Attorney Blake Harris of Mile High Estate Planning reveals everything you need to know about protecting your wealth and passing it to the next generation. THE ULTIMATE GUIDE TO ESTATE PLANNING AND ASSET PROTECTION

Blake Harris

Dedication

This book is dedicated to my children, Foley and Fargo. The two greatest human beings I have ever known. You give purpose to all that I do.

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Acknowledgments

The Mile High Estate Planning team, thank you for your hard work, support, patience, and most of all for your continued commitment to providing an excellent experience for every single Mile High Estate Planning client.

My father who taught me more about life, business, and the law than anyone could ever ask for.

My mother who instilled in me the compassion to understand the struggles of my clients, friends, and family.

My grandparents for teaching me the value of hard work, consistency, and frugality.

My children who fill everything I do with joy and purpose.

My friends for never letting me forget the importance of having them in my life.

The endless number of business partners, professors, accountants, financial advisors, bankers, professional trustees, experts, and other mentors who have trained and taught me, and who continue to support my clients and I every single day.

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Praise for The Ultimate Guide to Estate Planning and Asset Protection

“Managing Attorney Blake Harris at Mile High Estate Planning delivers a captivating and detail-oriented guide to Estate Planning and Asset Protection that is both thorough and easy to read in his latest book The Ultimate Guide to Estate Planning and Asset Protection. I found myself not wanting to put it down and am grateful for the excellent work he has done with this book as well as for the excellent work he has done for clients I have sent his way over the past decade.” – Mark Wallen, President, Highland Tax Group, Inc. Denver, Colorado

“As a member of the Elite Private Banking team at Nevis International Bank & Trust, the largest international bank in St. Kitts and Nevis, we hold Mr. Harris' law firm in high regard when it relates to estate planning and asset protection. I would recommend The Estate and Asset Protection Bible to anyone wishing to gain insights about asset protection from one of the top estate planning experts in the world.” Anthony Gajor, Private Banker, Nevis International Bank & Trust Ltd.

“Having the pleasure of knowing Attorney Blake Harris for over a decade, I was delighted to learn that he was willing to share his extensive experience in The Ultimate Guide to Estate Planning and Asset Protection. In this book, Mr. Harris shares more information on this unique area of law than most attorneys ever know.” - Attorney John Montague, Miami, Florida

“Having known Attorney Blake Harris for nearly a decade, I was excited to learn that he had written a book which shares so much of his valuable knowledge. His newest book, The Comprehensive Guide to Estate Planning and Asset Protection takes a difficult subject and transforms it into a compelling read. I will definitely be recommending The Comprehensive Guide to Estate Planning and Asset Protection to all of my clients.” - Brandon Drespling, Triumph Capital, Denver Colorado

“The Ultimate Guide to Estate Planning and Asset Protection is truly remarkable. Attorney Blake Harris of Mile High Estate Planning shares his in-depth knowledge in a manner that is both simple to understand and enjoyable to ready. If you want to do all that you can to protect your legacy and plan for your family's future, I highly recommend you read Blake's latest masterpiece, The Ultimate Guide to Estate Planning and Asset Protection.” -Scott Whatley, Haystack Help Radio, Denver, Colorado

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Biography

Blake Harris is the managing attorney at Mile High Estate Planning where he assists clients with asset protection, estate tax planning, and probate. Blake’s extensive experience helping families plan for and manage the transfer of their assets has made him well regarded as an expert in handling difficult and sensitive issues surrounding estate planning, asset protection, and probate.

Before Mile High Estate Planning, Blake worked for one of the nation’s largest wealth management firms, where he helped high-net-worth and ultra-high-net-worth clients plan for the transfer of their assets. Over the course of his career, Blake has worked for, co-counseled with, and learned from several of the nation’s top estate planning and asset protection attorneys. Blake founded Mile High Estate Planning because he is passionate about helping families protect their wealth and pass it to the next generation. Not only does he value building long-lasting client relationships, he also strives to provide each client with confidence in their estate plan and probate case in a relaxed and casual manner.

In addition to his active practice, Blake also shares his in-depth knowledge to help other professionals advance in their careers. In Colorado and across the nation, Blake has given numerous presentations and continuing education lectures on asset protection, estate planning, and probate to CPAs, financial advisors, and other attorneys. Blake has also been quoted in state- wide and national publications, such as ABC, NBC, CBS, Fox News, The Denver Post, and Market Watch, and he has been named a "Rising Star" for 2020 and 2021 by Super Lawyers Magazine.

Blake graduated in 2007 with a degree in finance from the University of Florida and received a juris doctorate in 2010 from the University of Florida Levin College of Law, a top-tier law school. Blake has been a member in good standing of the Colorado Bar since 2013 and the Florida Bar since 2010. He is an active member of Wealth Council, Elder Council, the Denver Bar Association, and the Colorado Bar Association.

Outside of work, Blake enjoys traveling and spending time with family.

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Table of Contents Part 1: Introduction A word about wealth ______7 The Playing Field ______8 Part 2: Asset Protection Asset Protection, Not Just for the Wealthy ______10 Homestead Exemptions ______10 Transferring Ownership______11 Life Insurance and Annuities ______11 Retirement Accounts ______11 Asset Protection Questions ______12 What does it mean to protect your assets? ______12 What do you want to protect? ______12 How does asset protection work? ______13 Asset Protection Strategies ______13 Can a trust protect assets from a lawsuit? ______13 Asset Protection Strategies ______15 Single Member LLC ______15 Family Limited Partnership ______16 Asset Protection Trust______17 Domestic Asset Protection Trust ______17 Offshore Asset Protection Trust ______18 Offshore Bank Accounts ______18 Titanium Trust ______18 Cook Islands Trust ______19 Nevis LLC ______19 Why You Need to Protect Real Estate ______20 Cryptocurrency and Asset Protection ______20 Part 3: Estate Planning Estate Planning ______22 Last Will and Testament ______22 Planning for Minor Children ______22 Guardianship Designations ______22 An Estate Plan Right for Your Family ______23 Trusts ______24 What is a trust? ______24 Types of Trusts ______24 Revocable Living Trust ______24 Irrevocable Trust ______25 Testamentary Trust ______25 Pet Trust ______25 Gun Trust______25

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Certification of a Trust ______26 Why fund a trust? ______26 Purpose of Funding a Trust ______26 The Responsibilities of a Trustee in Colorado______27 Medicaid Planning ______28 Medicaid in Colorado ______28 Medicaid Protective Trust ______28 Medicaid Protective Trust and Long-Term Care Insurance______28 Incapacity Planning ______30 Planning for Incapacity ______30 Financial Power of Attorney ______30 Medical Power of Attorney ______30 HIPPA Authorization ______30 Living Will ______30 Estate Tax Planning ______31 What is estate tax planning? ______31 Estate Tax Planning Strategies ______31 Irrevocable Life Insurance Trust ______32 Estate Tax Facts ______32 Prenuptial and Postnuptial Agreements ______33 Marital Property ______33 Prenuptial Agreements ______33 The Value of Prenuptial Agreements ______33 Protecting Assets with a Prenup ______34 Postnuptial Agreements ______34 Postnup vs. Prenup ______34 Family Guidance Letter ______35 What is a Family Guidance Letter? ______35 End of Life Logistics ______35 Part 4: Conclusion Conclusion ______36 Mile High Estate Planning ______38

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Part 1: Introduction A word about Wealth

The fields of asset protection and estate planning would not exist without wealth. The entire purpose of these legal fields is to safeguard, preserve, and maintain good stewardship for our assets. But what is wealth and what makes it worth protecting? For some, wealth might mean a number in a bank account, a large and luxurious house, or it could mean a more comfortable, carefree lifestyle and the sense of security that comes with being well off.

How does one acquire and maintain wealth? There is no substitute to being born into a wealthy family. Being born into a wealthy family means that you are given the right connections for schools and jobs, and you are more likely to marry someone of a similar status. It means that you are able to speak the language of the rich and will always be more accepted by others who are rich.

