You know you need to do something to plan for your future. Make a will or trust or . . . something. At least that’s what television keeps telling you. But that estate planning thing sounds hard and you don’t know where to start. And, well, what is estate planning anyway?
There’s a nagging voice in the back of your head telling you something’s missing. What is it? You’ve done everything you need to protect yourself and your family. You have more insurance policies than you can name, and you have a retirement account that’s building slowly but surely. So, why that nagging voice?
Then, one day you’re walking Speckles, the family guinea pig, and it hits you like a bolt right out of the blue. You stop, unable to move. Then the next thought. What happens after I die? Or if I become incapacitated? Who will take care of my family? What will happen?
The breeze cools that panic-induced bead of sweat on your brow, and you recover a bit. “I need an estate plan,” you say to yourself. Smiling, you resume your walk, then the second bolt out of the blue stops you dead in your tracks. “What the hell is an estate plan? The good news is that nagging feeling got you this far, but you don’t know what to do next.
You’ve heard people talk about wills and estate plans. Maybe the family machinations that formed the plot of Knives Out got you thinking a little about what happens after you die. But it sounded complicated and expensive, so you never did anything about it. “It’s too overwhelming,” you told yourself. “I’d rather watch Netflix. I’ll worry about that estate thing later.”
Well, my friend, later is now. And I’m here to help.
What is Estate Planning, Anyway?
Most people think estate planning is simply deciding who gets your stuff after you die. While that is part of it, a comprehensive estate plan is much more.
A more technical definition is that “estate planning is the process through which an individual directs financial management and medical decision-making in the event of incapacity, and financial management and disposition of assets after death.1
If that doesn’t sound like a definition written by a lawyer, I’m a Disney Princess. Lawyers enjoy making simple concepts complex.2 It makes us feel important.
I’m not saying that estate planning is simple because it’s not. But the concept behind it is, and this is it:
Estate planning is a plan for the future that prepares the client and their family for the client’s incapacity and death.
A well-constructed and thorough estate plan uses legal instruments such as powers of attorney and a will to make incapacity and death more manageable and carry out the client’s wishes.
The Pieces of an Estate Plan
So, you can see that estate planning makes sure your favorite niece gets your prized nine-iron after you die. But it also prepares you for that time when you either temporarily or permanently can’t manage your own affairs.
Incapacity Planning
Colorado probate law defines an incapacitated person as:
“[A]n individual other than a minor, who is unable to effectively receive or evaluate information or both or make or communicate decisions to such an extent that the individual lacks the ability to satisfy essential requirements for physical health, safety, or self-care, even with appropriate and reasonably available technological assistance.”
C.R.S. 15-14-102 (5)
See Why Incapacity Planning is a Must for a more detailed explanation of incapacity planning. But, if you’re too impatient to go to another page on this very website, here’s the elevator pitch.
Chances are, at some point in your life, you’ll become incapacitated. It could be temporary or permanent. But, when that day comes, you’ll need someone to manage your financial and possibly medical affairs.
Incapacity planning makes sure someone you know and trust is handling both. That means your bills are getting paid, and proper medical decisions are made for you by people you trust.
Death
Sorry to be a Debbie Downer, but you’re going to die.3 Remember, along with taxes, death is inevitable. And even with all our wonderful technology, we still can’t take our property with us.
A well-constructed estate plan includes a legal document that distributes your property to the people you want to have it. That means your favorite niece gets your prized nine iron.
And speaking of that other inevitable aspect of life – taxes. You know the government taxes everything that moves. And it turns out, it taxes everything that stops moving also. The good news is that a well-constructed estate plan helps limit the taxes on your estate and heirs.
Estate Planning is Future Planning
Estate planning isn’t only for the rich. It’s for anyone who wants to plan for their future. A thorough estate plan serves two primary purposes. First, it ensures you and your family are protected during your incapacity. Second, it distributes your property to your heirs according to your wishes.
References:
1 Orange Book Handbook: Colorado Estate Planning Handbook, Seventh Ed. (David K. Johns and Julia Griffith McVey eds., CLE in Colo., Inc., Supp. 2020)
2 There’s a quote, “If you can’t explain it simply, you don’t understand it well enough,” that’s at times attributed to Albert Einstein and to Richard Feynman at other times. No matter the origin, it’s a good rule to live by. Unfortunately, many attorneys seem to think it’s a rule that will put them out of a job. As for me, I think it’s a rule that will make my career more meaningful.
3 That’s assuming there hasn’t been an incredible medical breakthrough that’s rendered wills obsolete and made me too disgruntled to update my website.