Learn more about wills, trusts, powers of attorney, living wills, etc. The list goes on and on. What is right for you? What do you need? How much is a reasonable amount to pay? Find out here!

Althaus Law Family Estate Planning

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):

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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

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.

How To Explain Living Trusts To A Six-Year-Old

Let’s continue our little conversation with the explanation of what a trust is. This one is more complicated to fully understand, but the basics are almost identical to a will. If you missed our chat in Part 1 of this series, feel free to check it Wills Explained To A Six-Year-Old here.

So why do you need a trust over a will? Great question! A lot of people don’t. Let’s learn a little more:

Six-Year-Old: “Mommy, Daddy, what’s a trust?” (I’ve heard kids ask crazier questions, so roll with it)
Parent: “Well honey, a trust is a big stack of papers that lets Mommy and Daddy decide where all their stuff goes when they pass away.”

Wait a minute. Hold the phone. That’s exactly what a will does! What are you trying to pull here? I know, I know. It’s confusing. But the conversation isn’t over yet.

Six-Year-Old: “Ummmm … You just said that’s what a will does. I don’t get it.”
Parent: “You’re paying attention. Good job! A trust is a much bigger stack of papers than a will. It also starts protecting you and all these things around you immediately. Our will doesn’t start working until we are gone.”

So that’s the main difference. There are a lot more pages to a trust, and those pages have terms in them that allow the trust to take effect immediately. Whereas a will is more of a “back-burner document” in that we don’t ever look at it until you pass away. We will get into the intricacies of trusts in later posts. For instance, trusts also let you avoid probate. We haven’t even explained probate to our six-year-old yet, so hold on to that nugget. For now, just know this:

Trusts

1. Let’s you say where you want your stuff to go when you die,
2. Start protecting your stuff and your family immediately, not later like a will, and
3. Avoid probate (unlike a will)

There you have it! If you have more questions or need some more things broken down to where a six-year-old could understand them, don’t hesitate to reach out anytime.

Explaining Estate Planning

How To Explain a Will To a Six-Year-Old


“If you can’t explain it to a six-year-old, you don’t understand it yourself.” – Albert Einstein

I take the quote from good ol’ Al above seriously. Especially when it comes to estate planning. I can’t tell you how many times people tell me they have heard about estate planning and they get the basics, when really, they have no clue what most planning documents are for and why people need them. It’s not their fault either. They probably got an explanation from someone who didn’t fully understand it either.

The point of this blog series is understanding. To grasp the core concepts that, in reality, are so simple. This will allow you to move on to the more advanced topics later. You’ve got to walk before you can run and all that. You will have to bear with me since these conversations could go down the route of being a tad morbid. We will avoid the explanations of death of the afterlife here for everyone’s sake. This is meant for you to get a better understanding. I also don’t plan on writing this post forever.

The Last Will and Testament


First up is the will. This is the bread and butter estate planning document and no plan is complete without one. So how do you explain a will to a six-year old? Here goes:

“A will is a stack of papers where Mommy and Daddy get to decide who gets all of their stuff when they pass away.”

That’s it. That’s all you have to say. Let’s pretend this six-year-old is an actual six-year-old and has some brain-busting follow up questions planned for his or her interrogation of you.

Child: “But why?”

Parent: “Well, you like our house and your things, don’t you? We decide now because we want to make sure you are safe and still have toys to play with and a roof over your head when you are older.”

We won’t get into the nitty gritty here of how your things can go to unintended people or to the state, but just know they can for now.

One other bonus point for all of you parents out there with minor children is the guardianship. So maybe your child throws you this curveball (your child is pretty smart):

Child: “But is that really all a will does?”

Parent: “I’m glad you asked. Mommy and Daddy also get to name the people that will take care of you and raise you to be big and strong if we aren’t around to do that anymore.”

That’s the plain and simple point of naming a Guardian for your kids. If you aren’t there anymore, or you are incapacitated, then who raises your kids? If you don’t name someone that could mean your children go to foster care or end up with a relative you would never want to raise them. We all have that relative. If you don’t, you may be that relative. Sorry. Maybe not though.

That’s it for the will! Next time we will go through explaining a trust to a six-year-old. Get excited.

Let’s play the odds here for a second and pretend it’s inevitable that you are going die. Someday, not that long from now when you think about it, you’re going to keel over, become kaput, push up daisies, become worm fertilizer, and all those other wonderful euphemisms. Trust me, in my profession, I hear them all too frequently.

