PROBATE IN THE UNITED STATES, ENGLAND, AND WALES

           Probate is a court-based legal process used to wind up the affairs of someone who has died (the decedent), whether or not the person left a will.  With a few notable exceptions, it is the only way that title to the decedent's assets can be transferred to the decedent's devisees (recipients named in the will) or heirs (recipients named by law).


          The probate process is used to collect together all of the assets of the estate, sell any as necessary or required under a will, pay any appropriate creditors’ claims, and then distribute the assets to the heirs or devisees.  Probate is a distinctly Anglo-American process:  in the U.S., England and Wales, all wills and intestate estates (where no will has been left), are potentially subject to probate.   In England and Wales, probate is tied to the payment of inheritance taxes.  In the U.S., estate taxes are primarily paid to the federal government, and the state-managed probate process is not directly related.


          The degrees of court involvement and complexity of probate range from simple and inexpensive to complicated and costly.  Which are simple and which are complex may or may not have anything to do with the size of the decedent's estate.    

PROBATE IN COLORADO

 In Colorado and in other states which have adopted the Uniform Probate Codes (I and II) there are three types of probates, which can all apply regardless of whether there is a will ("a testate estate") or no will (an "intestate estate"): "small" estates, informal probate, and formal probate.

 

1. Small Estates

 Whether or not you have a will when you die, if you have $63,000 or less in property (including bank accounts and cash) and no real property, your devisees or heirs may collect your assets through the use of an affidavit, and do not have to open a probate action through the court. This procedure requires the devisee or heir collecting the assets to swear he or she is entitled to do so and will distribute it to any other entitled devisees or heirs.


If using an Affidavit for Collection of Personal Property, the affiant goes to the institution or individual holding the decedent’s asset, presents the affidavit, and collects the asset. The affiant then distributes the asset to those entitled to it, whether per the terms of the decedent’s will or the intestacy laws.


2. Uncontested estates (informal probate)

The informal probate process is generally allowed when there is a valid will or clear intestacy (clearly no will), no contests are expected, and there is a qualified personal representative (formerly called an executor or administrator) ready to be appointed. The court will have a limited role in the administration of the estate. It generally is not required to approve the actions of the personal representative (formerly called the executor or administrator), but will ensure that the directions in the will or intestacy law are followed, and it provides a venue for the devisees or heirs to hold the personal representative accountable.


3. Contested or problematic estates, and invalid, questionable, or lost wills (formal probate)

A formal probate may be required for many reasons, such as where a will is contested, unclear, potentially invalid, or when there are apparent or actual significant challenges (i.e., identifying heirs, property title disputes) in administration. The court may require that the personal representative to obtain its approval for every transaction, or may allow the personal representative to administer the estate unsupervised.


In both informal and formal probate procedure, the court appoints a personal representative or special administrator who is given the authority to essentially step into the decedent’s shoes, wrap up their business affairs and distribute their assets. The personal representative may be supervised by the court or conduct the administration without supervision. Both informal and formal probates must be open with the court for at least six months, but full administration of the estate may take much longer. Some of the waiting period is to the benefit of the heirs or devisees because the claims of creditors, if not presented in a timely manner during that administration, will be barred forever.

WILL MY ESTATE HAVE TO GO THROUGH PROBATE?

In addition to the considerations of value of the estate (whether over $63,000) and the ownership of real estate, whether or not your devisees or heirs will have to go through probate to transfer title to your assets depends on how your assets were owned, or titled, when you died. Assets which generally are not “probate assets” include certain types of jointly held assets, which by operation of law are payable to or automatically re-titled to the co-owner upon the other owner’s death. Other types of property or benefits, such as life insurance policies and retirement accounts, usually go directly to any named beneficiary – unless the owner has neglected to name a beneficiary, or has decided for other reasons (upon advice of counsel) that the benefits need to be paid into the probate estate. Assets held in trust also do not pass through probate. Thus, generally only assets that were owned by you in your individual name, and that do not have a beneficiary designation, are controlled by the will or by the intestacy laws. (*Note: Colorado law requires that a decedent’s will be filed (lodged) with the District Court in which the decedent was domiciled within ten days of the decedent’s passing, even if no probate administration is expected.)


If you are considering re-titling any of your assets to joint tenancy in order to try to avoid probate, it is highly advisable that you consult with an experienced estate attorney before doing so. While it might sound like a good idea it can present other undesirable outcomes. The better tool for minimizing probate is to create a revocable trust, which also has other benefits.

WHAT ARE THE RESPONSIBILITIES OF MY PERSONAL REPRESENTATIVE?

A personal representative has many duties, rights, and responsibilities, including the ability to open and maintain an estate bank account, to sell, transfer, or encumber real property, to sell and/or transfer assets, to consolidate bank accounts, and to deal with creditors. A personal representative's duty to the estate, devisees, heirs, and other interested parties, including creditors, is called a fiduciary duty, which means that it calls for the utmost honesty, fair dealing, and sound judgment – much like a trustee. A personal representative must:

  1. Act impartially in regards to all parties to the estate.
  2. Administer the estate with care and prudence.
  3. Put the interests of the estate in front of the personal representative’s own interests.
  4. Be loyal and treat each party the same.

Colorado requires that a personal representative notify (by publication in a local newspaper or by mail) any possible and known creditors of the decedent, and to pay legitimate claims. During the creditors’ period, the personal representative will likely deal with valuing, consolidating, and/or liquidating the estate’s assets. After the creditors’ period is over, the personal representative may make distributions to creditors, devises, and/or heirs. A probate case can close once all of the assets are transferred out of the decedent’s name, all legitimate claims are satisfied, all devisees’ and/or heirs’ interests are satisfied, and applicable tax returns are filed and paid.

FEES AND OTHER EXPENSES OF ADMINISTRATION

It is possible for a lay person to handle a probate on his or her own, and the Colorado courts have an excellent set of approved forms available to the public. However, probate is not easy, and an attorney’s expertise is usually necessary at a minimum to identify what type of probate is necessary. If an attorney is hired, the scope of the her or his involvement will depend on the complexity of the estate.


Even the most carefully written wills have costs associated with probate administration, including court fees, attorney fees, and the payment of the decedent’s final expenses and legitimate debts. Most attorneys charge an hourly fee, and the rate depends on several factors, such as the attorney’s expertise and experience, the novelty and difficulty of the case, the results obtained, and costs involved. Attorneys in Colorado do not charge a percentage of the estate.