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Commentary and Analysis Regarding Colorado Law

Planning with Retirement Assets

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For many people, their retirement assets, such as IRAs and 401(k) Plans are their most valuable assets.  Therefore, it is particularly important to plan carefully for what will happen to these assets at death.  Doing so is tricky because most of these plans, with the exception of Roth IRAs and Roth 401(k) Plans, are subject to income tax as withdrawals are made from them.  Also, the rules regarding distributions from these plans are rigid.  The following are a few examples of issues to consider:

Surviving Spouse: When retirement assets are left to a surviving spouse, the surviving spouse has a variety of options.  One option is to rollover the retirement plan into the spouse’s own IRA.  The surviving spouse then has all the opportunities that the spouse would have if the assets had originally been contributed to the IRA by the surviving spouse.  The surviving spouse can withdraw all of the assets and also can leave the assets to whomever he or she chooses.  This may be appropriate in many cases, but not always.  For example, if each spouse has children from a prior marriage, they may want to leave the retirement plans held by the first spouse to die in trust for the surviving spouse so that he or she receives distributions from the plan during life, but the balance is designated to pass upon the surviving spouse’s death to the children of the first spouse to die.  The trust needs to be carefully crafted with the retirement asset rules in mind.

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Gift and Estate Tax Uncertainty

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Gift and estate tax uncertainty is not new.  Over the past several years, we have seen the amount a person can leave free of estate tax utilizing their estate tax exclusion amount rise from $600,000 in 1997 to $11,580,000 in the year 2020, with several stops in between.  We have had one year of estate tax repeal, in 2010.  In 2012, we were on the brink of the estate tax exclusion amount dropping from $5,120,000 to $1,000,000, but the law was changed at the eleventh hour to prevent that from happening. 

Even the current law contains a provision that will cause the exclusion amount to drop to $5,000,000 plus an inflation adjustment in the year 2026 (resulting in an exclusion amount of approximately $6,000,000). 

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Preparing for Death and Possible Disability

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COVID-19 ALERT: Beware of Scams

April 15, 2020
COVID-19 ALERT: Beware of Scams

by Jennifer M. Spitz, Shareholder

During the COVID-19 pandemic, there are many examples of altruism and community support.  Unfortunately, though, not everyone has good intentions.  Some people use this difficult time to try to defraud others.  Below are some examples to watch out for.

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Estate Planning in Uncertain Times

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on estate planning issues during the current crisis.

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When is an Irrevocable Trust Not Irrevocable?

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Decanting and the Art of Change

What is in a name?  There was a time when irrevocable meant just that.  In Colorado (and at least 24 other states); however, an irrevocable trust can now be changed by decanting.  Decanting can describe the gradual pouring of a liquid, typically wine, from one container into another.  Recently, the term “decanting” has taken on a new meaning in the legal profession where it refers to a technique whereby assets are transferred (decanted) from one trust to another trust.  Decanting essentially allows modification of an otherwise irrevocable and unamendable trust.

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