Updated: 2020-07-18 by
Probate is the official way that an estate gets settled under the supervision of the court. A person, usually a surviving spouse or an adult child, is appointed by the court if there is no Will, or nominated by the deceased person's Will. Once appointed, this person, called an executor or Personal Representative, has the legal authority to gather and value the assets owned by the estate, to pay bills and taxes, and, ultimately, to distribute the assets to the heirs or beneficiaries.
The purpose of probate is to prevent fraud after someone's death. Imagine everyone stealing the castle after the Lord dies. It's a way to freeze the estate until a judge determines that the Will is valid, that all the relevant people have been notified, that all the property in the estate has been identified and appraised, that the creditors have been paid and that all the taxes have been paid. Once all of that's been done, the court issues an Order distributing the property and the estate is closed.
Not all estates must go through probate though. First, if an estate falls below a certain threshold, it is considered a "small estate" and doesn't require court supervision to be settled. Click here to find out Colorado's small estate threshold and procedure.
Second, not all assets are subject to probate. Some kinds of assets transfer automatically at the death of an owner with no probate required. The most common kinds of assets that pass without probate are:
- Joint Tenancy assets-when one joint tenant dies, the surviving joint tenant becomes the owner of the entire asset, without the need for a court order. This is called "right of survivorship." For example, if a house is owned this way, "Jane Sage and John Sage, as joint tenants," and Jane dies, John owns the entire house.
- Tenancy by the Entirety or Community Property With Right of Survivorship-these are forms of property ownership that function like joint tenancy, in that the survivor owns the entire property at the death of the other tenant, but are only available to married couples.
- Beneficiary Designations-retirement accounts and life insurance policies have named beneficiaries. Upon the death of the account or policy owner, these beneficiaries are entitled to the assets in the account or the proceeds of the policy.
- Payable on Death Accounts/Transfer on Death Accounts-bank and brokerage accounts can have designated beneficiaries, too. The account owner can fill out forms to designate who should recieve the account assets after their death.
Third, if a dececent had created a Living Trust to hold his or her's largest assets, than that estate, too, won't go through probate, unless the assets left outside of the trust add up to more than Colorado's small estate limit. That, in fact, is why that Living Trust was created, to avoid probate after the death of the trust's Grantor.
But for estates in Colorado that exceed the small estate's threshold, and for which there is either no Will, or a Will (but not a Living Trust), probate will be required before an estate can be tranferred to the decedent's heirs or beneficiaries.
The general procedure required to settle an estate via probate in Colorado is set out in a set of laws called the Uniform Probate Code, a set of probate procedures that has been adopted, with minor variations, in 15 states, including Colorado.
In Colorado, under the UPC there are three kind of probate proceedings: informal, unsupervised, and supervised formal.
Most probate proceedings in Colorado are informal. You can use it when the heirs and beneficiaries are getting along, there are no creditor problems to resolve and you don't expect any trouble.
The process begins when you file an application with the probate court to serve as the "personal representative" of the estate. (This is what most people think of as the "executor"). Once your application is approved, you have legal authority to act for the estate. Usually you'll get what's called "Letters Testamentary" from the court.
Once you get the letters, you need to do these things:
- Send out formal notice to heirs, beneficaries, and creditors that you know of
- Publish a notice in a local newspaper to alert other creditors
- Provide proof that you've mailed notices and published the notice
- Prepare an inventory and appraisal of the estate's assets
- Keep all the property safe
- Distribute the property (when the estate closes)
Once the property's been distributed, you close an informal proceeding by filing a "final accounting" with the court and a "closing statement" that says you've paid all the debts and taxes, distributed the property, and filed the accounting.
Unsupervised Formal Probate
A formal probate, even an unsupervised one, is a court proceeding. That means that a judge must approve certain actions taken by the Personal Representative, such as selling estate property, or distributing assets, or paying an attorney. The purpose of involving a judge is to settle disputes between beneficiaries over the distribution of assets, the meaning of a Will, or the amounts due to certain creditors. The informal probate process won't work if there are disputes, so that's when the court gets involved.
Supervised Formal Probate
A supervised formal probate is one in which the court steps in to supervise the entire probate process. The court must approve the distribution of all property in such a proceeding.
What's the Difference between Real and Personal Property?
Many states make a distinction between personal property and real property when they set out the rules for which estates are small enough for either an Affidavit procedure or a summary probate procedure. What's the difference?
Personal property means things that people own that are moveable, as in not fixed to the land. Examples are: cash, stocks, bonds, cars, vehicles, clothes, furniture and furnishings.
Real property means things that are land and things affixed to the land. Examples are: houses, and other buildings, as well as the property underneath them and the rights associated with the land, like water, mineral, and other rights.