What is Probate?
Probate is a legal process that is outlined in Article 15, Title 10 of the Colorado Revised Statues.
With respect to persons who have died with or without a will, the purposes of Probate include:
- To simplify and clarify the law concerning the affairs of decedents;
- To discover and make effective the intent of a decedent in distribution of his property; and
- To promote a speedy and efficient system for settling the estate of the decedent and making distribution to his successors;
When a person dies either with, or without a will, and owns any type of property (real estate, personal tangible property, or depository accounts) transfer of those assets to third parties who are entitled to receive those assets requires several legal determinations and formalities before the law will recognize or validate the transfer of ownership.
If a person dies without a will, the intestate laws of Colorado will govern who is entitled to receive non-joint tenancy property. As outlined in the foregoing section, the law can be a bit burdensome to understand and follow. The probate process provides a means for resolving any disputes concerning inheritance that may arise when a person dies without a will.
When a person dies having left a will, probate provides a process to determine the validity of the will, and a means for resolving any inheritance disputes that may arise.
Whether or not a will is involved, probate sets forth certain requirements and steps that must be undertaken prior to transfer of a decedent’s property to the heirs.
In Colorado there are three types of probates. if there is a will the probate is referred to as testate estates—or if there is no will, it is referred to as an intestate estate.
Type 1 – Small Estates
Colorado law has a simplified process that can be used if the value of a decedent’s estate is $60,000 or less in personal property (includes bank accounts and cash) and there is no real property (i.e., real estate). In such a situation, the heirs may collect a decedent’s assets by using an affidavit and therefore avoid having to open a probate action through the court. The law requires a devisee or heir collecting the assets to swear they are entitled to the assets of a decedent and will distribute it to entitled devisees or heirs.
Type 2 – Informal Probate
Informal Probate consists of filings with the court, limited court hearings, and unless objections are raised, routine court approvals. The informal process is generally allowed when there is a valid will or clear intestacy, no contests are expected, and there is a qualified personal representative ready to be appointed. The court has a limited role in the administration but ensures that the directions in the will or intestacy law are followed and provides a venue for the devisees or heirs to hold the personal representative accountable.
Type 3 Probate – Formal Probate
Formal Probate involves prior court approval, close supervision, control, and review of the actions of a Personal Representative, after notice to third parties, and a formal court hearing. A formal probate may be required for several reasons, including when a will is contested, unclear, invalid, or when there are apparent or actual significant challenges (i.e., identifying heirs, property title disputes) in administration. The court may require that the personal representative get approval for every transaction or may allow the personal representative to administer the estate unsupervised.
Both informal and formal probates must be open with the court for at least six months, but full administration of the estate may take much longer.
Highlights of the Probate Process
The probate process begins with a formal petition being filed with the State District Court in the County in which the decedent resided at the time of death. The petition recites basic information about the decedent, date of death, and whether the decedent is known to have left a will. A copy of the will is attached to the petition.
The person normally filing a petition for probate customarily seeks appointment as the Personal Representative and asks the court to issue “Letters Testamentary or Letters of Administration” evidencing the petitioner’s authority and power to act as Personal Representative.
A Personal Representative has many duties, rights, and responsibilities, including providing information to heirs, developing an inventory of estate assets, posting notice to creditors, opening and maintaining an estate bank account, paying creditors, selling, transferring, or encumbering assets, consolidating bank accounts, filing final income and estate tax returns, and making distributions in accordance with a will, trust, or the intestate laws of Colorado..
Colorado Probate Law requires a Personal Representative to:
- Provide written information about the probate to the heirs and devisees of the deceased person.
- Prepare an inventory and appraisement of the deceased’s estate within three months after appointment, listing with reasonable detail and indicating, as to each listed item, its fair market value as of the date of the decedent’s death and the type and amount of any encumbrance that may exist with reference to any item. The inventory shall include the oath or affirmation of the personal representative that it is complete and accurate so far as he is informed. The personal representative must send a copy of the inventory to interested persons who request it, or he may file the original of the inventory with the court.
- Supplement an estate’s inventory as follows If any property not included in the original inventory comes to the knowledge of a personal representative or if the personal representative learns that the value or description indicated in the original inventory for any item is erroneous or misleading.
- Take possession or control of, the decedent’s property; except that any real property or tangible personal property may be left with or surrendered to the person presumptively entitled thereto unless or until, in the judgment of the personal representative, possession of the property by the personal representative will be necessary for the purposes of administration.
