Estate Planning to Avoid Probate
Longmont Estate Planning Attorneys
Many people have the idea that the probate process is something that must be avoided because legal fees and costs will eat up most of the assets and it will take years before anyone gets anything. While this may be true in some states, Colorado allows for an informal process that is fairly simple and cost effective. (Note: Colorado does provide for a more formal process if such a process is necessary.)
In terms of time, nothing in the probate process requires an estate to wait years to distribute property. In fact, a Colorado statute says that an estate can be closed six months after the personal representative is appointed. What determines how long probate will take is the complexity of the estate. For instance, an estate with many types of assets and/or many creditors wanting to be paid will take longer to administer than a smaller estate with no creditors. People have also heard that probate allows beneficiaries to challenge the will, or that beneficiaries can take the personal representative to court if they disagree with the personal representative's decisions, and that these problems will go away if they simply stay out of probate. However, it's not the probate process that causes these problems but the beneficiaries themselves. If you wish to avoid probate, speak with our Longmont estate planning attorneys at Jorgensen, Brownell & Pepin, P.C.
How to Avoid Probate
A common way to avoid probate is to create a trust, but the validity of trusts can be challenged in court. Also, trustees are subject to the same standards as personal representatives, and their actions can also be reviewed by a court. Finally, people have the impression that without probate there is no estate, and without an estate there is no estate tax. This is simply incorrect. It is important to first understand that in 2015, an estate is not subject to estate tax unless it is worth more than $5.43 million. The definition of "estate" in the tax code is not limited to what would be included in a probate estate, so avoiding probate does nothing to limit estate taxes.