What You Need to Know About Probate
The aging population of the United States is propelling the nation toward a milestone: A historic increase in the number of deaths every year, according to the Census Bureau. Each day 10,000 Americans turn 65. When the first Boomers were born (1945-1964), the average life expectancy was 63 years old. Today, Boomers can expect to live to almost 79 years, but according to one study, they are likely living with numerous chronic health conditions.
Not to be crass, but as the largest generation, baby boomers, age and die, adult population growth will begin to fall off sharply. When someone dies, there is an accounting of his or her assets and debts (the estate). All the debts must be paid, and assets must be distributed to beneficiaries. Those assets include real estate, bank accounts, stocks and bonds, automobiles, furniture, jewelry, and other property.
The process by which the person's estate is processed is called probate. Whether the deceased person has a will or not, Colorado has a clear and direct procedure for probate. Don’t believe everything you hear about probate, and don’t be afraid to get started.
Once the court is notified of the death, they will appoint a Personal Representative (PR) to act on behalf of the estate. The PR has legal responsibility, so if you’ve been named PR, ask yourself if you’re comfortable navigating the courts and the probate process. Here are a few hints and things to avoid:
· Don’t wait to get started. Colorado law requires that a will be filed within 10 days of the decedent’s passing. The will is filed in the district court of the county the deceased lived in. Once the will is filed, the probate court will freeze the estate assets until the court is satisfied that all procedures have been followed and the deceased wishes are carried out. If there is no will, Colorado intestate succession laws will be followed; generally, assets go to spouse first and children next.
· Learn about the probate process and determine if you need a lawyer. If so, choose an experienced probate attorney. Think about the deceased’s estate plan, how well the heirs get along, how large the estate is, and does the estate have enough money to cover all the debts. Do you live out of state and need someone close by to help with the paperwork? If you hire a lawyer, don’t rely on him/her for everything -- attorneys can cost thousands of dollars. Also check with financial planners, CPAs, REALTORS®, contractors, estate planners.
· Secure any property (real estate and personal) and make sure it is maintained. The PR is responsible for inventorying and valuing assets as of the date of death and finding titles or other ownership papers, insurance policies, beneficiary information on 401k’s, bank accounts and so on. All the estate’s property will need to be inventoried and appraised.
· The PR files notifications in a newspaper or mails a notice to creditors. Anyone who stands to benefit from the estate, as well as creditors who were owed money by the decedent, will have to be notified. The creditors then have up to six months, a six-month ‘creditor claim period,’ to respond. The PR will need to be present at probate hearings and court actions. After six months, the PR pays the creditors and distributes any remaining assets to the heirs as designated by the will or state law.
· Keep accurate records – accounting, inventory, etc. Common costs are final medical bills, funeral expenses, estate taxes, court fees, appraisals, personal representative’s fees, attorney’s fees, etc. The PR is responsible for paying expenses out of the estate.
· Make sure the mail is picked up and newspapers and deliveries canceled. Check the mail for important notices from creditors. Maintain the property so you don’t invite burglars or vandals.
· Most estates finish probate within a year but with special situations cases can drag on and on.
· Don’t wait too long to start marketing real estate if you want to settle the estate quickly. Be sure to hire a REALTOR® that understands probate. Your real estate broker can assist you in many ways such as determining whether to rent or sell the property, finding estate auctioneers, finding title documents, home inspections, appraisals, and the list goes on.
· And finally, communicate, communicate, communicate. To avoid conflicts, make sure you and all the heirs are on the same page. Find out if you all have the same goals in mind. Ease everyone’s mind that you are following the law and being fair (within the decedent’s wishes).
The process sounds intimidating, but if you follow the steps given by the court, before you know it you’ve paid all the debts, filed tax returns, settled disputes, and paid the beneficiaries and closed the estate.
Disclaimer: This article is not meant to be legal advice nor a source for legal, business, accounting or financial advice. I am not an attorney, financial advisor, or estate planner. Probate rights and responsibilities vary according to circumstances and from state to state. Please seek services of competent professionals. I am a real estate broker and only offer advice within my role as a real estate professional.