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If you’re establishing an estate plan, you are probably familiar with the term “probate.” Probate is the process by which your estate is examined and dispersed after your death. It can be extremely expensive for your family and extremely public – all probate court proceedings are a matter of public record. All estates must go through probate court, but Colorado law allows some ways to establish your estate so that the process is as streamlined as possible.
If you die with a will (this is called dying “testate”), probate is simple, as long as no one contests your will. The court will simply ensure that your will is executed as intended. If you die without a will (dying “intestate”), the court will need to identify all your property and decide how it should be dispersed. This can take a very long time and become quite expensive for your family in the form of attorneys’ and court fees.
A living trust is designed so that your assets could be legally controlled by another individual. While you’re alive, the trustee must use the assets in accordance with your wishes, but upon your death, your assets transfer seamlessly to the trustee or beneficiary, because they already legally own them. There are other benefits to a living trust besides avoiding probate, too.
One of the easiest ways to circumvent probate altogether is to arrange your property so that you own it jointly with the person you would want to receive it after your death. If you include a “right of survivorship” clause in your agreement, upon your death the property would simply transfer automatically to the remaining joint owner.
When discussing finances, there are several ways to designate your beneficiary simply within the account itself. For instance, “payable on death” accounts are designed so that as you open them, you choose your beneficiary, and then upon your death the beneficiary receives the money without having to go through probate. Many retirement accounts also ask for a beneficiary and operate the same way upon death.