If, like most of us, we are not fortunate enough to be born a part of or marry into a wealthy family, we must rely on our work and potential to get ahead. The good news Is that it is possible to acquire a fair amount of wealth even without an extraordinary income. The millionaire next door is a true story. I have had clients with millions of dollars in assets who never earned more than $100,000 a year on their jobs.

Understanding the rules and taking advantage of the tools available to maximize your money is essential for building and preserving wealth. The majority of the articles I have written and books I have published are for helping people understand trusts, asset protection, and other tools for preserving wealth.

Through helping thousands of individuals and families preserve and pass their assets to the next generation; I have seen the good and the bad that money can do. I tell many of my clients, when it comes to protecting generational wealth, the best thing they can do is die broke. Money can tear apart a family and, in many circumstances, isolation is the reward for wealth. Despite any warning I give, clients and non-clients will want to grow their wealth which is why I have written this book.

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The Playing Field

Asset Protection

Asset protection is all about creating a walled garden around your wealth. As with most great things, it all started with the ancient Romans. During 200 B.C., around the time of “the Bacchanalia,” the first record of the word “fideicommissum” appeared (which is an early concept of a trust), representing a scheme developed for leaving wealth to one’s heirs after death. Now, we do not know who invented the precursor to the trust, but it’s nice to imagine that the foundation of all asset protection was born in the backdrop of ancient Roman wine and music.

The purpose of this book is to give you a basic understanding of my background, the drivers of my practice, as well as some essential components/issues that go into developing said “walled” garden around your wealth.

Where We Are

Fast forward more than two years later, to present day America. The United States is the most litigious society in the world. We live in an age where class-action lawsuits are marketed like political campaigns and contingency-fee attorneys are fighting over frivolous lawsuits like a pack of wild dogs fighting over scraps in a junkyard. Indeed, our legal system is becoming a bit of a junkyard: claims are packaged up, sold, and remarketed similar to junk bonds in the 1980s.

If an attorney does not want to litigate a claim, they simply refer the claim to another eager lawyer that will litigate it for them whilst collecting a sizable referral fee. Unlike other countries, the U.S. allows for referral fees and contingency fees. Law firms spend millions of dollars a year on advertising to extract money from unprepared defendants in frivolous lawsuits. Lawyers will often coach clients on how to embellish stories about their former employer so they can increase their legal fees. And let’s not forget, it’s all about the fees … it’s dog-eat-dog. It’s the butt of every lawyer joke and what keeps any highly compensated executive or successful entrepreneurs up a night. If you are reading this, it is more than likely you do not like litigation. That is because most wealth is not created from litigation. Litigation is zero sum. It’s messy. Friend’s don’t walk away from litigation and continue to be friends. Edwardo Saverin and the Winklevoss twins don’t hang out with Mark Zuckerberg on the weekends.

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In contrast, most wealth is created by building lasting relationships with clients, business associates, and customers. They are who I serve. The entrepreneurs; the executives; the doctors; and, yes, even lawyers who add value to their customers’ and colleagues’ lives. Litigators show up to the poker table with a gun saying, “Give me your chips or else.” Those are the bad guys. The bad guys are the ones twisting the facts and circumstances in order to effectuate a judgement against you. It is the bad guys who attempt to steal the wealth you have created for yourself and those you love. My mission is to change the rules of this game. I am a maverick going against the grain every chance I get. I change the game by using my expertise in asset protection to strategize the appropriate plan of action to keep your wealth out of the bad guys’ hands and rightfully where it belongs with you and your family’s generations to come.

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Part 2: Asset Protection Asset Protection, Not Just for the Wealthy

Recently I had the opportunity to speak at an international asset protection conference and a nice, older woman asked me, “How high does my net worth need to be in order to benefit from asset protection?” One of the most common misconceptions in asset protection is that prospective candidates think their net worth is not high enough. Indeed, asset protection is not just for the super wealthy. Many people who do not consider themselves to be wealthy may not worry about protecting their assets. This could be a mistake. Individuals at any income level should consider what they can do to protect their assets against creditors and lawsuits.

Anyone can be the target of a lawsuit. This can happen because of a car accident, unhappy neighbor, claim of medical malpractice, and for many other reasons. Without the proper asset protections in place, a person who loses a lawsuit could be financially wiped out. With the proper asset protections in place, it is possible to legally keep most, if not all, of your assets. Doing what is necessary to protect against unfortunate circumstances does not have to be difficult. It is something that should be discussed with an experienced asset protection attorney.

Because anyone can become the target of a lawsuit, it is important to put together a plan designed to protect one’s assets as soon as possible. This must be done prior to involvement with a lawsuit. In the middle of a legal action it could be difficult to keep creditors from obtaining a person’s assets. It may not be possible to implement protective measures during a lawsuit.

When a person decides to create a plan to protect their assets, it is important they have a goal. An individual should analyze their financial status, as well as identify which assets need to be protected and/or transferred. An experienced attorney can help with this part of the preparation. An attorney can also tell a person how to change their financial situation for their own benefit. An individual should be willing to commit the necessary time and effort to create the best possible plan.

There are many different elements associated with an effective asset protection plan. It could involve different financial and legal vehicles. This type of planning often involves utilizing state homestead protection laws, insurance policies, estate planning, as well as other business vehicles and asset protection trusts. Below, are some examples of asset protection techniques and/or relevant statutes (e.g., the Homestead Exemption) that can provide asset protection benefits for anyone with significant assets. This is meant to provide some broad-based strategies that you can incorporate for your asset protection strategy. Please note that this does not constitute what I will call a “sophisticated asset protection plan,” which I set forth in greater detail in the throughout the book.

Homestead Exemptions

It is possible to protect the equity in a home. Should a person lose a lawsuit and be forced to declare bankruptcy, a homestead exemption law prohibits a court from giving some of the equity of a homeowner’s house to creditors. Some states, such as Florida and Texas, have no limits when it comes to the amount of equity that can be protected. Colorado only protects approximately $75,000 of equity in your home.

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Transferring Ownership

It is impossible for a creditor to take an asset a person does not own. It may benefit a person to consider transferring certain assets into an asset protection trust. This financial vehicle makes it possible to have family members receive income or give certain assets outright to specified family members.

Life Insurance and Annuities

In many cases, a person could have significant asset protection with cash value life insurance policies, as well as annuity balances. It is important to check with an attorney to learn each state’s specific exemptions.

Retirement Accounts

Unlimited asset protection is provided by ERISA-qualified retirement plans according to federal law. It is possible to protect up to a million dollars in assets with a retirement account. Some states provide protection for even higher than a million dollars’ worth of assets. Proper planning for asset protection should involve working with an experienced attorney. Doing this will provide protection for investments, wealth, real property, savings, and more that is accumulated over a lifetime. A plan will also include protecting future assets. An asset protection attorney can create a plan that will make it difficult, if not impossible, for a creditor to take your assets.

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Asset Protection – Common Questions

What does it mean to protect your assets?

Protecting your assets means that you preserve your assets for both your personal use and for your family in later generations. Asset protection means that you have taken any of a number of possible steps to either change the form of ownership of the assets or the location of ownership in order to make it difficult or impossible for creditors or judgement holders to reach your property. These are the various structures that you would establish to either create some separation between you and your assets or to move them into entities that limit your amount of liability. Asset protection is an overall strategy followed by the execution of any one of a number of steps that are recommended by an attorney to give you the most possible protection.

Of course, there is not one magic step that will give you absolute protection over every asset that you own. Instead, asset protection means that you have worked with an asset protection attorney to devise a strategy of various measures that you would take to give as much protection as possible to as many assets as you can. When done effectively, asset protection will greatly limit the amount of assets that a prospective judgement holder (those who successfully sue you and receive a judgement) can get from you. It is important to remember that asset protection steps are done within the confines of the law and are completely legal so long as such steps are implemented while the threat of a lawsuit or other event is general in nature.

Protecting your assets will mean that your attorney will scrutinize the laws of various states and jurisdictions in order to find a general strategy of where to hold your assets and who should exercise control over them. Asset protection will make as many of your assets as unreachable as possible. This means that, even if you transfer control over your assets to someone else, you still own them and nobody else can.

