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Colorado Estate Planning Documents Explained

All estate plans have, at their core, a plan for managing the end of life and for managing your assets after death. In Colorado, certain estate planning representatives have slightly different titles than they do in other states and require specific planning documents. 

Below, we’ll explain each essential Colorado estate planning document, plus some documents and plans that ease the process of end-of-life planning for both you and your family. 

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Bear in mind that you should discuss your estate plan with your financial advisor and that you definitely need to review each recommended estate planning document (such as a will) with an attorney licensed in Colorado. Some documents must have the appropriate signatories, notarization, and legal review to be valid before filing with the appropriate state authority.

 

Planning for the Management of Your Affairs If You Become Ill or Incapacitated

Unfortunately, many people become too ill or incapacitated to communicate their wishes at some point in their lives. An estate plan should include designating a trusted person to make health care decisions if that happens to you.

In Colorado, these folks are known as health care surrogates (the term is interchangeable with health care agent). The person bears the responsibility of communicating your wishes concerning health care and end-of-life care should you become unable to communicate your own decisions. Designating them means that they have your permission to make decisions about your health care, including choosing among options, accepting a doctor’s advice, refusing continuation of care, or stopping care given to you.

If you’d like, you can appoint primary and alternate medical surrogates.

The appointment of medical surrogates is officially done through an official document known as the Medical Durable Power of Attorney. In the form, you can give instructions for your surrogate(s) about life-sustaining procedures, your wishes for additional medical treatments, and more.

In addition to a designated healthcare surrogate, if you become ill or incapacitated and unable to communicate or perform the acts you want to have done, you will need a trusted individual to make financial decisions on your behalf. (You can either name the same person who will be the medical surrogate or a different individual altogether. In either case, separate forms are needed.)

In Colorado, these individuals are known as financial agents. Once designated, they will have your permission to make decisions about your finances and other assets, such as property, on your behalf. 

Remember to discuss all your assets with the person you designate. If you are incapacitated for a lengthy period of time, they may have to perform such duties as paying bills, making sure your taxes are completed and filed, making decisions about your stock, bond, and other portfolios, and more. They may have to make decisions about the sale of retirement funds and real estate as well. 

To designate a financial agent and specify the powers you want them to have, you’ll need to complete a form called a durable (financial) power of attorney. 

 

Planning to Bequeath Your Assets After Your Death

The second part of comprehensive estate planning is making a plan to bequeath your assets after you die.

The first step in the process is to create a list of all your assets, including investment portfolios, financial accounts, real estate, personal property, assets in a business, and any other significant asset. This can be efficiently handled by using a document entitled a Current Assets List. 

Then, go through the list and choose the beneficiary you would like to receive each asset (or portion of the asset) in the event of your death. These can be family members, friends, or organizations. Bear in mind that the list is not a legal document; you will need to create an estate distribution document with the help of an attorney and have it legally witnessed, signed, and processed.

There are two types of estate distribution documents. The first and most common is the last will and testament, known as the will. Wills name each beneficiary and the assets you wish them to receive. 

All wills in Colorado go through probate after your death. The probate process first reviews the will to see that it is valid. Then it ascertains whether your estate owes any debts which require your assets to pay off.

The second type of estate distribution document is known as a living trust (revocable). A living trust is an entity that will hold possession of your assets so that you can still benefit from them during your lifetime. Like a will, the trust will designate your beneficiaries and which assets each will receive. 

Living trusts do not go through the probate process. Any assets held in the trust can therefore be distributed soon after your death.  With some trusts, assets may be required to be distributed immediately.  With other trusts, however, assets in trust may be held until a beneficiary asks to distribute those assets to themselves.  Generally, holding assets in trust after a trust maker’s death can add valuable asset protection and wealth preservation for future generations. 

 

Other Useful Documents

The following documents are helpful tools for you and your loved ones.

First, because so much of our lives are now conducted online, it’s helpful to create a list of your digital assets. The list should provide any financial accounts online, but also information for your e-mail accounts, social media accounts, and more – anything that your family would need to access upon your death and that would provide an orderly disposition of your assets and accounts.

Under Colorado’s Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), your estate’s personal representative, conservator, trustee, or designated representative under a power of attorney are allowed access to your digital assets. RUFADAA also provides that you can use your estate plan to outline your digital assets and your wishes for them.

Second, it’s also helpful to leave a property inventory on an ongoing basis, with information pertaining to the property, such as last inspection and so on.

Finally, remember that, without a discussion or instructions, your loved ones may not know what kind of burial or other disposition of your body you prefer. Many people thus find it helpful to leave instructions about their wishes.

You can also leave instructions on your preferences for a funeral and obituaries, including who will speak, where the obituaries should be published, and more.

For more information on estate planning in Colorado, contact the CERTIFIED FINANCIAL PLANNER™ Professionals and Certified Estate Planners™ at The Normandy Group. We offer serious financial planning for today’s complex world.  By combining tax, financial, and estate planning strategies we can help you achieve your goals. Contact us today for a complimentary consultation.

 

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Derek Landis
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Derek Landis