Let’s look at another amazing statistic … almost no one on the planet wants to talk about it or in any way be prepared until it’s too late. All of us, just walking around like we are some invincible super hero set to live forever, or at least pass away centuries from now with absolutely zero problems until that day comes. And when it comes? Well, obviously, we go from perfectly fine, normal functioning human beings with all our cognitive ability still in place and then the next day we are just gone, passed in our sleep most likely.

Want to know another statistic? That little story happens to virtually no one.

Here’s the scoop folks, while you only die once, most people fail miserably at being prepared for it. Every single person on this planet has access to everything they need to plan for their death. They don’t even have to talk to a stuck up, no good, scum-sucking lawyer to do it. They could talk to a do-gooder, people-loving, puppy cuddling excellent attorney, but they don’t have to do that either. Simply having a conversation with friends and family while putting your wishes down on paper is better than nothing! But we don’t do that either.

Here are some mind-blowing statistics for your brain hole:

  • 62% of people don’t have a medical power of attorney in place. This means there is absolutely no one that can speak to a doctor regarding whether or not you want your leg chopped off if you are in a coma. You’ve got another one anyway.
  • 55% of people don’t have any type of estate planning in place. This includes even just a simple will. You’re fine with the state deciding who gets your things, right? I mean, you gave enough to your family and kids while you were alive. Taxes? Nope, definitely didn’t pay enough of those. State, pretty please take more of my money!!
  • Think that last number was ok? 92% of adults under the age of 35 do not have a will. This includes people with children! You realize the only sure-fire way to prevent foster care for your kids is to appoint a guardian for them in your estate plan? No, you didn’t get that memo. Consider it delivered.
  • 32% of Americans say they would rather have a root canal, pay taxes or even give up sex insteadwtf of talking about their estate planning. REALLY? I am clearly not doing my taxes right.
  • 13% of individuals believe that their spouse or family will be able to make decisions for them or inherit their stuff anyway. This is a smaller number, but an amazing misconception. This one is just not true.
  • Most people say they want to pass at home, yet only 33% have a health care directive saying so.
  • Americans, on average, use 100,000,000,000 shopping bags a year! That’s enough to go around the equator … twice … every day. That has nothing to do with estate planning, it just blew my mind. Get a reusable shopping bag before you die. There. Planning.

So big whoop. Nice stats, right? What’s the big deal anyway? Here are some of the consequences of not having an estate plan:

  • All of your money and stuff that you’ve worked hard for could literally go to the state. I don’t know anyone that likes taxes that much.
  • Your children could be left with nothing. This is especially true for people involved in a second, third, fourth or Trump marriage. Let’s do a quick example. A is married to B. They have kids. A dies so all A’s stuff goes to B. B remarries C later in life. B dies and all of B’s stuff (including A’s stuff because he had no plan) goes to C. C goes to live on a beach in Hawaii legally. Children get nothing. Not a thing.
  • If you own a business and don’t have a financial power of attorney, there will be no one to make decisions for your company, pay bills, access bank accounts or keep your clients happy. There goes your business. It wasn’t that important, was it?
  • Heck, if you own anything and become incapacitated without a power of attorney in place, your things could vanish by the time you regain capacity. Mortgage payments, water bills, car payments, who pays those if you are in coma or in the hospital?
  • Your children could go to foster care. Appointing a guardian for them now stops that. I don’t know what else to say about it. That’s pretty powerful.
  • All of your money could go to paying a professional you’ve never met to manage your things. Let me reiterate, you do not know this person and you have to pay them an exorbitant amount of cash. See more below.

Odds are, you will be incapacitated more than once


So we’ve played the numbers and looked at all kinds of stats. Here’s one people don’t think about, however, and definitely don’t plan for. While you will only die once, you will likely become incapacitated multiple times throughout your life.

Who makes decisions for you then?

The court, that’s who. Some judge somewhere who hasn’t met you or your family will appoint a “professional” that hasn’t met you and doesn’t know you at all to manage your finances and/or your healthcare decisions. This means someone you’ve never even talked to could decide to keep you on life support for 100 years … or pull the plug unexpectedly. We like stories with cliffhangers though. Oh, did I fail to mention you have to pay this person that doesn’t know you? A lot. So there goes that inheritance the kids could pay off their student loans with. Wait, who am I kidding. No one is ever paying off their student loans.

