PROBATE – AHH!!!
Just the mention of the word sends chills down many American’s backs. But is it really that bad? We in Colorado are fortunate that our laws allow us to choose how to proceed into probate (which is the process of winding up the affairs of a decedent by paying creditors and distributing assets and property). The two choices are informal probate or formal probate.
Informal probate means that the estate is not court-supervised. Administration of the estate begins by filing a number of probate forms with the District Court, having the Court admit the estate into probate and appointing a personal representative (formally known as an “executor” or “executrix”) to begin the process of paying bills, taxes, selling property and/or distributing the decedent’s assets pursuant to the decedent’s Will or by the intestacy statutes if the person died without a Will. An informal probate can be wrapped up after six months, but most estate matters take up to a year or more.
Formal probate, sometimes referred to as supervised administration, occurs rarely, but is sometimes necessary when a dispute exists between those people interested in the decedent’s estate. In this case, the Court conducts hearings periodically regarding the distribution of the estate and other matters that arise during the administration process. A formal probate can last years and is often very costly.
The good news is that 90% of all estates in Colorado are not supervised, thus there are less costs and attorney fees associated with an informal probate. Because Colorado has adopted what is known as the Uniform Probate Code, probate matters have been greatly simplified, thus, reducing the fear of probate that many of us exhibit today.
So, does every estate need to go through the probate process? Not necessarily. For example, if an individual passes away with personal property and bank account assets (not real property) that are valued less than $66,000.00 a small estate affidavit can be used to transfer the property. Also, some property may just pass to another by operation of law, i.e. joint tenancy with right of survivorship, beneficiary designations on life insurance policies and IRAs, payable on death accounts (PODs), transferable on death accounts (TODs), and trusts. However, beware of transferring property or setting up a trust just to avoid probate. There could be significant tax implications and other unnecessary costs by transferring property without the advice of an attorney or accountant. Remember, probate should not be feared. Consult with your attorney on how probate can affect your estate.
Editor’s Note: This article was submitted by Jolene L. Devries, Elder Law Attorney. She can be reached at 719-275-4424