Colorado Estate Law: Frequently Asked Questions
The following is a list of frequently asked questions regarding the Estate planning process in the state of Colorado. If you have any questions regarding the information on this page, please contact one of our Divorce Attorneys.
What does Estate Planing mean?
An estate plan can significantly impact an individual’s entire family when that person becomes incapacitated or dies. A comprehensive estate plan should designate a guardian for minor children, appoint persons to administer the estate or trusts, appoint an agent to make medical decisions if the individual becomes incapacitated, provide asset protection for those who are unable to manage their own finances, minimize taxes, provide business succession planning, if applicable and any other issues that may impact the individual’s family or business after their death.
Do I need a will?
If you have any property, real or personal, and care who receives that property upon your death, then you need a will.
What is a Simple Will?
A "simple" will is what is typically used when a husband and wife have combined assets that are significantly less than the current estate tax exemption and there is no need for trusts for minor children or others. This type of will usually makes outright gifts to the surviving spouse and then equal shares to the children after both spouses have died.
What is included in my Gross Estate?
Your gross estate includes the value of all property in which you had an interest at the time of your death which also includes life insurance proceeds.
What is my Taxable Estate?
Your taxable estate is your gross estate after allowable deductions which include:
(II) Debts you owed at the time of your death;
(III) The marital deduction which is generally the value of the property that passes from your estate to your surviving spouse;
(IV) The charitable deduction which is generally the value of the property that passes from your estate to the United States, any state, a political subdivision of a state, or to a qualifying charity for exclusively charitable purposes; and
(V) The state death tax which is generally any estate inheritance, legacy, or succession taxes paid as the result of the decedent’s death to any state or the District of Columbia.
What is the current Estate Tax Exemption Amount?
| 2008 | $2,000,000 |
| 2009 | $3,500,000 |
| 2010 | N/A – estate tax is repealed |
| 2011 | $1,000,000 |
What is the current Gift Tax Exemption Amount?
The current (2008) annual gift tax exemption amount is $12,000 per year per person. For example, you may give a gift in the amount of $12,000 per year to as many people as you wish without incurring any taxes. You may also gift more than $12,000, however, it will be deducted from your life time exclusion amount of $1,000,000 (in effect through 2009) and also requires that you file a gift tax return.
Who pays the Gift Tax?
If and when a gift tax is due, it is the donor (the person making the gift) that is taxed. The gift recipient does not pay any taxes.
What is a Living Will?
This is a document that governs the withholding or withdrawal of life-sustaining treatment from an individual when that person is no longer able to make decisions regarding his or her medical treatment.
What is a Trust?
A trust is a legal entity created by a person (grantor) to hold property for the benefit of designated beneficiaries. Under a trust, property is actually transferred into the name of the trust and the trustee is charged with the responsibility to manage the trust assets and income for the benefit of all beneficiaries.