But I don’t have an estate


brokeI’m just going to go ahead and call bull@#%! on this one. Every single person has an estate. Maybe not the size of Prince’s or Buffet’s, but we all have something. Think of a few of these things, for instance:

  • Debt: Didn’t think this one counted, eh? Well it does. Your debt doesn’t just vanish when you die. Not even a lot of student loans go away. Have a co-signer on your loan? Those people are stuck paying your bills if you pass with no plan. Have credit card debt or private student loans? Someone still has to pay those. Only federal student loans are automatically discharged on death.
  • Family heirlooms: I realize this is an ancient term, but everyone has stuff that is important to them. Maybe you got a watch from your grandpa. Maybe you have your great grandmother’s wedding ring. Heck, maybe you have a Picaso. Who knows. The point is everyone has something important to them that they would like to have stay in the family and not get pooped on by a crow in some landfill somewhere.
  • Last wishes: This isn’t technically property, but you have the right to decide what happens to you when you pass away. Without a plan, you give up that right. More importantly, you throw this enormous burden into the face of your loved ones who will be unprepared for it. One study showed that when asked how their spouse wanted to be treated in certain medical situations, spouses guessed wrong 60% of the time. I guess your significant other really is wrong all the time. They should listen to you more often.
  • Children: This is a big one. I can’t even tell you how many people come through my doors with children and don’t have people lined up to care for them if something should happen to them. Here’s a fact for you, spouses travel together. They get in accidents together. If nothing is in place, they have left their kids to the care of the state, together. This one is so easy to solve and your children are the most important thing in your life, period.

Wrap it up


Why on earth does no one, and I mean no one, want to talk about the inevitable? After seeing the stats and knowing what could happen without an estate plan, it seems like a no-brainer. But it’s not. The hard truth of the matter is that talking about the end of your life isn’t easy. But, it’s necessary. The pain and anguish caused by not doing it is too costly. I get the point of view that some people just want to say “throw me away with the trash” or “I’m dead, what do I care.” If it were that easy and no one fought when you were gone, or no one else was impacted by someone passing away, then sure, maybe those thoughts are fine. The truth is someone, usually many people, are impacted by your death. Also, we don’t throw bodies out in case you were wondering. That’s illegal. Very. You will go to jail.

This isn’t meant to make you go out and pay huge amounts of money to get a full-blown estate plan with all the bells and whistles, like 32 different types of trusts. It is simply a letter to let you know the horror stories I have seen in my career. To spread the word about a little-known area of law called estate planning, that when you don’t know about it, truly can wreak havoc on people’s lives. So, go have the talk with your family. Stop putting it off. You don’t have to call me, but call an estate planning attorney somewhere. Most of us offer a free consult anyway, so you can bear being in the same room with a lawyer for a bit. The moral of the story is do something. You don’t have to get a root canal or give up sex. Please don’t do that.

The odds are, the ball is in your court to protect the ones you love.

*Footnotes and Citations: Statistics were obtained from LexisNexus, thevirtualattorney.comworldwatch.com, and the Center for Disease Control and Prevention.

Many people ask me why they would need a living will. First, the answer starts with an understanding of what that document actually is. It is not a will at all, it is actually a health care directive that allows you to choose how you would like to be treated in an end-of-life situation. Basically, they are known in the estate planning world as the “pull-the-plug” document.

Second, these documents are important because they take the decision out of the hands of everyone else in the world and allow you to decide how you want to be treated in the end.

But Why Do I Care What Happens to Me?

I explain to many of my clients that these documents aren’t necessarily just for you. They are for your family. Deciding whether to maintain life support for a loved one is a very stressful decision that could haunt someone for the rest of their lives and cause families to split up. If you simply decide beforehand with an advance health care directive, you take that stress away from your family and prevent future fights from ever occurring .

Further, if you have very strong beliefs on how you would like to be treated during the final moments of your life, this document allows you to do that.

Either way you look at it, a living will is a very important estate planning document to have in your arsenal.

Want More Info on Living Wills in the Thornton Area?

Contact Althaus Law, a Colorado estate planning law firm, for advice regarding your living wills and health care directives.

Estate Planning

If you are one of those individuals who hears “estate planning” and immediately thinks about rich people, you are not alone. Unfortunately, the myth that only the wealthy need a plan has permeated our society for decades. The truth of the matter is that everyone can benefit from an estate plan.

Why Do I Need An Estate Plan You Say?

