The loss of a loved one is a difficult thing. Not only are you dealing with his or her death, but you now have to navigate this legal arena which can be quite daunting. I am personally here to assist you throughout this process so the legacy of your loved ones can be fulfilled.
In its simplified form, “probate” is the process of transferring assets that were owned by the person who died (the decedent) to his or her heirs or beneficiaries. Probate also provides a venue for anyone owed money by the deceased to make a claim and get paid out of the estate to the extent it has assets. One good thing about probate is if a creditor doesn’t file a claim within 4 months after published notice, the claim is barred.
Who Handles the Probate Proceeding?
The decedent’s spouse or an adult child usually has the burden to deal with probate as the personal representative. A personal representative is the person you name in your will to handle your estate upon your death. The role is threefold: (1) gather all of the assets in your estate; (2) pay any outstanding debts you may owe; and (3) distribute the remaining property according to the terms of your will. All of this requires several documents to be prepared and filed with the court.
The personal representative is usually entitled to charge a reasonable fee to compensate for his or her time and effort. Frequently, the personal representative will hire the law firm or lawyer who created the will to assist them in going through the probate process. So, in addition to this lawyer’s attorney fees for having created the will, this lawyer’s firm will charge legal fees for handling the probate (sometimes equal to or more than setting up a revocable living trust that avoids probate altogether; legal fees can run from about $1,500 to $6,000 or more).
The court process itself can take six months or more of lost time with the inability to deal with or sell some assets until the process is finished. For example, if the probate involves the decedent’s house, what heir wants to wait six months or more before it can be put on the market and sold? Additionally, this is a public proceeding, which means that all court proceedings and all of the papers filed in the case are open to the public. Many people find this loss of privacy problematic for their survivors.
In my opinion, the best way to avoid probate is to make a Revocable Living Trust (RLT) the centerpiece of your estate plan. If you have an RLT, then on your death your “successor trustee” simply steps in and continues to administer the trust just as you did. However, even if you have an RLT, probate may be necessary if the RLT was not completely “funded” and probate assets existed. If so, then the “Pour Over Will” comes into play to pour the probate assets into the trust with court approval. You can only avoid probate for your family if you take steps now to not have any “probate assets” when you die.
Probate Assets Defined
Probate assets are assets and property solely owned by the decedent at the time of his or her death, either without a signed named beneficiary document, or with the decedent’s estate named as the beneficiary. Assets that are co-owned by the decedent and one or more other people in tenancy in common. For example, any asset you leave that includes a beneficiary designation, like life insurance, is not a “probate asset”. It’s important to know that any asset that passes on death by a beneficiary designation controls over any provisions of a Will or a trust. On the first death, real estate that was held in joint tenancy doesn’t need to be “probated,” but on the death of the remaining joint tenant, usually a spouse, the real estate does pass through the probate process.
Property Owned in a Different State
If you own out of state real property, such as a vacation home, then a revocable trust may again be the best option. Without an RLT, your out of state property is subject to two probate proceedings: one here in Colorado and another in the state where your property is located.