by Jamie Siebrase
The only things certain in life are death and taxes – and
inflation, given our current fiscal climate.
When my kids are in college
– around 2031 – analysts estimate a liberal arts education like the
one I received will cost over $66,000. Annually. Per child.
(See collegecalc.org.) Such grandiose
tuition could easily send me to my grave early, which is why this month’s
column explores two important devices: wills and 529 Plans.
“There are two
no-brainer situations that demand estate planning: a taxable estate and young
says Steven M. Weiser, Special Counsel at Foster Graham Milstein &
Calisher, LLP, 360 S. Garfield St. While Colorado’s laws of intestate
succession address where your estate ends up in the absence of a will, your
personal desires may be at odds with the state’s plan. What’s more, family
members might wind up in court if your intent isn’t clear.
to Denver Law professor Byron Hammond, “a will should be a customized document
capable of evolving as your family does.” Given the nuanced nature of estate laws, the
savvy planner will get a lawyer involved straightaway. Hiring a lawyer isn’t as
expensive as you’d think. And, adds Hammond: “While it’s especially difficult
for young families to think about the possibility they won’t be around for
their children, delaying estate planning isn’t prudent.”
a seasoned estate planner, is Of Counsel to the Law Offices of Claire E.
Dineen, 1444 Blake St. For more information, or to schedule
a consultation, visit dineenlaw.com, dial
303-567-7950, or email
Weiser specializes in estate
planning and taxation, and the firm, a local gem, has an array of talented,
multifaceted attorneys. For a complete list of practice areas, or to schedule a
consultation, dial 303-333-9810 or visit fostergraham.com.
Here’s a sneak peek of the issues you’ll discuss.
typically addressed first because most parents feel strongly about who will
care for their children. “Parents can clarify their intent by drafting
a will that nominates a guardian,” explains Weiser. While a court must approve
this nomination, a parent’s written wishes are compelling. Hammond underscores
the importance of candid discussion with intended guardians prior to putting a
nomination in writing.
A will dispenses of
And, even for a young couple who hasn’t accumulated
much moolah yet, Hammond and Weiser recommend a
contingent minor trust to eschew a court-imposed custodial account. Explains
cash ends up in a custodial account, once your children reach the age of
maturity, they will have unfettered access to all assets.”
explains Hammond, “We all hope our child will be a Nobel Prize winner. But, we
also understand our child could be the next Lindsay Lohan.”In
the eyes of the law, the age of maturity is 18. In most parents’
eyes, 18-year-olds are frighteningly sophomoric. “A trust is about protection
and control of your child’s inheritance,” Hammond says. In Hammond’s
experience, many parents allocate some money for higher education or health
needs during the beneficiary’s younger years, then pay out all or part of the
funds around age 25 or 30, attempting to time larger payouts with expected major
life events such as the purchase of a home or marriage.
your four-legged kids sleep under the covers and dine on extravagant
gluten-free kibble like mine do, a pet trust might also be pondered. “In the
eyes of the law,” explains Hammond, “a pet is merely personal property.”
Colorado is one of the few states to recognize pet trusts; drafting one ensures
Fido’s quality of life won’t be compromised if you aren’t around.
Other possible legal
issues that call for meticulous planning include blended families, ex-spouses,
and special needs children. “And don’t forget about potential creditors
your child may have,” Weiser adds. “Even life insurance can be an issue.”
planning for the future, Weiser suggests bringing other professionals into the
conversation. Heather Green, financial advisor at Edward Jones, 1519 S. Pearl
St., encourages young families to consider a 529 College Savings Plan. Why a 529 Plan over
other investment vehicles? Ultimately, you’ll get more bang
for your buck.Earnings
accumulate in the account tax-deferred and, if used for qualified education,
are not taxed upon withdrawal. What’s more, contributions may be deductible
for state tax purposes up to certain limits, depending on which plan you
529 Plans impose no limit on annual contributions. Contributions qualify for
the annual gift tax exclusion which, for 2013, has
been upped to $14,000 per beneficiary before triggering gift tax consequences.
Another plus? “529 Savings Plans are extremely flexible,” says Green. “If a
beneficiary decides against college or gets a scholarship, unused funds can be
transferred to another individual.” Adds Weiser: “Grandparents interested in
dynastic planning might consider a trust that owns a 529 Plan.” For more
information, or to schedule a meeting with Green, dial 303-722-8838.
delay. If you haven’t drafted a will or started stashing away collegiate cash,
grab your partner, call in the experts (and the wealthy grandparents), and
create a few documents that will ensure a bright future for your most precious