Allow me to enlighten you. I have a friend whose mother had an unexpected stroke at a younger age. She was the primary caretaker for the family, and while she was in the hospital, none of the bills could be paid because she was the only one authorized to access the financials. So not only was the family dealing with the emotions of having Mom in the hospital, but the house was nearing foreclosure, the car was nearing repossession, and utilities were being shut off, all because no estate plan was in place.

In the end, large court costs and needless expenses had to be endured in order to set things straight. The Mom is still recovering from the stroke, and luckily, she still has a house to call home. Much of the side stress involved with unexpected medical emergencies or accidents can be completely avoided with a proper estate plan. A simple power of attorney would have allowed a designated person to continue to pay bills as Mom would have.

Simply adding someone to your bank account is a possible solution, but a very bad one. A skilled attorney can guide you through all of your options.

Unfortunately, most people don’t realize they need an estate until it’s too late. Once it’s too late, you can’t go back. Plan for the future now, so you can enjoy the present today.

Looking for an estate planning attorney? Reach out to a skilled lawyer at Althaus Law, in Thornton, regarding your plans for the future in Colorado.

Estate Planning for Young Couples

Young Couples and Estate Planning in Colorado

All too often younger couples and families put off estate planning because they falsely believe they do not need it. Maybe you believe it is an expense that can wait or that is just altogether unnecessary. This could not be farther from truth. There are many essential benefits that individuals are unaware of when it comes to estate planning.

At Althaus Law, we help young couples in Colorado prepare for the future so they can rest easy knowing everything is setup correctly and in order.

What Would Happen To Your Children If Something Happened To You? 

A parent’s desire to protect their children and make sure they have all the benefits the parent can offer is at the top of every mom and dad’s list. Unfortunately, this list usually doesn’t include estate planning even though it is the number one way to easily protect your entire family should anything happen to you.

It’s hard to think about, but couples usually get involved in accidents together. What would happen to your kids if both you and your spouse were incapacitated, or worse? Setting up guardianships for your children can answer this question immediately and make you feel secure knowing your kids are protected life.

Giving Your Spouse The Ability To Make Financial And Medical Decisions

Many people incorrectly assume that their spouse can simply step in and handle everything should the other spouse become incapacitated. This is not true. All jointly owned property will require the signature of both spouses should any major decisions need to be made. An incapacitated spouse can’t very well sign anything. A power of attorney in your spouse’s name resolves this issue in a snap.

As far as medical decisions go, doctors can defer to closely related people in your network, including your spouse, parents and siblings, but they don’t have to. Many states have statutes with a list of individuals that a doctor should consult … Colorado is not one of those states. Having a medical power of attorney ensures that your spouse will have the total authority to make critical decisions, and should you both be incapacitated, it will designate another trusted person who can act on your behalf.

Being Young Doesn’t Make You Invincible

Don’t wait any longer to start protecting your family. Just because you are a young couple doesn’t mean you are invincible. Consult with Jeff at Althaus Law today to start planning for and protecting your future.

What is portability? Simply put, it means that now spouses can pass their estate and gift tax exemption to each other when the first one passes. In 2014, the federal estate tax exemption is $5,340,000. That’s a lot tax-free exemption to pass to your spouse.

So what exactly does portability mean when referring to estate planning in Colorado? To answer that question we begin with the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (TRUIRJCA) and the American Tax Relief Act of 2013 (ATRA). Mouth fulls, I know, but hear me out. The former created portability and the ladder makes it pretty much permanent. This is good news folks!

Need An Example?

Let’s use this in an example to make it easier to understand. Let’s say husband H and wife W have $7,000,000 to their names. Unfortunately, H dies and does not create any trusts that use his federal estate exemption. Fortunately, due to the unlimited marital deduction, all of the assets pass tax free to W. Now let’s look at what happens when W dies. She can use her 5,340,000 federal estate exemption AND, with the newer laws, can still utilize H’s unused federal estate tax exemption of $5,340,000. This means that since the 10,680,000 exemption that W now has is greater than her $7,000,000 estate, she pays ZERO dollars in estate tax. Woohoo,  nice work!

Without portability, W would have lost H’s unused exemption and ended up paying estate taxes on $1,660,000 (7,000,000 – 5,340,000). You must make sure to make an election shortly after the first spouse passes or you will lose out on this huge tax-savings benefit.

Give Us A Call

Questions? Wondering if portability or credit shelter trusts are better for you? Contact Althaus Law for more info.