What Actually Is Probate?
Probate is the court administration of a decedent’s estate. In general, when a deceased person owns assets and those assets don’t have a way to transfer on their own to a beneficiary, then those assets are in what’s called the decedent’s estate. Probates can be either testate or intestate. Intestate means that the person died without a will and the state intestacy laws will be followed instead. It’s a procedure whereby the decedent’s creditors are paid and past matters are settled. In general, the probate process takes six months to one year to complete, but it can take significantly longer if there is a dispute or creditor issues.
What Misconceptions Do People Have About The Probate Process?
Many people have the misconception that the probate process is very intimidating, but in my experience, it doesn’t have to be. For example, Colorado allows for informal probate, which is a fairly efficient system wherein court hearings are not necessary and the estate is not supervised by the court. Despite the belief that probate is a horrible result, with the appropriate guidance it can be a straightforward and efficient process.
What Actually Happens During The Probate Process?
The first determination must be whether or not a particular case requires probate. This determination is made after an analysis of the assets and the value of the probate estate. In Colorado (and most states), there’s a minimum threshold. For estates in Colorado that are under $65,000 and do not contain any real estate, a small estate administration procedure can be followed in lieu of probate.
If probate is necessary, then the next question is whether it should be opened formally or informally. Most of the time, it should be opened informally because informal trade is much more efficient and less expensive, and there’s no court supervision. The court essentially grants powers to the personal representative, which is a person who is tasked to handle certain duties and meet certain deadlines regarding the estate. Unless there’s an objection or someone raises a concern regarding the personal representative, the court will only ensure that the deadlines are being met.
Formal probate occurs when there is a disagreement about whether or not the person had a will, or who should serve as personal representative. If the estate has been sitting for a long time and no one bothered to open probate, then it may need to be opened formally, which requires a hearing for appointment.
Once the decision to pursue formal or informal probate has been made, several documents will be filed in order to open the case. If it is informal probate, then a person will generally be appointed as personal representative within a few days. If it is formal probate, then there will have to be a hearing during which the personal representative is appointed as the fiduciary who is in charge of the probate estate.
After someone has been appointed, notice that the appointment has happened must be sent to all interested parties, including creditors. A legal classified notice will have to be made in order to reach potential unknown creditors. These notices initiate the statutory clock on creditor claims. Once the personal representative has been appointed, they have 90 days to file an inventory of the estate, which is a list of all the assets the decedent owned that are subject to probate (this excludes assets that are in a trust or that have a beneficiary designation). The inventory form is the starting point for the decedent’s estate accounting.
The personal representative is also responsible for completing the final tax returns. Any income earned after death will be reflected on an estate income tax return. The personal representative also has the responsibility to sell assets or determine how the assets are going to be distributed. For example, they would have the authority to sell a house, or transfer investments. Before the case can be closed and at least once per year, the personal representative is to do a full accounting of everything that’s happened in the estate.
The estate can be closed in one of two ways. The first way is by filing a sworn statement that all beneficiaries and creditors have been paid and that the taxes have been completed. Once that statement has been filed, the case will sit for one year; if there’s no activity within that year, then the court will close the case. The other way to close probate is through a formal closing, which involves petitioning the court for an order to close the estate.
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