What do you want to protect?

After a lifetime of work, you hopefully will have a number of different assets and properties that you will want to keep safe from creditors using asset protection. In order to devise the strongest possible asset protection strategy, it is helpful to know ahead of time exactly what it is that you want to protect. Then, working with an asset protection attorney, you will want to figure out which of these assets are already protected by law and which assets you will need to take action to protect.

The good news is that, in most states, one of the most important assets of all, your home, is already protected from creditors due to homestead exemptions (as I briefly discussed earlier). Hopefully, you will have assets in your portfolio besides your home. For example, you may have other business investments, including real estate that do not fall under any other exemption. Alternatively, you may have your own business whose assets you want to provide with the highest degree of protection.

Since your bank accounts are one of the first things that creditors will go after, you will need to find a way to move the money from your bank account into another legal instrument. Liquid assets are among the easiest things for creditors to attach, so you will have to go to great effort to find a way to protect them. While hard assets such as real estate are slightly more difficult, they are still

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not off limits for creditors and you must find a way to structure the ownership of these hard assets to keep them in your hands no matter what even if you have to cede control over them.

You may also want to protect your retirement accounts or the assets that you have saved for that stage in your life. Some steps have statutory protections for retirement assets, but when it comes to bankruptcy proceedings, there is a limit on the amount of assets that are protected. Working with an asset protection attorney can help you devise strategies to give the highest amount of protection to the most assets possible.

How does asset protection work?

The first step that you will take in the asset protection process is to find an attorney who has a specialization in the field. While there may be a temptation to do it yourself in order to save money, this is an area where you need to do everything right. If your asset protection strategy is based on false assumptions or if someone has made an error, you may be unprotected when you previously thought that your assets are safe. You will want to find an attorney who has a specialty across multiple legal disciplines since there is no one single way to ensure asset protection.

When you retain Mile High Estate Planning, I will sit down with you to understand what assets you want to protect and what your short and long-term goals are. I will take the time to listen to you while applying my professional expertise to your situation, answering any questions that you may have. I have a wide variety of experience working with people of various levels of incomes and assets.

During our consultation, you will have to decide what you are comfortable with in terms of new structures and homes for your assets. Once I understand what you are trying to accomplish, I will draw up an asset protection strategy specifically for you. This may involve moving assets to certain places or creating various trusts in order to hold some of your assets.

Asset protection may involve executing a range of legal documents that transfer decision-making power over some of your assets to trustees. It may include taking actions to create various corporate entities and transferring your assets to these entities because of the protections that they provide. Then, you may need to shift other financial assets into certain accounts that are protected from creditors. For example, some states may have absolute protections for retirement accounts, as well as other safeguards for other types of annuities that provide you with an income. The most important thing to remember is that your asset protection attorney will have to start putting the plan in place immediately because any asset protection steps that are taken after a lawsuit is filed may be considered a fraudulent conveyance and then disallowed.

Can a trust protect assets from a lawsuit?

A trust is a legal instrument so the answer to this question is that it depends. When structured the right way and in the proper time frame a trust should provide you with asset protection from lawsuits and creditors. The important thing is that the trust must be designed in such a way that there is a separation between you and the assets. In most cases, this means that you will have to surrender some form of control over the asset to the trustee, even while you maintain beneficial ownership. If you retain the power to control your assets, the courts will likely find your trust instrument to be a legal fiction since you are the trust. A successful trust depends on creating a degree of separation between you and the trust assets.

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The most important aspect of a trust that will provide you with legal protection of your assets is that the trust is irrevocable. Irrevocable means that it cannot be undone or modified. This represents a permanent transfer of the trust assets such that it would be inequitable for creditors to be able to take it from you. When a trust is revocable, creditors can still reach it because you ultimately have the power to undo the trust and take back the assets. Even if you are the beneficiary of the irrevocable trust, it is the surrender of control of the assets to the trustee that legally separates you from your assets. Exactly how much protection is provided by a trust depends on the law of the jurisdiction where it has been established. Some attorneys advise you to establish a trust in certain overseas jurisdictions since it is nearly impossible for creditors to reach the assets that are held internationally.

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Asset Protection Strategies

Asset protection can be done successfully using a number of different strategies. There is no one overarching way to protect your assets. Instead, it will likely mean that you have completed many different steps as part of an overall strategy. The first step towards asset protection will generally involve purchasing insurance that can provide you with a relatively wide degree of protection. However, the mistake that many people make is to stop after simply purchasing a policy. Insurance does not always protect you to the extent that you need and when you require it. As a result, you will need other strategies. There are several different moves that could be considered forms of asset protection that are described below.

You can create a limited liability corporation (LLC) for a business or to hold property. Then, your liability extends only to the LLC's property and are not responsible for anything else beyond that. Some people create LLCs specifically to own property. Others create a structure of multiple LLCs to further minimize risk. Another asset protection strategy is to create a trust. This will mean that you grant property to the trust, and it is under the control of the trustee. Trusts can be either onshore or offshore. There is a greater degree of protection for offshore trusts, but they are more expensive to establish. The trust essentially becomes an identity separate from the grantor since it is a new structure with control that is separate and distinct from the person who has beneficial ownership of the assets.

Additionally, you can move some of your assets into accounts that enjoy statutory protections from creditors. For example, retirement accounts are protected from judgement creditors in some states (but not necessarily from bankruptcy court above a certain amount). Further, some annuities and life insurance policies are protected, provided that they are for the benefit of the person who is seeking to shield their property. You can also transfer property to your spouse's name or hold the property jointly with your spouse. In some states, joint tenancy in the property is enough to shield it from creditors.

Single Member LLCs Limited Liability Companies (LLCs) are a type of legal business formation that are a popular and straightforward way to protect assets. When property is placed under an LLC, it can reduce the owner’s personal exposure to risks surrounding that property, known as inside liability. When real estate is placed in an LLC, the property is treated as an autonomous business. It is considered a standalone business and is legally separate from its owner’s other assets. If someone gets hurt on the property and sues only the property that is under the LLC can be attached to pay a judgment, not the owner’s personal property.

If there are more than one investment property ideally separate LLC should hold each one, so that a lawsuit related to one property can’t potentially impact another. Let’s say you own three properties (A, B, and C) and all are under a single LLC. If that trespasser was on property A when he tripped and fell, all three properties will be at risk to satisfy a judgment. But if each property is in its own LLC, only property A will have liability exposure.

Many people also like to hold properties in an LLC for privacy reasons – they don’t want everyone to know what they have. Though filing requirements do vary by state, most states require that the names of the members or managers of the LLC be listed on the public filing. There are a few states that allow you to file for an LLC without giving the names of members or managers.

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The LLC represents an excellent way to shield you from inside liability, but what if there is a judgment against you related to your other business or professional activities, known as outside liability? Will the LLC protect your properties from that? The answer is that it depends on the law of the state where the claim is filed. In many states, a creditor cannot force you to turn over your membership interest in an LLC. Instead, those creditors rights are limited to a charging order.

Family Limited Partnership A family limited partnership (FLP) is a holding company owned by two or more family members created to protect a family's business interests, real estate, and other low risk assets. One of the main benefits of using a FLP to hold real estate investments or other risky assets is that the FLP can be used to give you Charging Order Protection over your assets. This means that if a member of a FLP finds himself or herself in debt, the creditor cannot get access to the property inside the FLP or even to the debtor’s share of the FLP in order to satisfy the debt. Charging orders do allow a creditor to take the debtor’s share of any distributions from the FLP, when those distributions are made. But, though this may sound favorable to creditors, it actually is not. If you find yourself in the debtor situation, a charging order gives you the ability to delay paying your creditors indefinitely by withholding distributions while paying yourself a salary to manage the FLP.

All states allow personal creditors of a FLP owner to get a charging order against the debtor- owner’s FLP interest and in about two-thirds of states the charging order is the creditor’s only option. And, because the creditor is not allowed to order the FLP to make a distribution, creditors who obtain charging orders frequently end up with nothing. However, having that charging order against an FLP owner can make it difficult to take money out of an FLP business without having to pay the creditor first.

