What is “probate”?
Probate is the process of transferring ownership/title of assets from a person who dies (“decedent”) to their devisees. A devisee is a person named in a will to receive an asset/property. By the literal definition, all wills/estates must go through probate; however, we generally understand that when people ask if they must go “through probate” they generally are asking if they must go through Court.
So, the accurate question is to what degree will the Court be involved?
The Colorado Probate Code allows a great deal of flexibility of the type of proceeding to be applied to each estate.
There are four primary methods to transfer assets from a decedent:
- Non-Probate Transfer;
- Probate by Affidavit;
- Informal probate;
- Formal probate.
It is important to engage with an experienced probate lawyer as selecting the best probate method will save time and money.
The first step in selecting the proper method is to look at how the assets are titled and whether there is a named beneficiary pursuant to the individual asset. Many assets simply transfer to its beneficiary by a function of law upon the decedent’s death. Common examples are real estate in joint tenancy with right of survivorship, life insurance proceeds, joint bank accounts, vehicles, and employee benefits.
The second step in selecting the proper method is to estimate the value of the estate. Estates that are small in value are allowed to enter a much less intrusive probate administration. Experienced probate attorneys are familiar with the accepted valuation methods and techniques that used by the Internal Revenue Service, Colorado Probate System, and the Colorado Law of Wills, Trusts and Fiduciary Administration. The valuation of an estate can be complex as assets that transfer by a function of law and assets held in a trust are generally not considered part of the estate when valuing.
The third step in selecting the proper method is to analyze the likelihood of any disputes as to the validity of the will, property title disputes, or any other significant challenges.
NON-PROBATE TRANSFERS
Sometimes after a decedent dies, assets transfer directly to a beneficiary without any need for court involvement and without the use of a will. At the risk of sounding circuitous, a beneficiary is a person who inherits property or an asset through non-probate transfer.
A common example of a non-probate transfer is joint ownership. For example, when a vehicle is jointly owned by two people and one dies, the survivor does not generally have to go to court to transfer the vehicle into the survivor’s name alone. The survivor simply presents a death certificate to the DMV and receives a new title without the decedent’s name on it. Other common examples of non-probate assets are jointly owned bank accounts, bank accounts with a payable on death designation, and life insurance policies with a designated beneficiary.
No court involvement is necessary to transfer non-probate assets. However, courts may still be involved if there is some question about the manner by which the asset became a non-probate asset. This question can arise when an asset that was named in a will (therefore intended to be transferred by will) is transferred by someone in a position of the decedent’s trust to that same person. For example, a person with Financial Power of Attorney over a decedent transferring a bank account into the Financial Power of Attorney’s name using that same document.
PROBATE BY AFFIDAVIT
Probate by affidavit also involves no court supervision. Colorado allows probate by affidavit in estates that are not large enough to justify administration and do not have any disputes. The value set for probate by affidavit for individuals who died in 2022 $74,000. So if a decedent dies in 2022 and the value of their estate is $74,000 or less, their heirs can collect and transfer assets using a small estate affidavit. This value adjusts for inflation based on the year of death so we recommend a consultation with an experienced estate lawyer to establish the value from the decedent’s year of death. In probate by affidavit, an asset may be transferred by the presentation of a written affidavit by a person claiming to be a successor to the decedent stating that:
- All the decedent’s property subject to disposition by will or intestate succession, less liens and encumbrances, does not exceed $74,000;
- 10 days have elapsed since the decedent’s death;
- No application or petition for the appointment of a personal representative is pending or has been granted; and
- Each claiming successor is entitled to the property in the proportions set forth, a person or institution having control or title to a decedent’s assets is directed to deliver ownership of the assets to those presenting the affidavit and is given protection for so doing.
INFORMAL PROBATE
Informal proceedings begin with an application to the probate court. Informal probate is generally used where there are no disputes as to (1) the existence (or lack thereof) of any will, (2) the terms of any will, and (3) and there is a qualified personal representative ready to be appointed. Often to qualify for informal proceedings, the qualified personal representative must provide the probate court renunciation and nomination documents from other parties who have a right to be the personal representative.
In informal cases, there is little oversight and intrusion by the probate court. Typically, the court will only act or make a decision if requested. If a dispute arises unexpectedly, informal probate proceedings can be converted to formal probate proceedings. Informal probate can be used in situation where there is a will and where there is not.
FORMAL PROBATE
Formal proceedings are started by a petition to the court and require notice to all interested persons and a hearing. Formal probate proceedings are action when controversy is expected, where the administration is expected to be of longer duration, or where broad powers are necessary. Formal probate proceedings are also necessary when there is a handwritten will.
Formal probate cases involve the judge or magistrate’s oversight. The Court will become as intrusive as needed by each individual case. In some cases, the Court does little while in other cases the Court will hold hearings that can last several days, weeks, or even months.
The Colorado Probate Code is located at C.R.S. §15-10-101 to §15-17-103.