We are far enough into the new year that resolutions are no longer of much use and so you may be ready to do something in 2021 that will make a difference in your family’s situation; if so, this column is written for you.
In our last column, we promised to talk about what happens when parents have not created an estate plan of any kind and passed without any type of a trust or a will. The state of Colorado has a ready-made plan for those people and in this column we discuss the details of that plan.
One of our mentors often referred to something he called “analysis paralysis;” the reference was meant to remind us that sometimes, the desire to analyze and understand every detail can prevent or, at least postpone, necessary action. One of the most common places where that temptation can arise is when parents consider establishing a trust (which extends their control over their money and property after their passing) instead of only a will (which gives immediate control to the beneficiaries after their death).
When those concerns, or others, prevent parents from creating an estate plan of any kind, there is an obvious risk that one or both of them can pass without any type of a plan. That situation is referred to as someone dying “intestate” (without a will) and, in those cases, the state of Colorado has a ready-made plan that will take the place of someone’s personalized estate plan.
The plan is laid out in Colorado’s Revised Statutes (§ 15-11-101, for those interested) and, basically, divides the assets among the closest heirs of the person that passes. We agree that this outcome is not as problematic as many people think it would be. We encounter some who think that the government will end up with everything – which would be so rare that for purposes of this article, we can say it will not happen to anyone with living relatives.
So, while Colorado’s ready-made plan is not as drastic as some think, it is still simply unable to take into account any unique circumstances. The statutory remedy has to be broad by definition, whereas someone that develops a comprehensive plan can consider every unique circumstance within the person’s family and financial affairs. For example, estate plans can and should address situations where there is a special needs individual or where there has been an unequal distribution of the parents’ resources in favor of one child, possibly at the expense of the other children.
There are as many unique circumstances as there are people and the ready-made plan provided by the state of Colorado deals with none of them. And since the plan forces the immediate distribution of resources (except to children and in other limited circumstance), it is nowhere detailed enough to have the same impact that a trust will have on the timing and manner of distribution of the parent’s estate.
In summary, those who wait for a better time, or for more information, to develop an estate plan run the risk of forcing their family to follow a generic plan upon their passing. In some circumstances, that might be exactly what the deceased person wanted; however, for many families, that is not an optimal solution. The relatively low costs involved in creating an estate plan make it a much better option.
We discuss these, and other, estate planning matters in our no-cost seminars. Due to the precautions we are all taking in light of COVID-19, we are changing the format of these seminars to telephonic participation so that we can be careful, but still share relevant estate planning information to as many people as possible. If you are interested in participating, or if you have any questions about this article or topics you would like us to address in future columns, send an e-mail to Admin@GJlawyer.com or call (970) 270-1213. Ext.4
Brad Wright’s business and estate planning practice includes transactional matters with a special focus on business succession. His brother, Steve Wright, has a similar law practice in Idaho Falls, Idaho and, together, they assist businesses of all sizes and types with a wide variety of legal issues. This column appears monthly in The Daily Sentinel.
© 2020 Brad R Wright, Steven J Wright