Another way that charging order protection can benefit you is that if that trespasser who sued you is successful and receives a charging order, it is likely that he will still be liable to pay taxes on the amount that you never pay him (as long as the FLP never makes a distribution). Letting that plaintiff’s lawyer know up front that you have a well-drafted FLP is a great way to deter that trespasser from suing in the first place. As many lawsuits are taken on a contingency basis, and an asset search will be one of the first things the attorney does before accepting a case, placing your assets into an FLP reduces the financial incentive for plaintiff’s lawyers to come after you.

The original purpose of a charging order was not to protect the debtor’s interest in the FLP, it was so that other members of the FLP would not have their interest endangered when one member found himself in hot water. This is different than a single member LLC because there have been court opinions that have said that if there are no other members in an LLC to protect, then the charging order protection should not exist.

As of right now, only five states provide charging order protection to single-member LLCs:

• Alaska • Delaware • Nevada • South Dakota • Wyoming

The remaining 45 states only provide charging order protection to multi-member LLCs and FLPs.

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Asset Protection Trusts

An asset protection trust can describe any of a number of different vehicles that can shield your assets from lawsuits or other creditors. This is a trust that fully transfers control of your assets to a trustee while you remain the beneficiary. The main two types of asset protection trusts are domestic and foreign asset protection trusts.

Another way to protect your investments is through an asset protection trust. Trusts are similar to corporations and LLCs in that they are considered separate legal entities. The trust must be irrevocable in order to be a separate legal entity. An irrevocable trust is a type of trust which terms typically cannot be modified, amended, or terminated without the approval of the named beneficiary or beneficiaries. Once the grantor transfers ownership of assets into the trust, he or she is no longer considered the legal owner of the assets inside the trust. As with an LLC or FLP, creditors can still attempt to get access to income from the trust, including most distributions.

In an asset protection trust, typically, you become the beneficiary of the trust while someone else serves as the trustee. The trustee will hold the legal title, but you, as the beneficiary, will hold an equitable interest. This means that while the property held in trust is technically yours, you can't lose your assets due to a lawsuit. Usually what makes an asset protection trust different from another kind of trust is that it is a self-settled spendthrift trust. This means that you are both the settlor (the person who creates the trust) and the beneficiary (the person who gets to access the trust), but you may or may not be the trustee (the person who controls the trust) though you do maintain a certain amount of control over how the trust assets are used.

The spendthrift clause is a key provision of asset protection trusts. This means that the trust is created for the benefit of someone who is not able to lose their assets to a judgement creditor or in a bankruptcy proceeding. By using the same language that was originally drafted to protect these so-called spendthrift beneficiaries into an asset protection trusts, we’re able to protect assets from lawsuits. This is because the assets are under the control of the trustee rather than the settlor of the trust personally. This works because the trustee, rather than the settlor, is in charge. If a judge orders the settlor of the trust to turn over his assets to satisfy a judgment, the settlor can honestly state that it is the trustee, not himself, who has the authority to do so. Likewise, the trustee can state that he is legally obligated to follow the terms of the trust and maintain the assets until the lawsuit is resolved.

There are foreign asset protection trusts that are legal and effective. You would simply move the assets to a trust that is domiciled offshore. There are numerous foreign jurisdictions that have laws that are conducive to asset protection trusts and are very aggressive in protecting your assets.

Domestic Asset Protection Trust A domestic asset protection trust (DAPT) is a legal structure that allows you to protect your assets from legal threats. In essence, a DAPT is an irrevocable trust in which the beneficiary can be the same person who created the trust, and the trust’s assets are shielded from that individual’s creditors.

Due to the simplicity and flexibility of a DAPT, it has become an increasingly popular option for asset protection. While business owners have traditionally been able to protect themselves by using limited liability companies or corporate entities, a DAPT allows individuals to protect their

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personal assets, as well as any business or investment assets. This type of trust can help level the playing field when it comes to personal exposure to creditors and lawsuits.

It is not just traditional creditors that a DAPT can protect you from. DAPTs also provide protection from legal complaints, malpractice claims, and a host of other financially consequential events.

A DAPT can allow you to shield yourself from the implications of lawsuits. Not only will this help you protect your financial health if legal action is brought against you, but it can also help you deter lawsuits from being filed in the first place. A creditor might be less likely to seek money from you if they know you have legal protections in place.

Offshore Asset Protection Trust An offshore asset protection trust is an effective tool for protecting assets from future lawsuits and potential creditors. A trust is established under the laws of a foreign country and managed by a professional trustee not subject to the jurisdiction of the settlor’s home country.

An offshore asset protection trust can provide peace of mind to people like physicians, business managers, and entrepreneurs whose wealth makes them vulnerable to legal threats. In the United States, the cost of defending a lawsuit can quickly reach hundreds of thousands or millions of dollars. In the event of a lawsuit, assets placed in an offshore asset protection trust are extremely difficult to reach, even if the plaintiff gets a favorable judgment in a U.S. court. The most reputable offshore jurisdictions are the Cook Islands, Nevis, and Belize, which have favorable laws and court systems for asset protection trusts.

Offshore Bank Accounts In order for an offshore asset protection trust to be effective, it needs to be properly funded. Generally, this will require setting up an offshore bank account. Even if the trust is established outside of the United States, it may not be entirely effective if the funds in it are deposited in a U.S. bank account. That being said, the funds do not need to be housed in the same jurisdiction as the trust. Cook Islands Trusts can set up bank accounts in diverse international banking centers such as Switzerland, Lichtenstein, Hong Kong, etc. Mile High Estate Planning has access to numerous offshore banks and advisors to help our clients easily transfer funds abroad to a safe and secure jurisdiction.

Titanium Trust The Titanium Trust is Mile High Estate Planning’s proprietary asset protection trust, which takes a traditional domestic asset protection trust and offshore trust one step further. Like titanium metal—strong and lightweight—the Titanium Trust has bulletproof strength. It protects your assets in the United States, but it also has the added advantage of agility, allowing you to move your assets through a network of international trust companies, protectors, and bankers who work together to safeguard your assets.

At Mile High Estate Planning, we are proud to provide our clients with asset protection solutions to fit their individual needs. For years we have offered offshore trust solutions that provide the highest levels of legal protection. Our team of attorneys have created an asset protection trust that provides the strongest level of legal protection while avoiding the ongoing costs and compliance requirements of an offshore asset protection trust. The Titanium Trust combines domestic and international elements to provide exceptional flexibility and protection.

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Cook Islands Trust The Cook Islands’ legal system is very favorable toward individuals defending themselves in legal proceedings, such as seizures and forfeitures, and it is widely considered to be among the most protective in the world. The offshore asset protection trust statutes on the Cook Islands are among the most formidable asset protection laws. Even lawsuits or judgments originating from powerful countries such as the United States cannot reach assets placed in trust there. In order to be protected by these statutes, the assets must first be placed in a Cook Islands asset protection trust.

While assets are in the Cook Islands trust, the grantor can still retain full ownership and can transact with them or transfer them in or out of the company under the trust. However, if there’s a legal proceeding, the trustee in the Cook Islands can immediately take over the management of the trust, effectively keeping them out of reach. The point of this? If a U.S. court orders to turn over any trust assets, the defendant must comply. Failure to comply with a court order is considered contempt of court and generally carries heavy penalties, including fines and even incarceration. However, since the assets are now under the administration of a trustee outside the U.S., the jurisdiction of a court in the U.S. doesn’t reach a Cook Islands Trustee. Thus, a defendant will not have the ability to hand over any assets assigned to a Cook Islands Trust, which will defeat the purpose of the court order.

