The Last Chapter Nobody Wants to Write (But Everyone Needs)

Nate is forty-six years old, married with three kids, and running a good local business. A well-respected member of his community here in Colorado, Nate made it a point to be everywhere he could as a great husband and dad, a volunteer at his church, and a middling golfer (his words, not mine).

The week between Christmas and New Year’s, Nate found himself belly up on the surgeon’s table for emergency bypass surgery. Two blockages brought him face to face with his humanity. He appeared to be in good shape, and while I’m no doctor, nor do I play one on TV or the weekends, I can assure you, Nate didn’t seem like the type of guy who’d be sporting a new zipper scar across his sternum. Thankfully, Nate was quickly on the road to recovery.

Nate’s situation sparked a much-needed conversation about what his family needs in place before he passes beyond his investment portfolio. Now, I’m not an attorney. My broker-dealer, Cambridge Investment Research Advisors, and Full Circle Financial of Colorado do not provide legal advice. Nothing in what I’m sharing in this article should be taken as such. What I can do, and what I believe falls squarely within my role as a behavioral financial advisor and fiduciary, is ensure you’re asking the right questions about your estate.

Based on my 30-plus years of experience as an entrepreneur and working with entrepreneurs, I can safely say that estate planning to most of the entrepreneurs I’ve met feels like cleaning out the garage: “I’ll get to it eventually.” Estate planning often finds itself living at the bottom of the never-ending to-do list. The problem is ‘eventually’ has a way of becoming a crisis – or an eternal regret.

“But, Mike, I have a financial plan. Isn’t that enough?” A financial plan alone is only part of the equation, and I make it a point to tell clients, “Your financial plan and estate plan aren’t supposed to live in isolation.” That’s why you’re reading this article – you want to know you have the right protective measures in place without giving into fear, regret, or unnecessary mistakes.

Think of this as a conversation starter. What happens to everything you’ve built when you’re no longer here to manage it? How can you better protect your hard-earned wealth with the right documents? The estate planning conversation often starts with the question: What’s the difference between a will and a trust? Let’s start there.

What Is a Will?

The estate document you’re probably most familiar with is a will. It’s a legal instrument that designates where your assets go after you pass, who will raise your children if needed, and who will be responsible for managing that entire process. At the very least, I highly recommend that Colorado business owners, in particular, have a will in place. This is often seen as the bare minimum in estate planning. It’s one of the most intentional ways to communicate care for your loved ones after you’re gone.

Not all wills have to go through probate in the state of Colorado, and an experienced estate attorney can give you greater clarity on that topic. What is probate? This is a public, court-supervised proceeding that can take months, sometimes longer, and leaves your financial affairs visible to anyone who cares to look.

Now, I don’t even like my HOA telling me how long my grass can be, let alone anyone having access to all the financial workings of my life. That said, there are other options you may want to consider for structuring your estate.

What Is a Revocable Living Trust? 

A revocable living trust, often simply called a revocable trust or a living trust, works differently from a will. The first distinction is that a trust is designed to bypass the probate court. You get to protect and preserve your family’s financial privacy, a value that’s increasingly rare nowadays. You can create and fund a revocable trust while you’re alive, hence the term “revocable”. 

A revocable trust can allow your assets to be managed and transferred according to your wishes without triggering probate. You personally retain full control of the trust during your lifetime. You’re welcome to change or revoke assets and access at your discretion. After you pass, your designated trustee will carry out your instructions in private, without the delay of probate court.

What happens when you cannot make informed decisions about your money, health care, or legal issues because of cognitive decline, injury, or illness? That’s where a living trust carries tremendous value. In the event you’re incapacitated, a revocable trust can go into immediate effect.

A key detail about trusts is that they must be funded. A trust without funding, as in the assets aren’t properly retitled and moved into the trust, will not do what you built it to do. This can be a costly oversight, and it’s entirely preventable with the right team around you. With funding in place, though, a trust gives you, as the controlling party, the freedom to designate how and when funds (and assets) are dispersed. This is why revocable trusts are often a better fit for families with young children or more complex estates, such as those with multiple properties, equity compensation, a family-owned business, or alternative securities and investments. 

Is It Better to Have a Will or a Trust as a Colorado Business Owner?

Let me be clear: wills and trusts aren’t meant to be one-size-fits-all estate solutions. The right structure for your family and business depends entirely on your Full Circle. This is the first step in my Full Financial Framework. Your Full Circle refers to the people and priorities that matter the most to you. Your goals, relationships, values, and, of course, your assets, with all their complexities, are what make your financial life uniquely yours.

So, which is better for Colorado business owners – a will or an estate? A revocable trust tends to make more sense for business owners compared to standard W-2 employees because of your business’ added legal structure. Also, if you own property in more than one state, a trust can help you protect against unnecessary separate court proceedings in each jurisdiction. This is what’s known as ancillary probate, which can also be time-consuming and expensive.

A trust also empowers you to be more precise in your estate decisions by clearly delineating how and when your assets reach their intended beneficiaries. If you hold business, equity compensation, or alternative investments, a trust provides added flexibility for how you want to structure distributions.

Does Having a Trust Reduce Your Tax Liabilities as a Colorado Business Owner?

This is a great question, and since I’m not a tax professional, nor do I provide tax advice, I recommend you consult with a certified public accountant or another qualified tax professional. What I can tell you is that a revocable trust doesn’t necessarily reduce your estate tax exposure. Assets held in a revocable trust typically receive a step-up in cost basis upon your death, which can have a significant impact on what your heirs may owe in capital gains tax.

A revocable trust can support broader planning strategies within your investment portfolio, which I’m happy to discuss your exact financial scenario during a Second Opinion Session. This is a complimentary conversation where we can review your current financial situation, discuss potential opportunities ahead, and I can ask some questions.

Getting Your Second Opinion With Full Circle Financial of Colorado

If you don’t have an updated estate plan, or the circumstances are different from your current plan, that’s a gap in your Full Financial Framework. Not a legal gap – again, I’ll leave that determination to your estate attorney – but it’s a planning and preparation gap. Preparation is the only reasonable response to the certainty of uncertainty.

My role isn’t to draft your documents. My role is to make sure the financial architecture of your life is coordinated. I aim to ensure your beneficiary designations align with your estate plan, that your investment accounts and your trust documents are speaking the same language, and that the people you love aren’t left sorting through unnecessary complexity at the hardest possible time.

If it’s been a while since you’ve sat down with a qualified estate planning attorney, that’s where I encourage you to start. If you have more questions than answers on how your financial picture connects with your estate planning, that’s why I’m here.

What you’ll likely experience in our Full Circle Consultation is that it’s in your best interest for me to be honest, upfront, and sometimes, blunt. Of course, I aim to do this in a professional, courteous manner, but you deserve to hear the truth in a way that cares for your financial future.

The last chapter of your financial story is too important to leave unwritten. Let’s make sure it says what you want.