Estate Planning in Colorado

Contrary to belief, you don’t need to be uber wealthy to have an estate plan. Here’s how a well-informed plan can make a big difference in what is left for your loved ones.

If you don’t already have an estate plan, what are you waiting for? Is it the uncomfortable conversation you wish to avoid with your family? Not only is the topic itself a heavy one, but the jargon that goes along with estate planning can be confusing at best—and pretty overwhelming at worst.

When pre-retirees and retirees alike hear the words “Estate Planning“, many switch off thinking it’s only an important step for those with millions of dollars of assets. The reality however is very different; if you own anything, you should create an estate plan.

Before you begin to take action on your estate plan, it’s important to understand the key topics that may arise as you address your specific needs. Here’s why having an estate plan in place with APO Financial will help provide you the security that comes with knowing you’ve planned for the future of your loved ones.   

What is an Estate Plan?

Estate planning spans more than just real estate; it refers to the umbrellaed approach of organizing, cataloging and making arrangements for the proper handling of your affairs after you pass — including your dependents as well as your assets, valuables and heirlooms. 

By setting up a solid estate plan, you’ll establish who will eventually receive your assets. It also makes it known how you want your affairs to be handled in the event you are unable to handle them on your own for any reason (e.g, medically unable to do so).

If You Live in Colorado, How is an Estate Plan Created?

An estate plan is usually created with an experienced financial advisor and/or an attorney, and may involve several meetings during which you’ll be asked a series of questions designed to bring out the financial and familial issues that are specific to you. The estate planning process also involves a careful analysis of how you own your assets and the implications that you should consider in the event of mental incapacity and death.

At APO Financial, our highly experienced advisors will ask you these and several other questions related to your retirement goals and plans, Social Security and other benefit and pension programs, and assure that your assets are carefully listed and your estate plan set up in a way that maximizes your ability to achieve your goals.

Transfer of Property at Death

The transfer of assets and belongings after one’s death can be complex. There are numerous legal procedures and formalities that dictate the entire process, all of which must be handled in a timely manner. 

At death, assets are transferred in three main 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 living trust, beneficiary designation, or joint tenancy ownership.

Many estate plans incorporate a combination of the ways that your property can pass to your beneficiaries, but in order to figure out the best way to structure the ownership of your assets, we will need to know information about you, such as what you currently own and how your assets are titled. The way that property is owned (in your individual name, in joint tenancy, etc.) dictates who it will pass to and when and how it will be transferred as described above.

Will-Based v. Trust-Based Estate Plans

Chances are that your estate plan is going to involve a variety of different documents, but generally speaking, estate plans are centered around one of two different documents: a Will or a Revocable Living Trust. These documents, while similar, can have vastly different uses.

For some people, a trust can be more useful than a will. For others, a will is better. For many, they need both.

• Wills: A will by itself is just a small piece of the Estate Planning puzzle and are usually very simple instruments that most people can easily understand. They nominate an executor to round up the deceased person’s property while also nominating heirs to receive that property. There are numerous other concerns and nuances to consider here, but generally speaking, that’s the main summary.
• Trusts: A living trust can be an efficient means of providing for the orderly transfer of assets to your heirs. A trust is a legal entity that holds title to your property so that you avoid the probate process. More importantly, because of its thoroughness, a trust enables us to provide much more robust planning while maintaining control over the trust estate.

In the event of both a will and a trust, generally a trust will take precedence over a will. Careful use of wills, trusts, or both, can ensure your assets and possessions end up where you want them to go.

Tax Advantages

A big part of maximizing what you leave behind is minimizing taxes. Federal taxes on gifts and estates can be among the highest assessed on any financial transaction. In addition, some states levy their own estate or inheritance taxes.

Understanding potential types of taxes is important. 

• Estate tax: A tax imposed on estates worth more than a set value. The tax is only assessed on the amount that exceeds the maximum, not the entire value of the estate. 
• Inheritance tax: A tax paid by someone who inherits either property or money from someone who has died.
• Gift tax: A tax that’s applied on gifts exceeding a certain dollar amount. Note the giver, not the receiver, is responsible for any tax. 

Both estate and gift taxes usually have exemption limits, meaning you can give up to a certain amount without incurring tax. Many people use the gift tax exemption to transfer assets while they are still living, as part of their strategy to maximize what their beneficiaries receive.

Estate and inheritance taxes usually are based on the value of the taxable estate and are paid before the assets are distributed to the beneficiaries.

Let’s Get Started

Although estate planning often is viewed as a concern for older individuals with substantial means, it is a subject that almost everyone needs to address. There is no one-size-fits-all solution for estate planning. Regardless of which you choose, you should know that these plans can be revoked or amended at any time, and you should revisit them every few years to make sure that your estate plans have not changed.

Unlike more traditional estate plans developed by most estate attorneys, at APO Financial, we help you look at the bigger picture and determine what kind of legacy you want to leave. We’ll help you create an all-encompassing plan that not only executes your wishes after you’re gone but helps protect your loved ones. From reducing taxes to exploring life insurance to helping your family avoid probate, we’ll help structure your assets to maximize the wealth you leave behind for your heirs.

Ready to get your estate planning started? The first step of your journey is essential, so let’s get together for a complimentary visit to see if we want to travel down this road together. Contact us here to set up a meeting today!

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Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all.. Prior to making any investment, insurance, financial or legal decision, you should always seek individualized advice from a financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of your individual own situation

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Information relating to annuities is intended for educational purposes only and should not be construed as comprehensive or all-inclusive. Therefore, it should not be regarded as a complete analysis of the subjects discussed and should not be used to make an investment decision.

Annuities can be an important part of an overall portfolio but may not be appropriate for everyone. Before purchasing an annuity, it is important to understand the details of the product. Certain products may not be available in your state. The terms of each indexed annuity varies. It is always important to speak to a financial professional. about an annuity’s features, benefits and fees, and whether an annuity is appropriate for you, based on your financial situation and objectives. Participation rates, cap rates and/or index spreads may be subject to change by the insurance company according to the annuity contract provisions. If the insurance company makes such changes, this could adversely affect the return. Guarantees of an indexed annuity are backed by the claims-paying ability of the underwriting insurance company. The surrender charge period for a product may be longer, and the surrender charges may be higher than other annuity products. Indexed annuities are long-term investments. If the annuity contract is surrendered early, there is the possibility of a surrender charge being imposed and/or the funds may be subject to income taxes. The IRS may also impose a 10% penalty on withdrawals prior to age 59 ½, depending on the circumstances. With indexed annuities, there is the potential to lose money, depending on the product charges and minimum guarantee contract provisions. For additional information on annuities, reference the following websites: The FINRA (www.FINRA.org), the Securities and Exchange Commission (www.SEC.gov), Insured Retirement Institute (www.irionline.org), the National Association of Insurance Commissioners (www.NAIC.org) or your state's insurance department.