Probate in Colorado is required to transfer assets to heirs if an estate contains more than $50,000 of personal property or real property (for example, a home in Cherry Creek or a condo in Steamboat). This low threshold means your estate may be destined for probate if you fail to take any action.
A recent book Climbing the Retirement Mountain and Getting Safely Down the Other Side was cited by Next Avenue for an analogy of the probate process to a “traffic jam at the intersection of Last Will and Testament Boulevard.” This speaks to the fact that a will doesn’t avoid probate and your loved ones could spend months or years navigating the court process.
What are the timelines?
Uncontested probate will probably take at least six months, but if there is conflict between heirs this time frame could extend into the years.
When is there a benefit to going through probate?
Regardless of the added time and cost, probate can be helpful in some situations. It might actually be less expensive than probate avoidance measures. The court process offers finality.
Which assets pass automatically?
Any accounts with a beneficiary designation pass outside a will and the probate process. A good portion of an estate may be held in these types of accounts. Some examples include:
- Roth or traditional IRAs
- 401(k) accounts and other employer-provided retirement accounts
- Life insurance policies
The other circumstance is when a couple jointly own property with “rights of survivorship.” In these cases, after the first spouse dies, the property transfers to the other spouse. When the second spouse dies, however, the property would go through probate unless steps have been taken to avoid it.
Why set up a living trust?
A revocable living trust gives you control during your lifetime then assets held in the trust pass directly to heirs. This type of trust avoids delay and costs associated with probate. A key to ensuring the trust operates as it is supposed to is to remember to transfer title to the trust whenever assets are acquired.
Consult an experienced estate planning attorney who can assist to properly set up a trust and transfer title. For instance, if you fail to follow through with title transfers and the trust will not serve its intended purpose.