Probate is the process by which an individual’s property is transferred after death. The law governing this process varies from state to state, but in Colorado probate can be less time consuming and costly than in many other states. This post will give a brief overview of the assets subject to probate and the types of probate in Colorado.
Not all assets are subject to probate. When we refer to the decedent’s estate we mean all the property, including all types of real property and personal property, owned by the person who passed away. Real estate owned in joint tenancy with rights of survivorship will automatically vest in the surviving joint tenant(s) upon death. Similarly, ownership of jointly owned bank accounts vest in the surviving account owner. Other assets, like an IRA, 401(K), or life insurance policy, have a transfer upon death clause with a designated beneficiary that operates outside of the probate process. Generally, assets owned individually without a beneficiary designation will be subject to probate. When developing a comprehensive estate plan, it is important to review all assets and their impact upon the distribution of your estate.
Colorado has three levels of probate:
- Small Estates: If an estate is worth less than a certain amount and includes no real property, then the estate may be administered through the use of a Small Estate Affidavit, allowing the collection of assets and payment of debts while avoiding probate court entirely. The statutory maximum for a small estate is indexed for inflation. In 2020, the amount is $70,0000.
- Informal Probate: Most estates above the small estate threshold, or that hold real property, go through informal probate. Informal probate is suitable for estates where there is a valid will, a personal representative has been identified, and no contest of the will is anticipated. Informal probate is also suitable for intestate estates (where the decedent did not leave a will) and a suitable party stands ready to act as administrator and distribute property via the Colorado intestacy statutes.
- Formal probate: Formal probate is required when there is a dispute over the validity of the will, or an interested party contests the will. Formal probate is a court proceeding, which may have varying levels of oversight and required approval of actions of the personal representative by the court.
An estate may go through informal probate, formal probate, or some combination of both.
Within both informal and formal probate, there is the potential for supervised and unsupervised administration. This simply refers to whether a court is formally monitoring the personal representative’s actions on behalf of the estate. Supervised administration is a fairly rare occurrence and generally only arises when there are significant and unresolved disputes between parties who have an interest in the decedent’s estate or where the estate is large and complex.
Statute requires that the probate estate be left open for a minimum of 6 months. During this period, the personal representative of the estate, sometimes called the executor or executrix, must notify all creditors. Any creditor to the estate must then file a claim. Consequently, probate takes a minimum of 6 months, and most probate estates are closed within a year, with the exception of large estates (currently in excess of $11.58 million) that have federal and state estate tax implications.
All probate estates will have costs of administration, such as payment of the decedent’s final expenses, payment of creditors, court fees, and attorney’s fees. Attorney’s generally charge an hourly rate for services associated with probate. The degree of attorney involvement will vary from estate to estate depending on the complexity of the estate and the nature of the probate proceedings. If you are unsure about the type of probate appropriate for your situation or if you need assistance with a probate matter, the advice of a good attorney can be invaluable. Let us know if we can help.
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