Everyone has heard the expression, “You can’t take it with you.” The fact is that nearly everyone who dies in Colorado leaves some property behind; there’s little choice in that matter. There is, however, choice in how that property is left, and the choices you make could help your loved ones to bypass the Colorado probate process.
Mechanisms for Avoiding Colorado Probate
To understand how to avoid the Colorado probate process, you first need to understand general categories of property and how they can be owned and transferred. There are two basic “buckets” that property can fall into: real property or personal property. Real property is commonly called real estate. It includes houses and land, but also interests in real estate, such as timeshare ownership. Personal property is everything else. Personal property may be tangible, like cars, clothing, art, or money. Or it may be intangible, like patents or contractual rights.
One very common way that people avoid having their real property go through probate is to title it to their Revocable Living Trust. The deed to the property will indicate that the property owner is the Trust. This means that when the Grantor of the Trust dies, all the rights to the property pass via the Trust document, without any further Probate action being taken. Certain personal property can also be owned by a Trust; the most common example of this is investment and bank accounts.
There are a variety of other ways to keep personal property out of probate. Life insurance proceeds on a policy that lists another person (not the deceased person’s estate) as beneficiary do not go through probate. Any asset, like a pension or investment fund held in a “Transfer on Death” (TOD) or “Payable on Death” (POD) account likewise bypasses probate.
One of the most beneficial ways to keep personal property out of probate is to hold it in trust. There are many types of trusts, so if you are interested in this option, consult with a reputable estate planning attorney who understands your needs and will help you make an informed decision.
Be aware: steps that you take to avoid probate may have significant tax consequences for your estate or your heirs. For this reason, it’s highly recommended to consult with a knowledgeable Colorado probate and estate planning attorney.
Do You Really Need to Avoid Probate?
Colorado probate can be complex, but it need not be as intimidating as people think. Avoiding probate should not be such an overarching goal that people make choices that don’t benefit them, all in the service of avoiding probate. One example is creating an unnecessary “living trust.” Unscrupulous service providers have talked some Colorado consumers into purchasing overpriced trust documents unsuited to their estate planning goals.
Fortunately, there is a single solution to both the desire to avoid probate problems and the risk of being taken advantage of: consulting with an experienced Colorado estate planning and probate attorney. At Davis Schilken, we take into account our clients’ big picture: the type and amount of their assets, the needs of their loved ones, potential tax issues, and clients’ particular estate planning goals. We then design an estate plan customized for their circumstances.
For those clients who are faced with the more immediate issue of administering a probate estate, our probate attorneys can guide them through the process so that probate is as simple and stress-free as possible. Contact us at 303-670-9855 to arrange a consultation at one of our two locations in The Denver Tech Center and Golden, Colorado. We look forward to working with you.