Advantages of a Cook Islands Offshore Trust • Protection for assets and investments, keeping them out of the reach of creditors, banks, or any court orders originating from outside the Cook Islands • A two-year statute of limitations on all creditors that bring an action against you or the trust • The Cook Islands do not charge taxes on assets held under a trust • The Cook Islands’ judicial system is considered “defendant friendly” and there are several barriers to litigation already in place via the Cook Islands Asset Protection Trust Act • A Cook Islands Trust can protect assets that aren’t located within the islands and you can transact with them electronically • Several types of trust arrangements are available and none of the trust deeds have to be publicly registered • A flexible trust structure that creates several investment opportunities

Nevis LLC Because the United States remains one of the world’s most litigious countries, it is more critical than ever to consider the risks of lawsuits. While many people use LLCs, domestic trusts, and other asset protection methods to shield their assets from creditors and lawsuits, the courts in the U.S. do not always respect the integrity of these legal structures.

The more sophisticated individuals are now turning to offshore LLCs to secure their assets. The Caribbean island of Nevis has become one of the world’s most favorable locations to establish limited liability companies for both privacy and asset protection. The small island country’s commitment to providing safe legal arrangements for overseas residents has been proven since the passage of the Nevis Business Corporation Ordinance in 1984.

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Asset Protection for Real Estate

Real estate investors know that rental properties can produce tremendous returns, but very few consider that real estate can also result in great risks for investors. I am not referring to a potential market downturn or the occasional difficult tenant, but rather to a lawsuit that could result in bankruptcy. The following will discuss several different legal options investors can use to protect their rental properties. Whether it is a single-family home or an apartment building; commercial, residential, or undeveloped land; no real estate investor can afford to put their entire net worth at risk. Why You Need to Protect Real Estate

Imagine for a moment that, after all your years of hard work, a tenant in one of your rental properties files a claim against you. Perhaps the tenant claims there’s toxic mold in the home or undisclosed lead-based paint. Maybe it’s not even one of your tenants – guests, workers, neighbors, even a trespasser who tripped over a downed tree limb on your property – has the right to sue you. The reality is a lawsuit can come anytime and even from the most unexpected of sources. If you haven’t taken any steps to protect yourself, you could lose your investments in order to satisfy a judgment against you.

Asset protection planning aims to reduce the potential liability from a future lawsuit. Protecting your property means developing a strategy that shields what you own from creditors. You do not need a multimillion-dollar real estate portfolio to start thinking about asset protection; even a retiree trying to augment a pension with a single rental property needs to be aware of the potential legal risks.

The goal of asset protection is to use the laws that are available to protect what you own from creditors and to keep one bad turn of events from turning into a life-altering set back. Asset protection planning can keep you from losing your property – it’s as simple as that. It’s perfectly legal and can make a world of difference when negotiating a settlement agreement, but you must start the process well in advance. If you wait until someone is already suing you, it might be too late to properly protect against that particular claim.

There are several ways you can protect your real estate investments, including single-member LLCs, limited partnerships, and asset protection trusts. Most often, a combination of these will prove most effective in defending against a potential lawsuit. Cryptocurrency and Asset Protection

Cryptocurrencies can provide a secure and universal form of payment. They can be stored digitally and can operate without the use of a middleman or bank. Cryptocurrency is an internet based digital token designed as a medium of exchange. Since cryptocurrencies are universal, it is the ideal asset to be used in conjuncture with an offshore trust account. To transfer your digital wallet to a trust, give the trustee the password to your account along with a contemporaneous memorandum explaining what your wallet contains and how to access it. These documents must be updated regularly to ensure they remain current, as a lost or out of date password can mean your cryptocurrency is inaccessible forever after death.

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Increased value of cryptocurrency may be free of additional estate tax or gift tax if it is held in an offshore irrevocable trust – giving your beneficiaries the full value of your assets. Further, transactions are nearly free of tax charges, have a lower international transaction fee, and can almost always be immediately converted to cash. When transferring cryptocurrency into an offshore account, it is crucial to use a trustee whom you fully trust, or to store your password in a safety deposit box or other secure location. Since transactions are essentially irreversible, if a password falls into the wrong hands it could have disastrous consequences. Maintaining your cryptocurrency in an international trust is a great long-term solution to ensure your beneficiaries receive the full value of your estate.

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Part 3: Estate Planning

When many people hear the word “estate,” they think of end-of-life matters, but the truth is that estate planning is so much more than just planning for your passing. It also addresses events such as divorce, advance healthcare directives, and living wills. Estate planning can help you take steps to protect your assets so you can use them as you see fit.

No matter how old or how young you are, it is never too early or too late to work on your estate plan. A knowledgeable estate planning attorney can help you arrange your financial and legal matters so that you can rest easy at night. If you are a senior, you can enjoy your golden years knowing that you have done everything you can to arrange for eventualities. If you are younger, estate planning can help you prepare for the unexpected. Estate Planning

Estate planning means having a strategy in place to protect wealth during your lifetime, as well as preserving assets after you pass away. It also means naming trusted loved ones who will be responsible for making decisions for you in the event of incapacity and who will manage the assets in your trust or estate after your lifetime. A comprehensive estate plan should also factor other needs like protecting more vulnerable beneficiaries such as minor children or persons with special needs.

It is better to think of estate planning as an ongoing process that can pave the way to an orderly transition as you age and face the everyday uncertainties of life. Your estate plan is not only about your wealth and assets but it can also reflect your values. You can devise a succession plan to benefit charities of your choice and establish lasting arrangements to help others.

Last Will and Testament

A last will and testament is a written declaration of who you would like to receive your property and, if applicable, who you want to raise your minor children when you pass away. If you pass away without drafting a will, the default laws of the state where you live in at the time of your passing will govern the distribution of your property. That means the probate court will divide the estate property without any input from you.

Only a probate court can administer a last will. Probate proceedings can be costly and lengthy legal proceedings that diminish the amount of funds left in the estate for the beneficiaries. That is why we generally recommend that clients use a trust to manage their property. However, the last will and testament provides important provisions in case any property has been left out of the trust. It works with a trust by instructing that your estate property be distrusted to your revocable living trust for management.

Planning for Minor Children

When it comes to succession planning (i.e., deciding what happens to your assets when you pass away), setting up a revocable living trust for the benefit of your minor children can be incredibly beneficial. As the grantor of a revocable living trust, you can remain the trustee for as long as you are alive and capable. Given the nature of revocable living trusts, you can amend your plans as

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your children grow and your needs change. You are free to place and remove assets in and out of the trust, and you can make any changes you like to the management, distributions, beneficiary, and many other important facts set out in your trust. Using a revocable living trust, you can remain well in control of the assets after your passing. You can appoint a successor trustee who will be in charge of administering the funds on your behalf in the event of your incapacity or passing until your children reach a particular age (of your choosing).

Your successor trustee can be an impartial and trusted loved one or could be a professional trustee such as a financial institution. Regardless of who is managing the trust, they are responsible for following your wishes as expressed in the trust document. You are able to decide how any funds or assets are managed, as well as how and when your children receive assets— either as an outright distribution at a specific time, as a staggered distribution over time, or as a conditional gift. It is difficult to predict all the possible ways in which a child’s life can change, but a well-drafted trust is able to address even some of the remotest possibilities. Unlike a traditional bequest or gift, a trust can protect a child’s inheritance from unfortunate life events they may experience in the future (i.e., bankruptcy, lawsuits, or divorce). Not to mention that any assets left in trust do not have to go through the costly and time-consuming process that the probate court imposes on a conventional inheritance.

Guardianship Designations

The main priority when drafting your estate plan might be who takes care of your children if you become incapacitated or pass away unexpectedly. You can use your last will and testament to nominate a guardian or guardians for your minor children. If your designated guardians live in a different city or state, you can designate an emergency guardian to look over your children while the permanent guardian travels to receive your children.

If you don’t have an estate plan in place, the courts would determine who looks after your children. While courts often appoint close family members as guardians, they may not necessarily appoint who you prefer as a guardian. The children will likely have emotional needs that will be difficult to meet and the courts may not fully understand the specific circumstances of every case. Often, close family friends have better relationships with children than distant relatives and/or may be in a better position to accept this significant responsibility. In our experience at Mile High Estate Planning, most parents would like to prevent the courts from determining how their children are raised. We believe that no one is better suited to decide how children are raised than their parents. Regardless of who you nominate, you can always update your estate plan to reflect changes in your and your children’s lives.

