If you’ve ever heard anyone talk about what happens after you or a loved one passes away, you may have heard them mention their desire to “avoid probate.” However, many people: 1. Don’t know exactly what that means and 2. Don’t know the best way to achieve that goal. Before you can understand why you want to avoid probate, it is important to have a good understanding of what probate means and what the probate process entails.
What is Probate?
When a person dies, all of their assets, liabilities and ownership interests become part of their estate. Probate is the process of parsing through the financial matters the deceased left behind, ensuring that the right people receive property, and also that all valid debts are paid. The word probate comes from the Latin probatum meaning “to prove.” Probate is the process of “proving” the validity of a will or estate settlement in court.
Why is Probate a Bad Thing?
Probate is not an inherently bad thing. It was a system created to handle estates fairly and with court oversight. However, there are some major cons when it comes to enduring the probate process like:
- No privacy: Your case will become public record. If you have a reason to want to maintain privacy after death, probate will be a problem. We all know that family dynamics and business dealings can be delicate. Probate will put it all out in the open for anyone to see, including the media if you are a high profile person or public figure.
- Family drama: The probate process makes it easier to contest a will and for disgruntled relatives to make a fuss by challenging your will. If you settle your estate with non-probate methods, it is less likely that an estranged or disinherited relative will be able to successfully collect what you don’t want them to have.
- It takes a long time: Depending upon the complexity of the estate, the probate process may last for months or even years. During this time, there is the risk of assets disappearing or diminishing in value.
- It is expensive: Probating an estate requires the help of a probate attorney to help you navigate the process. Requiring more than one trip to probate court will end up costing you money in legal fees that could probably be avoided. There are also taxes that may be involved with probate, depending upon the value of your estate.
How is Probate Avoided
The only way to avoid a long, messy probate process is by proper pre-planning. Comprehensive estate planning with a probate attorney is the key to avoiding probate. This generally includes the use of a will and possibly a trust.
An estate plan utilizes different legal instruments and asset transfer methods to remove as much of your property as possible from the hands of the Probate Court.
Revocable Living Trust
A revocable living trust is a document created while you’re still alive, which instructs an appointed fiduciary, the trustee, how to manage and distribute your property after your death. Ownership in your property or assets are transferred to the trust at the time it is created. While you are alive, you may still make changes to or fully revoke your trust document. After you die, you can rest assured that your wishes will be carried out.
A trust goes into effect immediately. There is no need to file anything with the probate court for the appointed trustee to begin their duties of managing the trust.
Another way to avoid probate hassles is by placing your assets into joint ownership with your future beneficiaries. This way, when you pass away, the ownership interest will automatically transfer to the joint owner.
Payment on death accounts are set up while a person is still alive. The account is set up with a designation which names a beneficiary to receive title or ownership of the funds or assets as soon as the owner dies.
TOD Deeds or Car Titles
Similar to the POD accounts, assigning a home deed or automobile title a transfer on death designation will allow ownership to pass seamlessly to the named beneficiary.
Colorado has a simplified probate process available for individuals with smaller, less complicated estates. An attorney can take a look at your current net worth and your potential future financial condition and determine the best possible estate plan for you.
Proceed with caution
You may be tempted to simply give all of your assets away before you die. While this is a way to avoid the probate process, it could cause you problems in your older age if you need to qualify for long-term care benefits. It’s important to talk to a qualified Colorado estate planning lawyer before making any big decisions. The attorneys at Skulborstad Legal Group, LLC are ready to help you and your family members make an estate plan that successfully avoid probate.