Not everyone needs a million dollars to have a reason to create an estate plan. Other reasons to make sure you have an estate plan in place include having children/grandchildren, a recent divorce, owning a business, or if you expect to receive an inheritance or large sum of money. If you haven’t read the first article on Common Reasons to do Estate Planning, you can find it here. Here are some common reasons to do estate planning:
- Ensure that a specific portion of your estate actually gets to the people you designate as beneficiaries such as grandchildren, charities, etc. Without a plan in place, Colorado law provides where your assets go when you pass away. Friends, charities, and potentially grandchildren are not part of the plan Colorado law has in place.
- Protect a part of your estate if you pass away and your surviving spouse remarries. Special trusts can be set up to protect your current surviving spouse, and ensure your assets don’t end up somewhere you have not chosen.
- Address different needs of different children. No two children are alike. When you customize your estate plan, you can be assured that each child’s personal needs are met in the manner you deem best.
- Discourage challenges to your estate plan. Establishing a Revocable Living Trust can make it more difficult for people to make objections when you are gone.
- Encourage and reward beneficiaries who make smart life decisions, and prevent the depletion of your estate from those beneficiaries who do not. Your trust can be tailored with incentives which encompass your values and goals to encourage and motivate your beneficiaries.
- Assure an education for your children or grandchildren, despite what they (or their parents) dream of doing with their inheritance. By establishing an educational trust, can set aside funds to be strictly used for educational purposes, and not a Las Vegas vacation.
- Plan for a “Brady Bunch” family estate plan to avoid the step-parent spending your children’s inheritance, and also to provide for your spouse without sacrificing the intended legacy for your children from a prior marriage. Remarriages and divorce can have devastating effects on the inheritance you intend for your children if your plan is not reviewed and updated.
- If you wish to leave funds to a charity, you can do this directly through a will or a trust, or you can leave it to a donor-advised fund you set up while you are living.