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Real property and probate

On Behalf of | Jul 8, 2024 | Uncategorized |

When it comes to estate planning and probate, real property—whether it’s a beloved lakeside cabin passed down through generations or a family home where parents still reside—requires special consideration. Unlike such assets as retirement accounts or stocks, the emotional ties to real property can go back generations or represent a childhood home.

In Colorado, probate is generally required if the decedent owned any real estate or more than a certain amount, which increases annually. During probate, the court appoints an executor (also called a personal representative) to manage the deceased person’s assets, pay debts and transfer property to heirs.

Challenges and opportunities

Here are some reasons why real estate in probate deserves unique attention and provides practical tips for managing it effectively.

  1. Valuation: Determining the value of real estate can be tricky due to market fluctuations, location and the property’s condition. Executors must obtain accurate appraisals to ensure fair distribution among heirs.
  2. Maintenance and costs: Real property still needs maintenance while waiting for probate to conclude. Executors must cover property taxes, insurance and repairs. Balancing these expenses can be challenging.
  3. Title issues: A clear title is crucial for transferring ownership. Executors must verify title deeds, resolve liens, and address any encumbrances. Title issues can delay probate proceedings.

Avoiding probate may be possible

While probate is typical, there are several legal methods to potentially avoid probate and expedite asset distribution:

  1. Living Trusts: The owner can create a revocable trust (living trust) during your lifetime to hold ownership of assets, including real estate. A successor trustee takes over after your death, bypassing probate.
  2. Joint ownership: Establish joint ownership of property. When one owner passes away, the property automatically transfers to the surviving owner without probate.
  3. Beneficiary designations: Set up payable-on-death (POD) and transfer-on-death (TOD) designations for bank accounts, vehicles, and other assets. These designations allow direct transfer to beneficiaries upon your death.

Mistakes can be costly

When it comes to estate planning, mistakes cost time or money. So, many find it helpful to consult with an estate planning lawyer who can help tailor these strategies to your family’s specific situation.