By: Kyle Ferrare, CFP® & Brannon J. Fisher, CFP®
The hardest part of estate planning can sometimes be getting started. It can be difficult to think about the end of your life, but preparing for the unexpected and having a solid estate plan in place can better protect your loved ones from any hassle or delay that may come from transferring your assets.
It might be difficult to know exactly where to start with estate planning, but the process isn’t as daunting as you may think. Of course, it can be time-consuming, but making sure that your assets are properly passed down to your loved ones is worth the effort. Estate planning is the process of determining asset distribution after your death and outlining medical and end-of-life care decisions in case of incapacitation.
For high-net-worth individuals and families with large estates, estate planning also involves strategizing to minimize transfer taxes on beneficiaries, including gift and estate taxes. The federal gift and estate tax exemption is $13.61 million in 2024 (or $27.22 million for married couples). Unless Congress acts, these exemption limits are scheduled to be cut in half at the end of 2025. If you anticipate that your estate will exceed this amount when you pass or if it already exceeds this amount, you should work with an estate planning professional to discuss strategies for minimizing transfer taxes for your beneficiaries.
Estate Planning 101
The following are the core documents that comprise an estate plan:
- Last will and testament: This is the basic estate planning document for most people, describing how your assets should be distributed to your heirs and/or charity after you die.
- Living will: This is a medical directive that explains how life-sustaining medical decisions should be made if you are incapacitated and can’t make them yourself.
- Durable power of attorney (POA): This appoints a designed agent who will manage your financial affairs if you are incapacitated and unable to do so yourself.
- Limited power of attorney (POA): This is similar to a durable POA but it places limits on the power of your designated agent in making decisions on your behalf. A limited POA might be best if you don’t want to give someone else total authority over financial decision-making.
- Living or revocable trust: This allows assets to be transferred to your beneficiaries without them needing to go through the expensive and time-consuming probate process. A living trust is typically most useful for those with large, complex estates and multiple beneficiaries.
Estate Planning in Colorado
Each state has different laws regarding specific aspects of estate planning. The following are some estate planning laws that are specific to Colorado.
Intestacy in Colorado
Intestacy is a legal situation that occurs when a person dies without having made a last will and testament or any legally binding arrangements on how their assets will be distributed after their death. When someone dies intestate in Colorado, their assets are distributed to their closest relatives under the state’s intestate succession laws. Only assets that pass through probate are affected by this law.
Some of the assets that don’t pass through probate and pass to the surviving co-owner or beneficiary (if one is named) include:
- Property transferred to a living trust
- Life insurance proceeds (if there’s a named beneficiary)
- Retirement account funds (if there’s a named beneficiary)
- Payable-on-death bank accounts
- Securities held in a transfer-on-death account
- Property owned with others in joint tenancy or tenancy by the entirety
If you die intestate in Colorado and have children but no spouse, your children will inherit everything. If you have a spouse but no decedents, your spouse will inherit everything. If you have no spouse or children but your parents are alive, your parents will inherit everything. And if you have siblings but no spouse, children or parents, your siblings will inherit everything.
Probate in Colorado
Probate is the legal process used to transfer property ownership from a decedent to beneficiaries. All wills and intestate estates in Colorado must go through one of three types of probate, based on the estate:
- Small estates worth less than $50,000 with no real property
- Uncontested or informal estates
- Contested estates or those with invalid or questionable wills
Fortunately, the probate process in Colorado is simplified by the Uniform Probate Code. This is a uniform act drafted by the National Conference of Commissioners on Uniform State Laws designed to streamline the probate process and standardize and modernize various state laws. The code lessens the time attorneys must spend probating estates, saving the decedent’s money. More than 90% of probates in Colorado are non-court supervised.
Estate and Inheritance Taxes in Colorado
In addition to federal estate taxes, some states also collect state estate and inheritance taxes. Estate taxes are paid out of the estate while inheritance taxes are paid by the beneficiaries who inherit property.
Only six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania) currently collect inheritance taxes. Meanwhile, only 12 states (Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Vermont, and Washington) collect estate tax at the state level. Colorado doesn’t collect estate or inheritance taxes at the state level.
Remember, if your estate is worth more than the federal gift and estate tax exemption amounts listed above, federal estate taxes might be assessed on the estate. In this scenario, it’s important to work with an estate planning professional to discuss strategies for minimizing these taxes.
Choosing an Executor in Colorado
One of the most important estate planning tasks is choosing an executor to oversee the settlement of your estate. This person will take inventory of your assets after you die, prepare your final tax return, pay any taxes due, settle any outstanding debts, and distribute the remaining assets to your heirs according to the terms of your will.
In Colorado, your executor can be your spouse, domestic partner, adult child, sibling, or close friend. They must be at least 21 years old, in good mental health, and not legally incapacitated. Your executor does not have to live in Colorado. No technical or legal training is required, but your executor should be someone who can handle the legal, tax, and financial requirements of the job. You can also choose a professional executor for your estate, such as a financial institution or attorney. This might be smart if you have a large and complex estate that would be difficult for a non-professional to administer.
