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Can You Hand Write A Will in Colorado?
This week we are addressing common myths in estate planning. To kick things off, we are starting with the most common one we hear all the time: that hand writing a will works just as well as having one drafted for you. The short answer to whether or not you can draft your own will is yes. However, that will is not very strong and there is little guarantee that it will hold up in court if anyone decides to contest it.
Why Isn’t A Handwritten Will Worth Much?
When an attorney prepares a will for you, the hope is that they have experience dealing with what happens when that will needs to actually be used. This means they know what terms to add in to the document that will prevent litigation and will contests. Further, an attorney knows what is required under the law to have a valid last will and testament in Colorado that will hold up in court. Some of these requirements include:
- Having two witnesses to attest to you have capacity to sign your will
- Having a notary witness your signature (basically confirming that you are who you say you are)
- Having you swear that you understand the documents, are over 18 and that you are not signing under anybody else’s influence
A handwritten will just doesn’t usually have these things. Without these requirements, there is no guarantee that you were even the one to write the will in the first place. Handwritten wills (also called holographic wills in Colorado) are much harder to uphold in the court system if anyone tries to contest them, even if all of the above requirements are met. In the long run, you have a lawyer draft your documents for you because you want peace of mind that they will work. You can not guarantee that with a handwritten document. You can learn more about what actually goes into a full estate plan here.
So Let’s Wrap It Up
So can you draft your own will on a cocktail napkin? Yes. Should you? Absolutely not. Odds are if you care enough to write something down, then it’s important enough to you and your family to make sure it goes where you want it to correctly. The only way to best ensure that happens is to get a proper estate plan from a lawyer. As I’ve said in many posts before, most attorneys will at least offer a free consultation where you can learn a little bit more about your options.
What If I Told You Everything You Have Heard About Trusts Is A Lie?
Many people think that in order to have a solid estate plan where they can avoid probate and protect themselves from creditors, they have to have a trust. They have been told by their parents, friends, family, and sometimes by attorneys that having a trust is the only way to go to ensure their family and their things are protected.
With somewhat recent changes in the laws here in Colorado and across the United States, trusts do not play as important of a role in most people’s estate plans anymore. If you want to know more about what a will is or what a trust is, you can read more by clicking that link. I’m going to focus more on when you need a trust here.
So When Do I Actually Need A Trust?
There are three main times I recommend a trust for people:
- If you have what I like to call a “Brady Bunch” family, then a trust can help to determine who is supposed to get what a little more effectively than a will can. This occurs when each spouse is bringing children to their current relationship from prior marriages. If you wish to split things to certain children upon the death of the first spouse, or guarantee certain children will get more/less than others at the second death, then a trust is beneficial.
- If you have tons of money. By tons of money, I mean over the federal estate tax exemption amount of $5,490,000.00 for 2017. If you are married, you can double that number. If you have over that amount you will pay estate taxes in Colorado. Trusts can help to plan for this occurrence and lower your estate-tax bill.
- You have complex family situations. More specifically, you wish to protect your children from themselves. If you have a child with a drug addiction, alcohol problem, gambling addiction or any other type of situation where you would like to ensure money is protected and can’t be used for those addictions, a trust can help you to accomplish that goal.
Just because you fall under one of these three categories, does not necessarily mean you have to go out and get a trust right away. A will-based plan still may be able to meet all of your needs and protect you.
Many people also come to me and ask, “What about Medicaid planning? Doesn’t a trust help protect your assets from Medicaid?” Well, yes and no. The long and short is that Medicaid laws change so frequently that it is nearly impossible to draft a plan and guarantee that it will work against all Medicaid laws forever. Feel free to read more about the pros and cons of Medicaid trusts here.
The important thing is to have a skilled estate planning lawyer review your situation to help you decide what may work best for your specific situation.
Do Trusts Have Disadvantages? YES!
With the recent changes in estate planning and probate laws in Colorado, Medicaid planning is not as easy as it once was and will-based plans are becoming more and more popular over trust-based plans. I have taken the time here to list some of the benefits of a will-based plan, and some of the potential downfalls to a trust-based plan (especially when Medicaid is concerned):
- Medicaid laws change very frequently making it impossible to guarantee that a plan written today will work tomorrow. This is true even if you pay much more money for a trust-based plan over a will-based plan.
- In order to best protect against Medicaid claw backs you need to make an irrevocable trust, preferably where you are not the trustee. This means that you do not own or control your property anymore. That relationship makes Medicaid supposedly not being able to come after it. If, however, you break the formalities of the trust and show “incidents of ownership” Medicaid will still claw through these trusts.
- If you own property as Joint Tenants With Rights of Survivorship then as soon as one person passes, the Joint Property passes immediately to the surviving spouse. It avoids probate and arguably there is nothing for Medicaid to make a claim against. This would not apply if you were the second spouse to pass, however. This type of planning can be completed without a trust at all.
- The Medicaid laws allow for exempt or non-countable assets. This means that the government doesn’t count your primary residence, your car, some of your personal household goods, retirement accounts, and more in their claw back review.
- Probate is actually recommended by many attorneys now in Colorado due to the numerous law changes. You get the benefit of a creditor cutoff period where creditors have only four months to make claims or they are forever barred. A lot of debt gets wiped out this way and the cutoff period is not available for trusts. Further, a judge signs off on the work an executor/personal representative completes, releasing them of liability in the future. A judge does not sign off on anything for a trust in most cases.
I have done both trust administrations and probate cases. Both have taken similar amounts of time, and I have seen trust administrations actually cost more in the end. There are instances when a trust can be very beneficial. Tax avoidance and probate avoidance are two of those. I only recommend avoiding probate if you have property in other states, however.
End-of-Life Planning in Colorado
Frequently people to come to me and ask about end-of-life planning. They usually want to know about a will, a trust or how they make their decision regarding whether or not they would like to be on life support if the worst happens. In reality, end-of-life planning is a small part of what is called Estate Planning. While estate planning allows for an individual to protect their assets, themselves and their family both while they are alive and after they pass, end-of-life planning focuses only on what happens after passing.
What Exactly Does End-Of-Life Planning Involve?
End of Life planning is the second half of a full estate plan. It involves making important decisions regarding your passing, such as:
- Where do you want your things to go?
- Who do you want to receive specific gifts or money from you?
- Do you want to benefit charity?
- What happens if family members predecease you?
- What happens if you are in an accident and leave behind minor children?
- Do you want to stay on life support in an end-of-life situation?
- What terms do you want in your living will?
- Do you prefer to have a funeral and have you made arrangements for it?
- Who will pay for your end-of-life expenses?
There are many more questions to consider when planning for the inevitable. An experienced attorney can guide you through the entire process and make sure your questions are answered. At Althaus Law, we can help you make sure that the decisions you make are legally binding, and everything is simple and efficient for your loved ones.
Is There More?
Yes! With a full estate plan you are able to not only plan for passing away, but you are able to protect yourself and your family while you are still alive. The easiest way to accomplish this is by putting a financial and medical power of attorney in place. This enables you to have an individual ready and able to act for you if you become incapacitated. Afterall, the odds are you will only die once. We can all become incapacitated multiple times through out lives, however.
If you have any questions regarding end-of-life planning or estate planning in general, don’t hesitate to reach out!
Frequently Asked Questions for Estate Planning
Our estate planning FAQ was recently published on AVVO. You can check it out here. If you ever have questions regarding wills, trusts, powers of attorney or any other estate planning documents, you can always give us a call at 720-547-2319 or reach out to us online.
Initial consultations are always free of charge.