On June 28, 2013

Some Colorado residents may have common misconceptions about what an estate is in legal terms and whether estate planning is necessary. Most people have estates, whether they know it or not: Even a child who inherited his or her grandmother’s heirloom ring or who has a savings account has an estate. If people own something of value that they want to pass along to someone else when they die, they need an estate plan.

When people die without a will, the state government typically decides what happens to their assets and personal possessions. The will is the basis of estate planning. A good estate plan will conserve and distribute everything that people have accumulated, and a will is a statement of what they want done with their property after they die. Moreover, wills can be modified.

People should understand how estate planning works and have certain documents to reach their goals. They should also know that a will cannot transfer jointly owned property, life insurance proceeds or retirement accounts. Along with a will, some individuals use a trust, which can minimize estate or gift taxes, place conditions on distribution of assets and avoid public probate. Most people do not have large enough estates to trigger the estate tax. However, they need to understand applicable laws and realize that they can change. They also need to know about gift taxes or state death taxes that might affect their estate. Some states do not have a death tax, and those that do usually do not tax property left to a spouse.

Although estate planning might sound complicated, an experienced estate planning attorney could help. He or she could review a person’s situation, determine what that individual needs and then draw up the documents necessary to suit his or her circumstances.

Source: Fox Business, “The Basics of Estate Planning“, Constance Fontaine, June 19, 2013

Categories: Estate Planning

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