Estate Planning FAQs

Estate planning sounds like a fancy term, but really, it's just planning to protect you, your family, and your loved ones in the event of death or incapacity. Estate planning protects and preserves your assets for yourself and your beneficiaries. Planning allows you to name the people that you want to make your medical and financial decisions if you are incapacitated, and upon death, such planning transfers your assets as quickly and efficiently as possible.

In a sense, the government does create a plan for you, if you fail to do one. For instance, if you become incapacitated and you don't have a valid financial power of attorney, a judge will need to appoint someone as your conservator. Similarly, if you don't have a Will or a Trust when you die, assets without the beneficiary designations will transfer via the intestacy laws. Each state has intestacy laws. In Colorado, the general distribution of intestate assets would be to your spouse/partner in a Civil Union. Or, if you are not married or in a Civil Union, then to your children, etc. The idea of having an estate plan is to avoid the default that the legislature created in the intestacy laws.

A Will is a legal document that describes how your assets should be distributed in the event of death. The actual distribution, however, is controlled by a legal process called probate, which is Latin for “prove the Will.” Many people believe that having a will avoids probate; however, the nature and value of your assets controls whether your estate will go through the probate process.  There is a threshold in Colorado that will trigger a probate.  If a person has (1) more than $86,000 (in 2025) OR (2) any real estate in his or her name upon death, it will trigger a probate.  The will then nominates the person who will be in charge and outlines the distribution of the assets through the probate process. 

If a person wants to avoid probate, a revocable trust can be established to hold a person’s assets.  Because the assets are owned by the trust, rather than the individual, the assets do not need to go through the probate process.  Instead, your successor trustee will administer the trust upon death by paying creditors, filing taxes, and distributing assets

There is one other crucial difference: a revocable trust controls assets both while a person is living and after death.  You, as the trustee, are in charge of the assets while you are alive.  However, if you become incapacitated, your successor trustee can manage the assets for your benefit. 

Unfortunately, you would need a conservator and/guardian appointed for you. This requires a court process and hearing. If you become incapacitated before you die, the probate court will appoint someone to take control of your assets and personal affairs known as a conservator. A conservator, once appointed, must file a strict accounting of your finances with the court each year. The process is often expensive and time-consuming. 

YES. In fact, people who create most Living Trusts act as their own trustees. If you are married or have a partner, you and your spouse may act as co-trustees, and you will have absolute and complete control over all of the assets in your Trust. In the event of your disability, your hand-picked successor trustee, not the court’s appointee, assumes control over your trust assets.

NO. The purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate state and federal estate taxes. It’s not a vehicle for reducing income taxes. In fact, if you’re the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

YES. In fact, most real estate should be transferred into your Living Trust. Otherwise, upon your death, depending on how you hold the title, there will be a probate in every state in which you hold real property. When your real property is owned by your Living Trust, that property will not go through probate.

NO. The Living Trust has been authorized by the law for centuries. The government really has no interest in making you or your family suffer a probate that will only further clog up the legal system.

NO. A Living Trust can help anyone protect his or her family from unnecessary probate fees, attorney’s fees, court costs, and in some cases, help plan for federal estate tax.

YES, but you would be better off choosing an attorney whose practice is focused on estate planning. Members of the American Academy of Estate Planning Attorneys receive continuing legal education on the latest changes in laws affecting estate planning, allowing them to stay on top of the latest laws and techniques to help you meet your needs.

The federal estate tax is a tax levied by the federal government upon the estate of a deceased person. The federal government gives certain exclusions and deductions and then taxes everything above a set level.

A state estate tax is a tax levied by a state government upon the estate of a deceased person. It is levied in much the same way as the federal estate tax. A state inheritance tax is a tax levied by a state government that varies depending upon the relationship of the inheritor to the deceased person. Many states have a separate state estate or inheritance tax that is effective at a lower level than that of the federal government.

Portability allows the surviving spouse to use the amount of federal estate tax exclusion that their deceased spouse left unused at their death. Portability has been part of the law since 2011, though it was temporary until 2013.

Yes. Portability must be elected on a timely-filed federal estate tax return. This is the case even though a federal estate tax return would not otherwise be required, such as if the estate of the deceased spouse is below the threshold for federal estate taxation.