When working with estate planning clients, and explaining the probate process, clients are often surprised to learn that even when they have a Last Will and Testament that sets forth distribution of their estate, the Will is still subject to probate in Colorado.? This is because, in Colorado, having a Will does not enable avoidance of probate, but it can and should make the probate process a bit more streamlined and cost efficient.
What is ?Probate??
Probate is the process by which assets are legally transferred from a deceased to his or her heirs and beneficiaries.? In Colorado, all wills (testate estate) and intestate (no will) estates must be probated.? Under Colorado law, a decedent’s Will must be lodged (filed) with the District Court where the decedent resided (domiciled) within ten (10) days of the decedent’s passing, even if there is no probate administration expected.? There are three types of probate depending on the size of the estate and whether there is a Will or clear intestacy and whether an estate is contested.
Small Estates:? Less than $50,000 and no real property.? For those individuals who have less than $50,000 and no real property in the estate at the time of death, whether they die with a Will or intestate, the beneficiaries and/or heirs may collect the decedent’s assets by using an affidavit and no probate court action is opened.? Even with a small estate, if there is a Will, the Will must be lodged.? An affidavit (made by the Personal Representative/Executor if one is named in a Will, or by order of intestacy, the closest heir) is presented to the institution or individual possessing/holding a decedent’s asset (such as a bank account) and the affiant then collects the asset and distributes the asset according to the terms of the Will or the laws of intestacy.
Informal Probate:? Uncontested estates.? Informal probate is generally permitted for estates in excess of $50,000 or with real property and there is either a Will or clear intestacy (i.e., a surviving spouse or child), and no contests to the distribution of the estate are expected.? With informal probate, the court has a limited role of supervising the named personal representative or appointed personal representative in the case of intestacy to ensure the terms of the Will or the laws of intestacy are followed in the distribution of the estate, but the personal representative is a fiduciary for purposes of distributing and/or managing the decedent’s estate.? A personal representative is required to provide notice to potential heirs and beneficiaries and creditors and cannot distribute the estate until such creditors’ notice period is expired and legitimate claims are paid.? The probate must remain open for a period of at least six months; however, complete administration may take significantly longer.
Formal Probate:? Contested estate or invalid/questionable Wills.? Formal probate may be required in circumstances where there is a questionable, invalid, or contested Will or where there may be substantial challenges, such as identifying heirs in the case of intestacy, property disputes, or beneficiary challenges.? The court has discretion regarding the degree of supervision from allowing a personal representative to administer the estate unsupervised to requiring court approval for every transaction.? Because formal probate can be complex, adversarial, and require significant court oversight, costs associated with formal probate (including potential attorney fees if the personal representative must hire counsel), including the time and costs to administer an estate through formal probate can be substantial.
SMART TIP:? Colorado probate procedures can be complex and confusing. There are several estate planning tools and techniques that can be employed in an effort to avoid probate.? We encourage those interested in avoiding probate to seek professional advice from legal counsel and financial advisors.