An Estate Plan Right for Your Family

Finding the right plan for your children will depend on a variety of individual factors, including your family type (e.g., traditional, blended, single-parent family), the age and personalities of your children (e.g., a responsible older teen vs. a toddler), and the availability of potential guardians, among other factors. After reviewing these factors, Mile High Estate Planning will establish a solid foundation for your children. Regardless of what your particular circumstances are, we are confident we will be able to work with you to find a comprehensive estate planning solution that meets your needs and reflects your wishes. Often an ounce of prevention is worth a pound of cure. That is certainly true when it comes to estate planning. Having a comprehensive and up-to- date estate plan in place can ensure your children are provided for if something happens to you.

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Trusts

What is a trust?

When you create a trust, you transfer control of your assets to a trustee. That person is now responsible for making decisions about your assets and will make choices as a fiduciary who is obligated to act in your interests. In many cases, you will be the trustee, in other cases, a third party will serve as trustee. When you establish a trust, you are often the beneficiary, meaning that you will still benefit or profit from the trust assets.

Types of Trusts

If you are considering establishing a trust, you should be aware of your options. Below are the different types of trusts. Within each of these individual kinds of trusts, there are many different varieties.

• Revocable Living Trust • Irrevocable Trust • Irrevocable Life Insurance Trust • Testamentary Trust • Pet Trust • Gun Trust • Asset Protection Trust • Domestic Asset Protection Trust • Offshore Asset Protection Trust • Titanium Trust • Cook Island Trust • Medicaid Asset Protection Trust

Revocable Living Trust A revocable trust is made while you are still alive. It will determine the disposition of your property after you die. This is called revocable because it may be changed at any point up until your death while you still have the capacity to sign the document.

In a revocable living trust, you transfer your property to a trust. You then sign a trust agreement, which creates the terms and conditions of the trust. Since the trust is revocable, you can make changes to the trust instrument during your lifetime and can maintain total control over your assets.

The flip side of a revocable trust is that you still own your assets in the eyes of the law. Therefore, a revocable trust is not as effective as an asset protection trust for protection from lawsuits and nursing home costs.

Through a revocable living trust, your assets will avoid probate, and you still maintain flexibility. This is a suitable alternative for one who wants to avoid probate and protect assets for future generations.

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Irrevocable Trust In order for your assets to be legally considered someone else’s property, the trust must be irrevocable. In other words, you cannot make any changes to it once the terms and conditions are set and the trust is executed. An irrevocable trust generally severs your ownership of the asset in the eyes of the law since the power to make decisions about the property is one of the major indications that you in fact own the property. Once you have set up an irrevocable trust, the assets are no longer in your hands, and they are protected. However, your asset protection attorney can still build a great deal of flexibility into an irrevocable trust that will enable you to have a great deal of control and management of the assets.

Testamentary Trust A testamentary trust is a part of your will. It comes into operation after you pass away and it determines who will inherit your property. This trust is established once you pass.

Your will contains the terms and conditions of the testamentary trust. It names a trustee and sets rules for how the assets are to be managed and used.

One purpose of a testamentary trust is to preserve assets for those who may not yet be in a position to use them. For example, you may want those who are currently minor children to eventually take control of your assets. However, your children may not be of the age of majority and, therefore, cannot yet take control of the assets. A testamentary trust preserves and manages the assets until the minors are adults subject to the oversight of probate court.

You can make a testamentary trust for practically anything. You can set up a charitable trust and use a trust to bequeath your assets. In other words, you are not limited to only one testamentary trust. Eventually, these assets will be distributed to the beneficiaries, but there is a trust in the meantime.

Pet Trust If you are a pet owner, you know the unconditional love that furry friends provide. The sheer joy we experience when they interact with us each day is a feeling that’s difficult to match. It is only natural to want our pets to be loved and cared for even if they outlive us.

A pet trust is an ideal solution because it allows the grantor to set funds aside to care for the pet, direct the level of care wished for, and the person or persons entrusted with the responsibility of caring for the pet. Not unlike a regular revocable living trust, a pet trust is a legal document that instructs how any funds set aside should be used. The trust should detail a beneficiary (i.e., the pet), a residuary beneficiary (if money is left over after the pet dies), a trustee to manage/distribute the funds, and a caretaker to take care of the pets.

The trust can include details for the proper care of your pet, including any habits, preferences, ongoing veterinary concerns, etc. The caretaker should follow the caretaker responsibilities listed in the trust. The funds in the account should be used for food, grooming, annual vet checkups, possible medications, toys, boarding, arrangements for when the pet passes, and caretaker allowance for their time and dedication.

Gun Trust A gun trust is a revocable trust created to hold title to your firearms. Because the trust is a legal entity, it becomes the legal owner of the guns and is transferred to the trust or purchased by the trust. A trustee is named to manage the trust for the trust’s beneficiaries. Because the trust is

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revocable, the grantor can make changes to the trust agreement or void the trust at any time before the grantor’s death. Upon the death of the grantor, the trust becomes irrevocable. An alternate trustee manages the trust for the individuals who become the beneficiaries after the grantor’s death.

A gun trust also allows gun owners to keep information about their guns private. Trusts are not subject to probate; therefore, the firearms owned through a trust are never listed in a person’s probate estate. Furthermore, a gun trust can be used to hold title to other firearms to protect a gun collection and preserve it for future generations.

Assets held in trust are also not probate assets. That means that if someone was the grantor or beneficiary of a trust, upon that person’s death the property in the trust transfers according to the terms of the trust without going through the probate process. Certification of a Trust

Colorado Revised Statute § 15-5-1013 states that instead of giving someone the trust instrument as proof that the trust exists, you can give them an abridged document with certain information about the trust. A certification of trust contains selected information that proves that the trust exists and gives enough data about the trust without revealing private information such as the assets that are a part of the trust and the name of beneficiaries.

The certification of trust may be necessary for the trustee to conduct business in the name of the trust. For example, the trustee deals with a bank or an investment company that will want proof of the trust. The other parties will then be able to view the certificate, which will set forth the authority of the trustee and any other co-trustees. Anything that is contained in the certificate of trust will be treated as if it were a representation made by the trust. If it turns out that the information is incorrect, the trust can be liable.

Why Fund a Trust?

Funding a trust involves taking assets that are titled in your name and moving those assets into the trust and retitling them in the trust’s name. There are many different reasons that you would fund a trust as opposed to just leaving your assets to your heirs in a will. One of the primary benefits of funding a trust is for tax reasons. Funding the trust keeps your assets outside of probate, and an irrevocable trust protects them from lawsuits and nursing home costs.

There are numerous other benefits of funding your trust. The trust is your foremost way of controlling your wealth both while you are here and after you are gone. You have made the effort to set up the trust because you want it to hold your assets, but without funding it, the trust is not effective.

Purpose of Funding a Trust

In reality, the trust is an empty vehicle until it is funded. The trustee can do nothing with the assets until the trust is funded. The trust cannot provide any protection to your assets, and you cannot realize the legal protections of a trust until it actually holds assets.

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Assets that are not a part of your trust are subject to probate, to seizure by creditors, or to appropriation by a nursing home to pay for care. Even if you have a will that directs the executor to transfer assets to the trust after you die, these assets may still be subject to probate. Therefore, it is important to title the assets in the trust because this is not done automatically. This is a process that involves changing the names and beneficiary designations for your assets.

If you do not fund your trust, your assets are subject to the court system and are unprotected. An unfunded trust defeats the purpose of setting up the trust and will mean that you expended effort and money to create something whose benefits you are not taking advantage of.

The Responsibilities of a Trustee in Colorado

Being a trustee involves numerous responsibilities. A trustee must live up to a high standard of conduct in their role. The trustee must act as a fiduciary, meaning they have a duty to act for the benefit of the trust.

The trustee’s responsibilities primarily involve the property of the trust. They manage the affairs of the trust, both administratively and financially, according to the terms of the trust document.