- Pay taxes on and take all steps reasonably necessary for the management, protection, and preservation of the estate in such representative’s possession.
- Pay the decedent’s surviving spouse an exempt property allowance in the form of cash or other property of the estate allowed by the statute. If there is no surviving spouse, the decedent’s dependent children are entitled jointly to the same exempt property allowance.
- Pay the decedent’s surviving spouse and minor children who the decedent was obligated to support and children who were in fact being supported by the decedent a reasonable allowance in money out of the estate for their maintenance during the period of administration, which allowance may not continue for longer than one year if the estate is inadequate to discharge allowed claims.
- Provide Notice to Creditors by publishing in some daily or weekly newspaper in the county in which the estate is being administered, that all persons having claims against the above-named estate are required to present them to the undersigned or to the District Court on or before (a date not earlier than four months from date of first publication or the date one year from date of death, whichever occurs or said claims may be forever barred.
- Deal with creditor claims after they have been presented, and decide which claims are legitimate, and either allow or disallow those that are not valid.
- Close the Estate by filing appropriate accountings with the court.
A Personal Representative is entitled to reasonable compensation for their services. The duties and responsibilities of a Personal Representative are always time consuming, burdensome, stressful, and emotionally draining. The amount of compensation is reviewable by the court.
An attorney’s expertise is usually necessary to identify what type of probate is necessary. The scope of the attorney’s involvement will depend on the complexity of the estate. Even the most well-planned estates and well-written wills have costs associated with administration, including court fees, attorney fees, and the payment of the decedent’s final expenses and legitimate debts.
Most attorneys charge an hourly fee, and the rate depends on several factors, such as the attorney’s expertise and experience, the novelty and difficulty of the case, the results obtained, and costs involved.
Whether or not your devisees or heirs will have to go through probate to transfer title to your assets depends on how your assets were owned when you died.
There are certain types of assets that are not governed or distributed per the terms of a will. Only assets that were owned by you in your individual name (and that do not have a beneficiary designation) are controlled by the will.
Assets that are owned in joint tenancy, or assets that have a beneficiary designation like a life insurance policy, some bank accounts, IRAs, or other retirement investment accounts pass to the named beneficiaries by operation of law, and are not subject to the provisions in the will or the probate process.
Although the process of probate as described above, at first blush, seems onerous to the lay reader, it is for the most part, a logical progression of reasonable, necessary, and prudent steps designed to assure that a decedent’s property lawfully passes to the heirs, after creditors have been afforded an opportunity to have their claims settled.
Many advertisements appear in the media urging folks to avoid probate by using a Revocable Trust and other legal devices such as joint tenancy, or beneficiary deeds. These options serve a purpose and are worthy of consideration, but are not ‘cookie cutter’ solutions for everyone. Despite the use of such probate avoidance devices, a Pour-Over Will is still required to assure that no portion of a person’s estate is inadvertently omitted and subjected to the intestate laws of succession. More on this topic appears in the next section of this work.
Advantages of Probate
Despite the negative connotations of probate, there are certain advantages:
- Although a Will requires probate, it is easier to understand, requires less interpretation than other devices, and offers less room for dispute and controversy.
- Third parties are generally more receptive to recognizing probate orders from a court as opposed to self-executing, self-proving non-probate documents.
- Powers of Appointment held by decedents often are written to require exercise by a will, duly admitted to probate as a means of assuring the power of appointment’s integrity.
- Tax liability and responsibility under probate law for filing tax returns is consolidated and the burden of filing is shifted away from beneficiaries, thus making it clear who is responsible for taxes.
- The probate code bars claims against an estate arising before the death of a decedent unless presented within the time set forth in the statute, thus assuring certainty of creditor claims.
- Probate property may offer greater postmortem tax planning opportunities.
- Probate allows for preserving the Medicaid Exemption for Personal Residences, not otherwise available if the primary residence is placed in a revocable trust.
- Independent, neutral, court supervision offers a forum for resolution and protection of a decedent’s desires when family members are anticipated to be difficult, and potentially unreliable, or fraudulent.
The Bottom Line
Probate is an aspect of estate planning that requires deliberate thoughtfulness, and professional advice to fully understand. It is not to be thought of as something that should be avoided.
Rather, probate should be recognized for what it is and for what it offers— a legal and orderly process for settling your final worldly affairs and adjusting the disputes among your heirs and creditor while offering some protection or your spouse and children.
As such, it ought to be understood, considered and plans made to appropriately navigate through it.
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