In Colorado, as in other states, after a person’s death, all of their assets and belongings are transferred to their heirs and beneficiaries. There are several different ways in which this can happen. One method is through probate, a court procedure that validates and carries out the wishes contained in a will. Whether an asset is transferred through probate or another process depends on several factors, including whether there is a will, how the asset is owned, and whether there is a trust.
The Importance of a Will when a Colorado Resident Dies
Whether or not there is a will is the first and most important question when a person dies. A will is a written document that specifies how the testator (the person writing the will) wants their belongings distributed after their death.
For a will to be valid in Colorado the following requirements must be met:
- The testator must be at least 18 years old
- The testator must be competent of mind and memory at the time of signing
- The testator must sign the will without any duress or fraud
- The will must be in writing
- The will must be signed by the testator
- There must be two witnesses to the will
The will should name a personal representative (called an executor in other states) who will ensure that the will is filed with the proper Colorado court and that its provisions are carried out. The people who are named in the will as recipients of the testator’s assets are called beneficiaries. A beneficiary can be anyone the testator chooses, such as a relative, a friend, a stranger, or a charity.
When a person creates a will, they determine who gets each asset that they own. Items can be named specifically (such as “I give my wedding rings to my daughter Sunita”) or more generally (“I leave all of my household items to my son Lance,” or “I leave everything I own to my wife Marguerite”)
The will is the roadmap to ensure that all of these wishes are carried out after the testator’s death.
What is Probate?
If there is a will, there must be some kind of a probate procedure, the court process for approving and carrying out the wishes in a will. Probate only occurs when there is a will. This procedure requires a judge to review the will and make sure it is valid.
All of the testator’s assets must be totaled and accounted for by the court. The outstanding creditors are paid, and the remaining assets are then distributed to the beneficiaries named in the will. The probate process can take several months, and there are court fees associated with it.
It is important to note that probate in the State of Colorado is public record, and the public can access any probated will.
There are some options for more informal probate processes, such as if the value of the deceased’s estate is less than $50,000 or if there are no questions at all about the provisions in the will. These less formal procedures reduce the length of the process and some of the fees associated with it. Probate is required if there is disagreement about the will or anyone is seeking to contest it (have it overturned).
What if You Die Without a Will? The Difference between Probate and Administration
When a person dies without a will, this is called dying intestate or intestacy. In this situation, their assets and belongings are distributed according to state law. Colorado statutes lay out exactly who will inherit.
In most situations, this means that everything they own goes to their spouse and children, or other close relatives if they are not married and have no children.
The distribution of assets is done under court supervision through a process called administration. Like probate, all of the deceased’s assets must be totaled and accounted for and all creditors paid. Then the remaining assets are distributed to the heirs according to the state statute.
Assets that Pass Outside of Probate
There are some assets that are owned in such a way that they pass automatically to another person without the need for a will, probate, or an intestacy proceeding.
These non-probate assets include:
- Beneficiary-designated assets. Beneficiary designated assets are assets that are owned in such a way that when the owner dies, they are automatically transferred to someone else. Examples include transfer on death bank and brokerage accounts, life insurance, and retirement plans. These assets do not go through probate.
- Some real estate. Real estate may pass outside of probate if the title is specifically held as ‘joint tenants with the right of survivorship’. This means if two people own the property in this manner (that phrase on the title) and one dies, the other automatically upon the death becomes sole owner. Beneficiary deeds also ensure that the person named as beneficiary on the deed becomes the owner upon the other person’s death.
- Trust assets. Assets that the deceased (called the grantor if they have created a trust) placed in a trust before their death are not impacted by an existing will and do not pass through probate or intestacy proceedings. Instead, the terms of the trust dictate the distribution of trust assets after the grantor’s death. The trustee who manages the trust ensures that the grantor’s wishes are carried out. Living trusts are included in this category.
Non-probate assets are not impacted by a will (and if those assets are mistakenly named in a will, that provision does not apply since the asset is transferred automatically based on the ownership type), a probate procedure, or any automatic court overview. In general, all that is needed to change ownership of a non-probate asset is a death certificate.
Since these assets pass automatically, outside of court, their transfer cannot be challenged in a probate proceeding.
How Coloradans Can Protect Their Assets and Ensure Their Wishes are Followed
There are several important steps you should take to protect your assets and ensure that your wishes are carried out after your death.
- Meet with an attorney for personalized estate planning. Estate planning is a comprehensive process that evaluates all of your assets. It determines the best and most efficient way for you to protect them and then pass them to the people and charities you care about after your death. The estate planning process also allows you to create an advance directive so you can make decisions now about your future medical care should you ever be unable to make your own decisions.
- Evaluate ownership of your assets. Your attorney can help you evaluate whether you already have non-probate assets and whether assets you currently own can be converted to non-probate assets. Maximizing your non-probate holdings will simplify your estate and reduce probate costs. It will also make things easier for your heirs, who will have immediate access to assets without waiting for a lengthy probate process to conclude.
- Execute and sign a will. Even if most of your assets are non-probate assets, it is important to create a will so that any assets that have been overlooked or improperly designated will pass to the people you personally choose. Doing so also allows you to designate a personal representative who will ensure that your wishes are carried out.
The skilled attorneys at Burnham Law have years of experience assisting Coloradans with estate planning. Whether you want to understand your options or get started with creating a will, trust, or advance directives, our team has the answers you need. Call us today at 303-990-5308 so you can protect your family’s future.