The trustee also needs to communicate with various individuals on behalf of the trust. That includes beneficiaries to whom the trustee needs to distribute information and keep informed. The trustee also needs to discuss matters with financial professionals for managing the investments and the property of the trust. In addition, the trustee also needs to ensure that the trust follows all applicable laws.

The trustee is responsible for anything that the legal owner of the property will need to do with respect to its assets. That includes taxes and other filing requirements, as necessary.

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Medicaid Planning

The U.S. Department of Health and Human Services states that the majority of Americans will rely on Medicaid for long-term care at some point during their lives. Medicaid is the only government program that assists in paying for long-term care for the elderly and disabled. It is a federal and state program that helps with medical costs for some people with limited income and resources, regardless of age. Medicaid also offers benefits not covered by Medicare like nursing home care and personal care services. In Colorado, the home equity exception was set at $595,000 for the year 2020.

Medicaid in Colorado

To qualify for Medicaid an applicant must meet strict income and asset guidelines. Medicaid recipients in Colorado are generally not allowed to have more than $2,000 in countable assets. These assets include checking, savings, and investment accounts. There are exceptions for some assets, such as a principal residence, vehicle, life insurance, and some personal property. Be that as it may, there are limitations to these exemptions as well.

Americans with higher levels of assets and income will often be forced to “spend down” their savings. They also need to reduce other resources before they can meet the Medicaid threshold and qualify for long-term care. Initially, they will pay for long-term care with their own savings, only after everything else runs out can they qualify for Medicaid. The average monthly cost of care for an assisted living facility is north of $7,000. Those with little savings risk paying these fees without government help.

Spending down assets to qualify for Medicaid long-term care means almost nothing will be left behind for the next generation. Americans should not be forced to decide between paying for the care they need during their later years or leaving nothing behind for their loved ones.

Medicaid Protective Trust

Medicaid protective trust is a general name for any type of trust that enables you or a family member to preserve assets and qualify for Medicaid to pay for nursing home care. There are numerous types of trusts that can qualify for this type of protection. An important rule is that the trust must have been established prior to the start of any lookback period. You cannot simply move your assets out of your name and into a trust and qualify for Medicaid tomorrow. As in most states, the lookback period in Colorado is five years. Creating a Medicaid protective trust is a better option than gifting money because Medicaid does not allow you to give away your money to qualify. Moreover, there may be capital gains tax considerations when gifting assets. Creating a Medicaid protective trust moves your assets out of your name while at the same time preserves those assets for future generations and out of the hands of nursing homes and probate.

Medicaid Protective Trust and Long-Term Care Insurance

Less than 10% of Americans have a long-term care insurance policy in place. As people live longer, the cost of long-term care insurance continues to become more expensive. Older Americans can expect to pay thousands of dollars each year for long-term care insurance. People avoid long-term care insurance due to high costs and inconsistent coverage restrictions. Many

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Americans fail to realize the fact that most will need some form of long-term care or help during their lifetime.

Long-term care insurance must be bought early before it is needed and is often an awfully expensive option. Establishing a Medicaid protective trust is comparatively much less expensive than investing in long-term care insurance.

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Incapacity Planning

When planning for your later years, you need to consider who will manage your personal finances and healthcare should you become too ill to do so yourself. You also need to consider what type of end-of-life care you want to receive.

Planning for Incapacity

Another important part of your estate plan is your incapacity documents. These documents can help ensure that someone is able to make decisions for you in the event that you are not able to care for yourself that be permanently or temporarily.

The most important documents incapacity documents you would need are:

• Financial Power of Attorney • Medical Power of Attorney • HIPPA Authorization • Living Will

Financial Power of Attorney This document specifies who should take over financial decision-making on your behalf if you become incapacitated. It also gives this individual power to pay bills, make investments, manage assets, file taxes, etc., on your behalf.

Medical Power of Attorney With this legal document, you determine who can make medical decisions on your behalf if you are unable to do so. This ensures that should you be unable to express your wishes at the time, you will receive the medical treatment you prefer.

HIPPA Authorization State and federal laws prohibit the release of an individuals’ medical information without their written consent. With an Authorization for Release of Protected Health Information, also known as a HIPPA release, this document gives medical professionals the permission they need to share information regarding your health status and care to the individuals you have specified. That means your family can get prompt access to your medical records should you become incapacitated.

Living Will A living will enables you to detail exactly what type of care you wish to receive if you are no longer well enough to speak on your own behalf, including what life-saving interventions you deem acceptable.

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Estate Tax Planning

The Internal Revenue Service defines the Estate Tax as a tax on your right to transfer property at your death. Whether an Estate Tax should be applied, an accounting of everything you own or have certain interests in at the date of death is used. The fair market value of these items is used for this calculation, which is not necessarily what you paid at the time of purchase or what the items values were when you acquired them. The total of all of these items is known as a Gross Estate. The property in the Gross Estate may contain cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets.

Once the Gross Estate is calculated, certain deductions and reductions are allowed in arriving at your Taxable Estate. These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses, and qualified charities. The value of some operating business interests or farms may be reduced as well.

What is Estate Tax Planning? Estate tax exemption amounts vary from year to year. If you don’t know the thresholds, you can end up paying hefty taxes on your estate. A tax attorney offers thorough estate tax planning advice to explore tax-saving benefits of incorporating instruments such as:

• Charitable Trusts • Family Limited Partnership and LLCs • Foreign Trusts • IRA Distribution • Irrevocable Life Insurance Trusts • Marital and Credit Shelter Trusts

Individuals with extensive property or interests can benefit from a tax attorney’s services, which explores tax-saving strategies such as legacy planning and family business continuation.

Estate Tax Planning Strategies

A tax attorney can help you plan to minimize your estate tax liability. The attorney will work with you to explore estate tax planning strategies and formulate solid plans to help you achieve long- term tax-savings.

Some of those strategies include:

• Yearly gifts exemption and lifetime exemption using instruments like the Grantor Retained Annuity Trust (GRAT) • IRAs for tax-reduced charitable giving • Wealth transfer during your lifetime to minimize gift taxes on your estate upon death • Life insurance instruments outside of your estate, including irrevocable life insurance trusts • Qualified Terminable Interest Property (QTIP) trusts to protect your children and spouse after your death

An experienced tax attorney can help you review your current estate plan and asset holdings to ensure that the law changes won’t impact you negatively. They can advise you on how new

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changes to the law affect your current estate plan and whether you need to review your current plan to avoid losing some of your estate.

Irrevocable Life Insurance Trust

Irrevocable life insurance trusts, known as ILITs, protect your life insurance from the hands of creditors during your lifetime, and exempting it from your estate and reducing your potential estate tax liability. ILITs have many benefits, and virtually no drawbacks, making them a favored and potent estate planning tool. An ILIT is an irrevocable trust created for the sole purpose of holding a life insurance policy on the grantor. The trust is funded by annual gifts up to the annual gift exclusion ($15,000 in 2020). Once the grantor passes away, the trust collects the life insurance payout and distributes it to the beneficiaries of the trust. Because the ILIT is irrevocable, the life insurance trust is exempt from your estate, is not accessible to creditors, and any money used to fund it is also removed from your estate, making it an incredibly attractive multi-pronged protective estate planning method.

An ILIT can protect you and your beneficiaries from creditors or legal judgments against them while the policy is in the trust, since the trust itself is the owner. There can be more than one life insurance policy held in the trust and almost any type of life insurance policy can be held in the trust.

Estate Tax Facts

• The estate tax is a financial duty imposed on an estate based on the value of its assets at the time of death.

• Federal estate taxes are assessed on estates valued in excess of $11.4 million as of 2019.

• Assets transferred to spouses are exempt from estate tax regardless of the value of the estate.

The Tax Cuts and Jobs Act of 2017: Recent changes to the tax laws have doubled the exemption limits on federal estate taxes, which means that many estates will be exempt from paying any federal estate tax. On December 2017, President Trump and Republicans in Congress increased the federal estate tax exemption (indexed for inflation) to $22.36 million and $11.18 million for married couples and individuals, respectively. Only the amount that exceeds that threshold is subject to tax. For estates that still have to pay estate taxes, the top federal statutory rate is 40%. In many instances, however, the effective estate tax rate can be significantly lower.

