When someone passes away, their estate, which includes assets like property, bank accounts, and investments, often goes through a legal process known as probate. Probate ensures that the deceased's debts are paid and their assets are distributed according to their will or state law if no will exists. While probate serves a necessary function, it can be a lengthy, expensive, and public process. Understanding how probate works and how to avoid it can save your loved ones time, money, and stress.

What Is Probate?

Probate is the court-supervised process of validating a will and administering an estate. This process typically involves the following things.

Validating the will: The court checks the legitimacy of the will to ensure it meets legal requirements.

Appointing an executor: If a will names an executor, the court will confirm this person’s authority to manage the estate. If no will exists, the court will appoint an administrator.

Inventorying assets: The executor or administrator compiles a list of the deceased’s assets, including real estate, bank accounts, and personal property.

Paying debts and taxes: Outstanding debts and taxes are paid from the estate’s assets.

Distributing the remaining assets: After debts and taxes are settled, the remaining assets are distributed to the beneficiaries as outlined in the will or according to state laws if no will exists.

Why Avoid Probate?

While probate can ensure an estate is settled properly, it has some downsides that make avoiding it beneficial for many people.

Time-consuming: The probate process can take several months, and in complicated cases, it may even stretch into years.

Costly: Probate can be expensive due to court fees, attorney costs, and other administrative expenses. These costs are often deducted from the estate, reducing the amount beneficiaries receive.

Public Record: Probate proceedings are public, meaning details about the deceased’s assets, debts, and beneficiaries can become part of the public record, compromising privacy.

How to Avoid Probate

Fortunately, several strategies can help you bypass probate, ensuring a more straightforward transfer of assets to your beneficiaries. Here’s what you can do.

Create a living trust: A revocable living trust is one of the most effective ways to avoid probate. When you create a trust, you transfer ownership of your assets to the trust during your lifetime. You act as the trustee while you’re alive, maintaining control over your assets. Upon your death, a successor trustee distributes the assets according to your wishes without going through probate.

At Partner Colorado, you can take advantage of our Estate Planning Services^_* that allow you to create your own revocable living trust so you can avoid probate.

Designate beneficiaries: Certain assets, like life insurance policies, retirement accounts, and payable-on-death (POD) bank accounts, allow you to designate beneficiaries. Upon your death, these assets pass directly to the named individuals without the need for probate.

Joint ownership with right of survivorship: Holding assets, such as real estate or bank accounts, in joint ownership with someone else (like a spouse or family member) can avoid probate. When one owner dies, the surviving owner automatically inherits the entire property, bypassing probate.

Transfer-on-Death (TOD) designations: Similar to POD accounts, many states (including Colorado) allow you to designate beneficiaries for assets like real estate or vehicles through a transfer-on-death designation. The named beneficiary receives the property upon your death without probate.

Small estate exemptions: Some states offer simplified probate procedures for estates valued below a certain amount. In 2024, Colorado allows small estate exemptions if the estate’s fair market value is less than $82,000. If your estate qualifies as a small estate, your beneficiaries may be able to use an expedited process that avoids full probate.

While probate serves an essential purpose, it can be a time-consuming and costly process that’s often best avoided. By taking proactive steps such as creating a living trust, designating beneficiaries, and using joint ownership or transfer-on-death accounts, you can ensure your assets pass to your loved ones with minimal hassle. Proper estate planning not only protects your assets, but also provides peace of mind to you and your beneficiaries.

*The use of any product and/or service is not intended to be a substitution for the advice of an attorney. Partner Colorado is not a law firm, and our representatives are not attorneys. No legal advice will be provided.