What You Need to Know About Probate in Colorado
What is Probate?
Put as simply as possible, probate is the process of proving that a will is valid so that the wishes expressed in that will can be carried out with legal authority. It also includes the paying of any creditors of the deceased loved one. Colorado’s probate process is fairly simplified, so over 90% of estates in Colorado are resolved without having to go through the probate court. Generally, the court appoints Personal Representatives to pay the bills, sell the assets, and distribute personal possessions.
Contrary to popular belief, wills do not avoid probate. They are the very documents that probate is for. If avoiding probate is an estate planning goal, consider some of the options discussed below or talk with an attorney about creating a revocable living trust.
What Assets are Subject to Probate?
Certain assets are set up to pass to specific beneficiary upon death such as property held in joint tenancy or assets with a payable on death (POD) designation. These assets are not subject to the probate process though they may be subject to taxes. So, if a husband and wife have a joint account and the husband dies, the wife gets the funds in that account automatically, regardless of what the will says.
Also, life insurance and retirement accounts that name a specific person as a beneficiary are not probate assets. Those assets pass to that designated beneficiary without the need for court intervention.
Be aware that Colorado law requires a decedent’s will to be filed with the Probate Court within ten days of death, even if there is no need to
How do Probate Assets Pass on to Heirs?
After all non-probate assets are determined and separated, the remaining assets are generally administered in one of three ways:
Small Estate Affidavit. If the value of probate assets taken together is less than $50,000, an heir can fill out a form called a small estate affidavit and present that document to whomever holds the assets. The persons or institutions holding the assets are then obligated to release the assets without further action. This works for all assets except real estate, regardless of the value of that real estate.
Informal Probate. This is the process by which the vast majority of estates in Colorado are administered. It generally takes between 6 and 12 months. The process is not court supervised and an attorney would have a minimal role.
People without homes or other real estate including time shares, oil, and gas interests are the most likely candidates for the informal probate process.
Administration of the estate is commenced by filing certain documents with the probate court. While those initial documents appear uncomplicated, there are pitfalls that can complicate settlement down the road. It would definitely be beneficial to consult with an attorney before getting too far into the process.
Once those initial filings are made, the estate is “opened.” The Personal Representative (or PR, formerly known as the “executor”) assumes responsibility for paying the bills and taxes and distributing the remaining probate assets to the beneficiaries. Colorado law sets forth the order in which debts are to be paid. The will nearly always names a PR. Otherwise, an heir or other interested party can request that the court appoint one.
Formal Probate. When informal probate is insufficient, such as when the estate becomes too complex or when there is dispute among the interested parties, formal probate is required. The Probate Court Judge will resolve disputes and issue orders which all parties must follow.
Closing an Estate
An estate is closed informally by filing a document stating that the PR has paid all debts and made all distributions according to the will.
While most folks have some sense that they would like to avoid probate in their estate administration, few have a sense of what the process entails. Hopefully, the information above has given you a sense of what to expect should you face the probate process after the death of a loved one. Shupe & Associates, P.C. is here to help guide you through this process and hopefully give you one less thing to think about alone should the need arise.