Does a Will always have to be probated? The good news is that probate may not be necessary in all cases.
Probate and Property Held in Joint Names
It is fairly common for individuals to own assets in joint names with their spouses, children, or others. If an asset is owned jointly with “rights of survivorship,” it passes automatically, by operation of law, to the surviving owner(s). This means that probate is not required. In fact, the decedent does not have a legal right to include his or her ownership interest in the property in a Will or bequeath it to anyone other than the co-owner. If the decedent did include such a provision in the Will, the probate court will not uphold it.
Probate and Property With Designated Beneficiaries
Assets such as life insurance policies, retirement accounts (i.e. 401(k)s, IRAs, and annuities, are “payable on death” to one or more designated beneficiaries. They pass automatically, by operation of law, to the designated beneficiaries. Because these benefits pass automatically and directly to their beneficiaries under the terms of the policy contract, they do not become part of the deceased’s probate estate. They, therefore, cannot be transferred to other beneficiaries according to the terms of a Will. You can also set up most bank accounts to transfer ownership upon death as well to a designated beneficiary, and should talk to your banking professional regarding your existing accounts.
Probate and Revocable Living Trusts
If the decedent formed a revocable living trust and funded (transferred) assets into the trust, these assets would avoid probate. Revocable living trusts allow assets to pass to beneficiaries under the terms of the trust agreement – avoiding probate.
Probate and Small Estates
In Colorado, if an estate (those with and without wills) is worth $64,000 or less and owns no real property, then the beneficiaries may collect the assets by signing a Small Estate affidavit, allowing them to avoid probate court all together.
If you have any questions about this blog, or wish to start the estate planning process, please contact Anne McMichael ([email protected]) or Jill Curry ([email protected]) via email or telephone (303-572-4200) today.