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Prenuptial and Postnuptial Agreements

Marital Property

Marital property generally means property acquired during the course of a marriage, such as income from employment or business generated during the marriage. Property that an individual owned before a marriage is not considered marital property, but instead separate property. Inheritances or third-party gifts given to an individual during a marriage are also not marital property.

What is considered marital property will vary from state to state. Marital property generally includes property a couple buys together during their marriage, such as real estate, cars, furniture, etc. Bank accounts, retirement accounts, and investments are also marital property if the income to fund these was earned during the marriage. In community property states, all assets acquired during a marriage are considered marital property and is considered owned by both spouses equally.

Prenuptial Agreements

A prenuptial agreement (also known as an antenuptial agreement or premarital agreement) is most commonly referred to as a prenup.

As its name suggests, a prenup is a written and enforceable contract entered into by a couple prior to marriage. A prenup allows the couple to select and control a variety of legal rights they obtain when marrying. It can also control what happens when the marriage ends, either by divorce or the death of one of the spouses. In certain cases, a premarital agreement could also specify waivers regarding a surviving spouse’s right to claim an elective share of the estate of the deceased spouse.

In the absence of a prenuptial agreement, the default marital laws of the state apply in the event of divorce, such as the rules regarding the division of property, retirement benefits, savings, and alimony. Each state has its own laws regarding the validity and enforcement of prenuptial agreements. Which state’s law should apply to a particular case depends on where the marriage took place, where the couple was living during the marriage, and what law should apply.

The Value of Prenuptial Agreements

The demand for prenuptial agreements in the United States has increased in recent years, mainly due to Millennial couples getting married. According to the American Academy of Matrimonial Lawyers, most lawyers saw an increase in prenups among Millennials. That should not be surprising. Millennial couples are getting married later in life and tend to date longer before marriage. That means individuals have longer to create wealth, accumulate assets, and think about what their goals and expectations are when entering the marriage.

Millennial couples are also most likely to carry student debt. Without a prenuptial agreement to address this point, you may be responsible for half of your spouse’s outstanding debt in case of a divorce.

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Protecting Assets with a Prenup

A prenuptial agreement can address the following matters:

• Personal property • Business assets • Children from a prior relationship • Collectables of value • Financial worth • The potential to earn a substantial amount of income • Purchasing a significant amount of real estate • Receiving an inheritance • Winning a lawsuit or settlement during the marriage • Detailed limits on alimony should the marriage fail • Allocation of debt between the spouses • Attorney’s fees

Postnuptial Agreements

A postnuptial agreement, also known as a marital agreement or a postnup, is similar to a prenup; however, the agreement is entered into after the marriage or civil union. A postnup is for couples who intend to remain married, and it addresses the same matters as a prenup, such as division of assets, finances, property, etc. It details what happens in regard to spousal support in the event of the dissolution of the marriage through death or divorce. A postnuptial agreement prepared in anticipation of or as part of the divorce process can be declared unenforceable.

Postnup vs. Prenup

On the face of it, both a prenup (before marriage) and a postnup (after marriage) are equally valid under the law. However, once you say, “I do,” a significant amount of both partners’ assets become marital property. The postnup should detail plans for these marital assets as well as future earnings.

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Family Guidance Letter

What is a Family Guidance Letter?

Mile High Estate Planning’s Family Guidance Letter™ is an excellent supplement to any estate plan. Please contact our firm for your own copy. The forms and letters in the family guidance letter convey your final wishes to your personal representative and heirs. You may, for example, include instructions as to who will care for your pet(s) as well as any special instructions regarding their care. The family guidance letter can be updated as often as necessary.

The family guidance letter also includes instructions for funding your trust and creating a certificate of trust. It is important to fund your trust before your passing. When transferring assets to the trust, your bank or other institutions may require the trustee to present a certificate of trust.

All estate plans require ongoing maintenance. You should review your estate plan every few years. In particular, a change in your family, an increase in your net worth, or a change in the law could significantly affect the effectiveness of your plan.

End of Life Logistics

A family guidance letter offers your descendants instructions on a variety of end-of-life matters, including:

• Asset transfer instructions • Income information • Information about liabilities • Information about online accounts • Information about your assets • Instructions about end-of-life decisions • Instructions about personal property • Instructions about pets • Instructions for completing your certificate of trust • Letters to children and others • Medical information • Names of your family members • Nominee’s contact information • Revocable living trust funding instructions

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Part 4: Conclusion

When people think about an estate planning firm, their first thought is probably that they are mainly for older people who are trying to get their houses in order. That is only partially right. In reality, everyone can benefit from what an estate planning firm can do regardless of age. It is never too early to start the process of estate planning, and about the only time where it is too late is if you die without an estate plan or if you have no capacity to make a decision. You should not wait too long to begin this process because you never know when you will need to have your estate plan in place.

While money should not be the only concern in this world, because of everything that you have to pay for, it naturally is one of the first things on peoples’ minds. People worry about money in this world. It is one thing to be concerned about money when you are healthy and things are going well. The worry is even greater when you are talking about a spouse or children who may not have the same ability that you have to make money. It is them who you want taken care of when you cannot do it. Your family is your future and you want it secured.

Not only do you have to worry about all of this, but you also have to think of what may become of you when you can no longer make decisions for yourself. There may come a time when you can no longer manage your own finances, and it is better to have someone else in control of these important decisions. Getting help from others as you age is not even limited to just money matters. You may not be able to make your own medical decisions or be able to make your healthcare wishes known to those who are treating you.

All of this can add up to your feelings of stress and insecurity. This is where an estate planning firm can help you. You may think of the word “estate” as being associated only with what happens after you die. Yes, this is one part of estate planning, but it is not the only part of it. Estate planning can also cover things that affect you while you are still alive such as advance healthcare directives and living wills. Estate planning can even include planning for a divorce since any settlement would take into account the marital estate. You may not know that an estate planning firm can help you take steps to protect your assets for you to use and enjoy as opposed to having to hand them over to someone else.

Of course, it will help give you peace of mind to know that you have a plan in place should the unexpected happen. Working with an estate planning firm can help free you from the nagging worry of how your loved ones will make do without you. Many different aspects of your family’s life without you can be covered by an estate plan. This includes questions such as who would raise your children if the worst happens and how they will be raised. It could also include an issue such as a trust to care for someone who has special needs. Practically every obligation that you have right now can be provided for in an estate plan.

If you are a senior, you can enjoy your remaining years knowing that many things are taken care of. If you are younger, the estate planning firm will help you not only plan for the road ahead, but also to prepare for the worst possible outcomes. No matter how old or young you are, it is never too early or late to work with an estate planner. A knowledgeable estate plan attorney can help put things in place now and put your mind at ease.

Asset protection protects you and your investments in case of a lawsuit or threat of legal action. In this book we have discussed several strategies for protecting your holdings, what works best

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for you will vary depending on your circumstances and situation. If you would like to learn more about how to best protect your properties and yourself from the threat of a lawsuit it is important to consult and work with a knowledgeable professional. Together with an asset protection attorney, you can create and execute a strategy that aligns with your goals and protects your real estate from the threat of lawsuits.

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Mile High Estate Planning

Mile High Estate Planning was founded in 2013 with the goal of providing top-notch estate planning services to Colorado residents at affordable rates. Our mission is to provide our clients with lifetime guidance and peace of mind. Our team of attorneys are top-tier law school graduates and specialize in asset protection, wills and trusts, probate, and elder law. Our planning services are completed on a flat-fee basis.

Please contact us today to schedule your no-cost, no-obligation, initial consultation. We are available to meet in person, via zoom, or by phone. Our office is located in downtown Denver next to Union Station with free parking, however, we service clients across the United States.

Contact Us

Contact us today for a free consultation at [email protected].

1660 17th Street, Suite 120 Denver, CO 80202

Phone: 720-924-6171 or 833-Ask-Blake Fax: 720-330-3261

Mile High Estate Planning is open seven days a week from 7:00 A.M. to 7:00 P.M.

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