PLANNING TO AVOID PROBATE 2024

by | Mar 20, 2024

Probate is a complex and trying process. After the passing of a loved one, nobody wants to deal with costly administrative fees, time-consuming evaluations, and stiff interactions with court officials. If you’re searching for a Colorado Springs estate attorney to ease this burden, then look no further than Axis Law Group. We help clients with trust and estate planning on a daily basis minimize, and even avoid probate’s impact on their estate and facilitate a smooth transition for their loved ones.

When is Probate Triggered?

Probate is triggered by two factors: (1) ownership of real property, such as land or a house, or (2) having estate assets without a beneficiary designation valued above $74,000 (subject to annual change). If either of these factors apply, the estate is required to undergo probate. However, our Colorado Springs estate planning lawyers will help you implement probate-avoidance techniques so that a probate attorney will not even be needed.

What is Probate?

Before diving into the details of what strategies may be used to avoid probate, it is helpful to understand what exactly probate is. In its simplest form, probate is the legal process where a deceased person’s estate is valued and distributed to the appropriate recipients. The process is required to last a minimum of six-months and involves the following.

  1. Validating a Will: The court determines the validity of the deceased person’s will. If no will exists or the will is found to be invalid, then the distribution follows the intestacy laws of the state.
  2. Appointing a Personal Representative: The court or the decedent’s will appoints a personal representative to manage the estate.
  3. Taking Inventory of Assets: The personal representative inventories and appraises the deceased person’s assets.
  4. Paying Debts and Taxes: The personal representative pays all debts to creditors and taxes owed by the estate.
  5. Distributing the Remainder: The remaining assets are distributed to beneficiaries and heirs according to the will or Colorado intestacy laws if no will exists

Avoiding Probate in Colorado

A common misconception is that a will avoids probate. Unfortunately, this is not true. A will enters probate and operates as a substitute for Colorado’s intestacy laws by allowing the deceased to distribute the estate’s assets as he or she wishes. If no will exists, then the court dictates where assets will go. In other words, a will functions to streamline probate by taking decisions out of the court’s hands but fails to completely avoid probate. Fortunately, below are a few examples of how to avoid costly encounters with probate.

  1. Revocable Living Trust: Establishing a revocable living trust allows you to transfer ownership of your property to the trust during your lifetime and list the trust as a contingent beneficiary on your financial accounts. As the trust creator (settlor), you retain control of the assets and can modify or revoke the trust as needed. Upon your death, the assets held in the trust bypass probate and are distributed directly to your named beneficiaries. This means you get to live your life normally and retain the added protection of a trust upon your death.
  2. Non-probate Assets: Certain assets, such as retirement accounts, life insurance policies, and payable-on-death (POD) or transfer-on-death (TOD) accounts, allow you to designate beneficiaries. By stipulating beneficiaries on these accounts, you may bypass probate entirely. However, placing the trust as a contingent beneficiary adds an extra layer of protection in case all listed beneficiaries predecease you. Otherwise, without any beneficiaries in existence, the account could trigger probate.
  3. Joint Tenancy for Real Estate: Similar to non-probate assets, owning real property as joint tenants with rights of survivorship ensures that property will pass to the appointed beneficiary outside of probate. However, owning property as tenants in common will not avoid probate. That is why we recommend allowing a professional to file your deeds so that this small differentiation is not overlooked.
  4. Gifting Assets: Gifting assets to others while alive removes the assets from the estate. As a result, the estate will no longer be subject to probate because of that asset. Yet, gifting property may trigger a gift tax so it is important to consult with a legal or tax professional prior to making significant gifts.

Avoiding probate in Colorado requires careful estate planning and consideration of various strategies tailored to your unique circumstances. Regardless of which strategy you are inclined to choose, our experienced Colorado Springs estate attorneys are here to guide you through the estate planning process and tailor strategies to your needs.

Ready to start planning your estate and avoid probate? Contact us today to schedule a free estate planning consultation!