Commonly asked Questions

  1. Why do I need a Will?
    1. A Will assists and protects your loved ones after your passing, in that it:
      1. Ensures that your estate, including your financial assets, real estate, and personal belongings, go to the loved ones of your choosing and directs how your property should be divided between those you want to give it to (your legatees).
      2. Directs who should care for your minor children (a guardian).
      3. Directs who you want to oversee the distribution process and carry out your final wishes (the executor).
    2. A Will does not avoid probate. To avoid probate you may need a trust.
  2. How can I plan my estate so that it will not be subject to probate when I die?
    1. Generally you can plan your estate to not be subject to probate in Colorado by holding your real estate and personal property in a living trust. Certain assets, such as retirement accounts or life insurance with beneficiary designations, joint tenancy assets, or payment on death accounts, are separate from the probate estate and, therefore, not considered in determining whether your estate is subject to probate.
  3. Will I owe estate taxes when I die?
    1. Whether your estate will be subject to estate taxes when you die depends upon the law in effect during the year that you die and the size of your estate at the time that you die. Flexibility to accommodate future tax law changes should continue to be an important component of your estate plan.
    2. Currently, your Federal taxable estate in excess of the lifetime exclusion ($5,450,000.00 plus your predeceased spouse’s unused exclusion) is subject to Federal estate tax if you die in 2016 – unless another exemption, such as the marital exemption, applies to your Federal taxable estate. The $5,450,000.00 lifetime exclusion applies if you are single or married.
    3. An estate plan should take into account the differences between the Federal and Colorado estate tax exclusion amounts. Colorado has neither a gift tax or an estate (inheritance) tax. It is important that existing estate plans be reviewed by an attorney because of legal developments that take place.
  4. What is the top Federal estate tax rate for 2016?
    1. The top Federal estate tax rate is 40% for 2016.
  5. What is the Federal lifetime gift tax exclusion and tax rate for 2016?
    1. For 2016, the Federal lifetime gift tax exclusion is $5,450,000.00 and the maximum gift tax rate is 40%. There is spousal portability for the unused spousal gift tax amount provided the appropriate election is made upon the death of the first spouse.
  6. What is the annual gift tax exemption for 2016?
    1. In 2016, the annual Federal gift tax exclusion is $14,000.00 for an individual donor and $28,000.00 combined for married donors.
    2. As such, you may give $14,000.00 to each child, grandchild, or other person (non-spouse) in 2016 and not be subject to the Federal gift tax. A married couple can give $28,000.00 to each child, grandchild, or other person in 2016 and not be subject to the Federal gift tax.
    3. Gifts to a spouse who is a United States citizen are exempt from the gift tax by the marital exemption. Although not eligible for the marital exemption, gifts from a United States citizen to his or her spouse who is a permanent resident are subject to an annual gift tax exclusion for 2016 of $148,000.00.
  7. What are tax exempt ways to reduce the size of my estate?
    1. Making annual gifts below the Federal annual gift tax exclusion is a tax exempt way to remove property from your estate. Qualified charitable, medical, and educational gifts also are examples of tax exempt ways of reducing the size of your taxable estate. As stated above, Illinois does not have a gift tax.
  8. What is the Federal lifetime generation skipping tax (GST) exemption for 2016?
    1. $5,450,000.00 is the Federal lifetime exclusion from the GST for 2016. There is no spousal portability of the Federal unused spousal GST exemption.
  9. What estate planning documents should I have?
    1. Every person, whether married, single, young or old, should have a will, a Power of Attorney for Health Care, and a Power of Attorney for Property.
    2. Depending on your circumstances and desires, your estate plan may also include a revocable living trust, an insurance trust, various other types of trusts, a Living Will, a Cremation Authorization, an Appointment of Agent to Control Disposition of Remains, a Mental Healthcare Directive, and/or a HIPAA (The Health Insurance Portability and Accountability Act) Authorization.
    3. Estate planning documents should be prepared by an attorney.
  10. When should I update my Will and estate plan?
    1. You should review your estate plan whenever a life-changing event has occurred, such as:
      1. An individual named in your will (or other estate planning documents) has passed away;
      2. There is a new person in your life that should be named in your will (birth or adoption of a child, marriage, etc.);
      3. After a divorce;
      4. If there has been a change in the state or federal law;
      5. You wish to change the guardian, executor, trustee, or agent named in any of your estate planning documents;
      6. All of your children have reached the age of 18;
      7. You have had a substantial change in the value of your estate;
      8. You have acquired a significant asset you would like specifically named and distributed through your will or trust; or
      9. There is a person, charity, or other entity that you would like to add or remove from your estate plan.

Careful planning is the most important step you can take to ensure that your assets are passed on as you intend. For answers to more of your estate planning questions, please contact us.