid as the result of the decedent’s death to any state or the District of Columbia.
Gifting and Gift Tax
The current annual gift tax exemption amount is $12,000 per year per person. Every individual may give a gift in the amount of $12,000 per year to as many people as they wish without incurring any taxes or reducing their lifetime exclusion amount. If you gift more than $12,000 in a year to any single individual, then it will be deducted from your lifetime exclusion amount of $1,000,000 and also requires that you file a gift tax return. The person receiving the gift does not pay any taxes. If, however, a gift tax is due, then it is the person making the gift that must pay the tax.
The attorneys at Bloch & Chapleau, LLC are here to help you develop an estate plan that is best suited to your particular situation and needs. Bloch & Chapleau, LLC offers the following estate planning services:
- Wills;
- Trusts;
- Living wills;
- Colorado Medical Power of Attorney (this is broader than a living will);
- Power of Attorney;
- Conservatorship; and
- Probate Litigation.
Creating an effective estate plan is absolutely necessary to ensure that your wishes are carried out and that your beneficiaries are protected. Our attorneys will make sure that you and your family are protected both during your lifetime and after you are gone.
