In its simplest form, a Colorado estate plan might only contain a will, which serves to name a guardian for young children and to name beneficiaries for specific assets. When someone with a will dies, that document will likely determine what happens with their property.
However, their assets will likely have to pass through probate court. Creditors and even tax authorities will have the ability to claim someone’s property before it transfers to their selected beneficiaries. One of the only ways to prevent a delay in the distribution of property from an estate and to minimize how much it costs to administer the estate involves keeping some or all of one’s property out of probate court. These are a few common strategies used to bypass probate requirements for assets when someone dies.
Trusts
Only the property directly owned by an individual becomes part of their estate. Many people will intentionally transfer ownership of some of their assets to a trust so that those assets do not require probate oversight and will not be at risk of creditor claims. Trusts can reduce the likelihood of estate taxes and give someone more long-term control over the use of their property after their death.
Arrangements for direct transfer
There are several ways to keep specific property out of probate court. People may add transfer-on-death designations to financial accounts. They can execute deeds to add a loved one to the title for property ahead of time so that they assume full ownership when the co-owner dies. Arranging for the direct transfer of property at the time of someone’s death to specific beneficiaries will diminish how much passes through probate court and allow some people to receive part of their inheritance quickly instead of waiting for probate proceedings.
Gifts before death
Making strategic gifts for multiple years gives a testator an opportunity to diminish their personal holdings while also witnessing their loved ones enjoying their inheritances. Annual gifts can enhance beneficiaries’ current standard of living while simultaneously diminishing the value of what will pass through probate court.
Those who plan carefully may have an easier time maximizing what their beneficiaries receive, qualifying for state aid when necessary and avoiding taxes after they die. Keeping certain property out of probate court is often a priority for those with a specific legacy in mind or enough resources to worry about taxes and family conflicts. Seeking legal guidance can help an individual to accomplish this goal.