Colorado probate law is very confusing for the general public, and frankly, this isn't surprising. Probate law is a legal process that most people do not think about until someone they love dies. Even then, unless a will or probate court names them as the personal representative, many people give the concept of how probate works very little thought. As a result, there are several Colorado probate myths that must be corrected. Having a better understanding of how Colorado probate law operates and how probate works can make the legal process of estate administration easier to understand as well as easier to get through for personal representatives and heirs.This article aims to provide factual information to dispel some Colorado probate myths. If you have questions about Colorado probate law, need estate planning assistance, or want to discuss a probate case, schedule a free consultation now with the probate attorneys of Ball Morse Lowe.
Can You Avoid Probate in Colorado?
If you are looking for ways to avoid the probate procedure in Colorado, there are certain estate planning tools that may be right for you. However, it is important that you begin the estate planning process before the need for a probate case is necessary.
- Living trusts. Living trusts are trusts established during your life that can hold any of your assets, including personal property and real property. Assets placed within a living trust avoid probate in Colorado.
- Joint ownership of property. Joint ownership of property creates a legal concept referred to as the right of survivorship. For property owned with another person, the surviving owner receives the remaining share when the other owner dies, meaning that this particular piece of real property will avoid probate in Colorado. Joint tenancy, regardless of whether the owners are married, also allows the property owner to avoid the probate procedure for that specific property.
- Payable-on-death accounts. Payable-on-death designations for financial accounts, such as a bank account or a savings account, is a simple estate planning tool that does not require the assistance of a probate or estate planning attorney. To accomplish this, all that is required is for you to speak with your bank or credit union representative and ask for the proper form that allows you to designate a payable-on-demand beneficiary. This can be very helpful as heirs may collect the payable-on-death account without it going through probate in Colorado.
- Transfer-on-death securities. Certain stocks and bonds in Colorado are eligible for registration as transfer-on-death securities with a specific form. All it requires is for you to speak with your brokerage company or plan administrator to request the proper form to list the beneficiary. Then, the registered securities will avoid probate.
- Transfer-on-death vehicle registration. If your vehicle is paid off, state law allows you to register your vehicle with a transfer-on-death beneficiary. With this, your vehicle avoids probate and is given to the named beneficiary.
- Transfer-on-death deeds. If you own real property, such as a home, that you want to leave to an heir and you would like it to avoid probate in Colorado, you may be able to take advantage of Colorado's transfer-on-death deed. Also referred to as a beneficiary deed, you prepare and record it during the estate planning process. However, doing so does not prevent you from deciding to revoke and sell your property, if you choose to do so, as the document holds no power until you die.
Additionally, there are three types of probate. While you will learn more about each type of probate further into this article, we want to briefly touch on one of them, as it does not involve traditional probate. For estates that are worth less than $70,000 (as of 2020) in personal property and that do not have any real property, they may qualify under state law as a small estate. Instead of beginning the probate procedure, a small estate affidavit is completed and filed with the court, and the personal representative may thereafter distribute the assets. While this does not technically avoid probate, it also is not the full estate administration process that most people fear.
What Are Common Myths About Probate in Colorado?
There are several Colorado probate myths that fuel the fear surrounding the probate procedure as well as estate planning. The truth is that getting involved now in the estate planning process can improve the probate procedure in the future for your family. You will also be more educated about how probate works.
It is a myth that simply having a will means that you will avoid probate.
Yes, a will is important. A will clarifies how you want your assets distributed when you die. If you have personal property with a value of more than $70,000, or own real property, a will on its own will not avoid probate.
It is also a myth that all of your assets must go through the probate process.
If your estate planning was properly prepared and you took advantage of various tools as discussed in the previous section, such as living trusts, transfer-on-death accounts, transfer-on-death deeds, and payable-on-death accounts, then only assets that aren't specifically covered by those types of tools would be subject to probate. Additionally, life insurance and most retirement accounts also aren't subject to probate.
It is a myth that probate in Colorado always takes years to finish.
The length of time that estate administration takes in a probate case depends on many factors. For both informal and formal probate, the minimum time for the process to be completed is six months. This gives creditors and potential heirs enough time to be informed about the fact that a probate petition was filed with the probate court. The more complicated a probate case is, the longer it takes.
It is a myth that probate is always so expensive that it will devour an estate's worth.
While each probate case is unique in nature, and it is impossible to give a clear answer on what the cost of a probate case will be, certain fees are fixed, such as court costs. Generally, when a probate matter is simple, such as for informal probate, probate in Colorado does not have to be so expensive that nothing is left in the estate after the process is completed.
It is a myth that personal representatives can do whatever they want during estate administration.
Personal representatives must follow state laws. They have a fiduciary duty to creditors, heirs, and the estate. The personal representative is required to follow probate procedures and answer to the probate court. They are legally required to take certain steps in a certain order. They cannot do whatever they want with the assets.
I Have a Will. Do I Still Need to Go Through Probate?
If your personal assets total more than $70,000, or you own real property, and you have a will that includes assets that are not placed inside of a vehicle such as a living trust, the answer is yes. However, if your personal assets total less than $70,000 and you do not own any real property, you may qualify for a small estate affidavit.
How Long Does Probate Take?
The length of time that the probate process takes depends on several factors such as the complexity of the estate, whether there is a will, whether creditors object to the treatment of their claim, and whether someone contests the will. For both the informal probate and formal probate process, the minimum amount of time is six months. The more issues that arise during a probate case, the longer the matter may take to draw to a close.
Which Type of Probate Is Right for Me?
Colorado probate law provides three different types of probate.
- Small estates.
- Informal probate.
- Formal probate.
Generally speaking, small estates are defined by state law as an estate worth less than $70,000 in personal property with no real property. Informal probate may be commenced if the decedent did or did not leave a will. If there is no will, then informal probate is appropriate if there is a clear line of inheritance involved. Informal probate may also be appropriate when there is a qualified personal representative available to accept the appointment, and there is no expectation that a contest shall occur. With an informal probate proceeding, the probate court is involved, but they are not as hands-on as they are in formal probate. With formal probate, there may or may not be a will. Formal probate is most appropriate when probate litigation is expected, such as someone contesting the will, a creditor objecting to how their claim was treated, or other complexities.
However, in both informal and formal probate, there are numerous probate steps and probate forms that must be completed. You can preview the probate forms on the Colorado Judicial Branch's website.
Determining which form of probate in Colorado is right for the probate case can be difficult since there are so many factors involved. An experienced probate attorney can provide a valuable point of view in making this determination. Schedule your free consultation now.
Should I Worry About Someone Contesting the Will?
There are many reasons why someone might decide to contest a will. Sometimes, heirs may believe they have good standing to do so. They may believe the will was written because of undue influence. They may believe that it was not written according to state law. They may believe that their loved one did not have the mental capacity to create the will because they suffered from dementia or Alzheimer's at the time the will was last updated or even created. Then again, someone may try to contest the will even when they do not have proper legal standing.
Regardless, if you are concerned that someone may contest the will it is imperative that you seek legal advice from a probate attorney to understand state law, to become informed on how probate laws operate, and to learn what you should expect during the probate process. If it is your will and you are looking for a way to improve your estate plan, there may be language you can use to prevent someone from contesting the will, thus making the probate procedure easier in the future.
To learn more about how probate works in Colorado and estate planning, schedule your free consultation now.