Over 40,000 people die in Colorado each year. In addition to the grief of losing a loved one, a relative or friend is often left behind to pick up the financial pieces for the deceased. A significant part of sorting out the finances for a person who has died is paying that person’s debts and distributing what is left to the people the person intended or the people that Colorado law dictates. Probate is the name of the financial distribution process.
The Probate process can be expensive for the surviving family and the financial affairs are addressed by a Probate Court as a part of a public record. Every estate requires some level of Probate, but with proper planning, you can avoid much of the expense the public process.
Payable on Death Designations
Many people choose to create instructions for their financial institutions to distribute their accounts through beneficiary designations on their accounts. These designations often take the form of a payable on death designation. Although these types of designations work for some, there are a variety of circumstances that may derail your intentions. For example, the person you designate on your accounts may die before you, and if you haven’t planned for that contingency, those accounts must go through probate.
When addressing your home or other real estate, some people choose to own the home in “Joint Tenancy.” Joint Tenancy is often used by couples or partners so when one of the “Joint Tenants” dies, the title in real estate automatically transfers to the surviving Joint Tenant. This works well as long as the surviving Joint Tenant is the person you still want to receive the property when you die (i.e., did you change property ownership following divorce).
Many people choose to create a will to explain how they wish to transfer their property after they die. A will does an excellent job explaining your wishes for asset distribution after death. That said, it is important to make sure the will is properly drafted and particularly important to make sure it is properly executed. In addition, a will does not avoid probate. It can streamline the probate process if properly drafted and executed, but if not, the will is more vulnerable to challenge by beneficiaries or heirs. At Ball & Barry Law, we can help you prepare an enforceable will and estate plan.
If you are truly interested in avoiding probate to the greatest extent possible, including shielding a vast majority of your asset distribution from the public eye after your death, a living trust is often the most efficient tool. As part of a comprehensive estate plan, you can create a living trust during your lifetime. You can then transfer or title your assets, including accounts, real property and personal property, to the living trust. The living trust provides directions to your “trustee” for distribution of all the assets placed in trust while avoiding probate for all of those assets. The trust also outlines contingencies for all of your property in the event your initial choice of beneficiary is no longer available or feasible for any number of reasons.
Death is inevitable for all of us. The best thing you can do for your loved ones, friends and family is to plan for that inevitability so that your assets go to the people you want to receive them in the way you choose. Contact Ball & Barry Law today if you need help planning your estate.