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There are many reasons Colorado residents continually put off making plans for their estate. Some, of course, have a hard time believing they will need those plans in place anytime soon. But even those who realize the importance of estate planning may feel bogged down by the number of details involved. That can be enough to make people feel overwhelmed and continue to procrastinate.
Estate planning entails preparing for a variety of future scenarios. These might involve not just you, the estate holder, but your children and anyone else who will inherit portions of your estate. For example, it pays to remember that if your children are married, their spouses may inherit your property and assets as well.
Colorado is considered an equitable distribution state, which means that when a couple divorces, a family court judge will attempt to divide the property they share in a fair and equitable way, rather than simply splitting everything in half. If one member of the couple inherited assets or property during the marriage, how are those divided? The good news for parents of divorcing spouses is that inheritances are not considered marital property, but separate property. So if the couple divorces, the spouse of the heir won’t have any claim to the inheritance.
But there is a catch: If the inheritance is received while the couple is still married, any appreciation of those assets or property is fair game for division among the divorcing spouses. If you really have a problem with your son- or daughter-in-law, you might be able to avoid the above scenario by putting your child’s inheritance in a trust. This will allow you to distribute your assets to your child slowly over time, which could translate to less appreciation. If you create a trust and then outlive your child’s marriage, it will prevent any of your wealth from going to your child’s former spouse.
In general, you have more control over how your money is distributed to your heirs if it is in a trust. But because every family’s wealth and personal circumstances are different, the best way to ensure your assets and property go where you want them to is to talk through your intentions with an attorney who focuses on estate planning. The sooner you take control of your estate, the more options you may have in how it is handled.
Source: Gazette.com, “Money & the Law: Child’s divorce can complicate estate planning,” Jim Flynn, Nov. 25, 2012
We can discuss your estate planning needs and different options during our consultation. To schedule this meeting, call us at (303) 713-9147 or email us using the contact form at the top of this page.
From our offices in Denver, we serve clients throughout the southwest and southeast Metro Area, including (but not limited to) people in Highlands Ranch, Littleton, Castle Rock, Parker, Aurora, Greenwood Village, Englewood, Centennial, Wheat Ridge, Golden and Arvada.