Connect with a Trusted Financial Partner
While estate planning can be time consuming, this shouldn’t deter you from creating one. Simon Quick can answer your questions about estate planning in Colorado and collaborate with an attorney to create a personalized estate plan that’s right for you. Visit us online, call us at (973) 525-1000, or send an email to firstname.lastname@example.org to discuss your estate planning needs.
About Brannon J. Fisher, CFP®
Director / Client Advisor / Principal
Brannon joined Simon Quick in 2019 and established the firm’s office in Denver. He focuses on business development and advising clients.
Prior to joining Simon Quick, Brannon was director of client relations and a registered investment advisor representative for a Denver-based asset management firm. He also had a 15-year career as a college administrator, including a 10-year stint as a development officer at Bowdoin College.
Brannon is a CERTIFIED FINANCIAL PLANNERTM and holds degrees from Colgate University, CU-Boulder, and Dominican University of California. Brannon is deeply engaged in his community. He is an adjunct faculty member at the University of Denver’s Bailey Program for Family Enterprise; he is President of the Rocky Mountain Estate Planning Council; he serves on the Finance Committee for the Ball Brothers Foundation; and he volunteers for Greenhouse Scholars as a mentor, selection committee member and member of the Development and Advisory Board.
Brannon, his wife Mandy, and his daughters Waverly and Layla enjoy a variety of active outdoor pursuits and host a revolving cast of foster pets for Mandy’s nonprofit animal rescue, Old Dogs New Digs.
About Kyle Ferrare, CFP®
Managing Director / Client Advisor / Principal
Mr. Ferrare joined Simon Quick in 2011 as the fifteenth employee of the firm, and in 2019, he became a Principal. Mr. Ferrare works directly with high-net-worth clients in developing and implementing their investment and financial plans. Mr. Ferrare also works with several of the firm's endowment and foundation clients, regularly attending investment committee and board meetings. He is a member of the firm’s Client Advisory Leadership Team, which executes and leads important initiatives across the client advisory team. Mr. Ferrare is also a member of the Financial Planning Committee which is responsible for identifying financial planning opportunities and disseminating guidance to advisors at the firm. In 2021, Mr. Ferrare relocated to the firm's Denver office to help expand Simon Quick’s presence in the Mountain West.
Prior to joining Simon Quick, Kyle spent five years in the Private Client Advisor Practice at Deloitte Tax LLP. He provided tax advisory services to a variety of private clients including high net worth individuals, investment partnerships, corporate executives, and owners of closely held businesses. Mr. Ferrare graduated from Bryant University where he majored in finance, with a minor in psychology. He completed the Financial Planning Certificate Program at Fairleigh Dickinson University in December 2009 and became a CERTIFIED FINANCIAL PLANNER™ practitioner in November 2010.
Outside of the office, Mr. Ferrare can be found skiing, mountain biking, trail running and exploring the outdoors with friends and family.
This information is for general and educational purposes only. You should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from Simon Quick Advisors & Co., LLC (“Simon Quick”) nor should this be construed as an offer to sell or the solicitation of an offer to purchase an interest in a security or separate accounts of any type. Asset Allocation and diversifying asset classes may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss. Investing in Liquid and Illiquid Alternative Investments may not be suitable for all investors and involves a high degree of risk. Many Alternative Investments are highly illiquid, meaning that you may not be able to sell your investment when you wish. Risk of Alternative Investments can vary based on the underlying strategies used.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Simon Quick), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Simon Quick is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. If you are a Simon Quick client, please remember to contact Simon Quick, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.
Simon Quick Advisors, LLC (Simon Quick) is an SEC registered investment adviser with a principal place of business in Morristown, NJ. Simon Quick may only transact business in states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. A copy of our written disclosure brochure discussing our advisory services and fees is available upon request. References to Simon Quick Advisors as being "registered" does not imply a certain level of education or expertise.
This newsletter and the accompanying discussion include forward-looking statements. All statements that are not historical facts are forward-looking statements, including any statements that relate to future market conditions, results, operations, strategies or other future conditions or developments and any statements regarding objectives, opportunities, positioning or prospects. Forward-looking statements are necessarily based upon speculation, expectations, estimates and assumptions that are inherently unreliable and subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are not a promise or guaranty about future events.
Economic, index, and performance information herein has been obtained from various third party sources. While we believe the source to be accurate and reliable, Simon Quick has not independently verified the accuracy of information. In addition, Simon Quick makes no representations or warranties with respect to the accuracy, reliability, or utility of information obtained from third parties.
Historical performance results for investment indices and/or categories have been provided for general comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices or benchmark index, as comparative indices or benchmark index may be more or less volatile than your account holdings. You cannot invest directly in an index.
Indices included in this report are for purposes of comparing your returns to the returns on a broad-based index of securities most comparable to the types of securities held in your account(s). Although your account(s) invest in securities that are generally similar in type to the related indices, the particular issuers, industry segments, geographic regions, and weighting of investments in your account do not necessarily track the index. The indices assume reinvestment of dividends and do not reflect deduction of any fees or expenses.
Please note: Indices are frequently updated and the returns on any given day may differ from those presented in this document. Index data and other information contained herein is supplied from various sources and is believed to be accurate but Simon Quick has not independently verified the accuracy of this information.