A quick and simple overview of probate in Colorado
March 9, 2015
After law school, I worked as a law clerk for the Denver Probate Court, the state's only trial court whose jurisdiction is dedicated exclusively to decedent's estates, trusts and related areas of the law. It resides in a quiet, spacious wing of the Denver City and County Building, and unlike the rest of the building, which is abuzz with activity, the probate court is solemn quiet, and sparsely staffed.
One might expect that this was by design, but it's not. I was told that a large staff and extensive facilities were once necessary because, in the distant past, the courts in Colorado supervised administration of decedent's estates and were otherwise heavily involved in the probate process.
All that changed in the mid-'70s when Colorado adopted the so-called Uniform Probate Code, and with it, a change in philosophy with regards to how probate cases are administered. Under the UPC, rather than being heavily involved by default, the court generally stays out of probate administration unless a party interested in the estate petitions the court to get involved. The result is a generally more efficient probate process.
That's not to say that probate and the administration of a decedent's estate aren't esoteric or easily understood, so I thought it might be helpful to give an overview of probate in Colorado to demystify the process.
In the mid-’70s Colorado adopted the so-called Uniform Probate Code, and with it, a change in philosophy with regards to how probate cases are administered. Under the UPC, rather than being heavily involved by default, the court generally stays out of probate administration unless a party interested in the estate petitions the court to get involved. The result is a generally more efficient probate process.
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In a nut shell, probate is the process of proving the existence and contents of a decedent's will, if any, paying legitimate claims against the decedent's property, filing tax returns as necessary, and distributing the remainder of the decedent's estate in accordance with the decedent's will or as otherwise provided by law.
The simplest estate to administer is a so-called "small estate." If a decedent owned little more than personal belongings and less than $60,000 in money or other liquid assets, it is relatively simple to administer his estate.
Under law, a decedent's heirs can collect his personal property from, say, a bank or investment house, using a so-called "small estate affidavit" and distribute it in accordance with the will or under law. The courts are available to resolve disputes that may arise with respect to the division of property or creditors claims, but barring any dispute, the courts stay out of it.
If the decedent had an estate of more than $60,000 or owned real property, it may be necessary to commence probate proceedings.
There are generally three types of probate proceedings in Colorado — informal probate, unsupervised formal probate, and supervised formal probate.
Informal probate is relatively simple and can often be handled by laypersons with minimal assistance of a lawyer. Formal unsupervised probate can be simple as well, but the procedures are more exacting, so the assistance of qualified counsel is highly encouraged. Supervised formal probate is rare and generally only needed where there is significant dispute among parties interested in the estate of a decedent, so counsel, if one can afford it, is indispensable.
Generally speaking, informal probate involves submitting an application to the court that is reviewed by court staff in administrative proceedings. If the application is acceptable, the court staff will appoint a fiduciary to administer the estate, traditionally known as an "executor" but now called a "personal representative." The staff will also issue so-called "letters," which are evidence of the executor's authority. The personal representative will give notice of her appointment to parties interested in the estate and perform the tasks described above, presenting the letters to title companies, banks and others who will only act when presented with letters as proof of fiduciary authority. When administration of the estate is complete (taxes and claims are paid and the remaining property is distributed to the heirs), the personal representative will close the estate by filing a simple document with the court.
Formal probate is similar in many respects, but under formal proceedings, a judge reviews the petition to open the probate (or to close the probate in some cases). There is also a hearing with notice to interested parties. The judge's review might be necessary under law for a number of reasons. For example, the decedent's will may have been lost, but a photocopy exists. Formal proceedings are necessary to probate a photocopy of a will.
The stakes are higher in the context of formal probate. The judge's orders are generally final as to interested parties who have notice of the proceeding, so formal probate is often used when there are potential issues that counsel in favor of final resolution. All that being said, unless an heir or a creditor invests the time, effort and money to bring an issue before the court, probate administration through formal procedures is identical to probate administration through informal procedures.
Formal supervised administration may be necessary in rare cases involving significant dispute. Oftentimes, these disputes are the result of decades of conflict among siblings or between a surviving spouse and the children of a prior marriage. Sometimes, a creditor with a legitimate claim against a decedent's estate may be getting stonewalled by the personal representative. As a result, in supervised administration, the court dispenses with the hands-off approach and gets involved in supervising the administration of the decedent's estate. This is costly because a personal representative will have to get an order from the court to take almost every action that would otherwise be within her discretion and most parties are lawyered up.
Thankfully, most estates can be administered through small estate and informal probate procedures. In the rare instances when formal probate or supervised administration is necessary, our laws provide for enhanced procedures and protections.
Because supervised administration is the exception in Colorado, not the norm, the case for probate avoidance is not as compelling as it once was, or as it is in other states like California. I address this issue in a prior article in this publication titled "Is probate avoidance a concept that is past its prime?" I recommend that you take a look at it if you are considering employing estate planning strategies designed to avoid probate.
Matthew Trinidad is a transactional attorney at Karp Neu Hanlon PC. He can be reached at 970-945-2261 or at firstname.lastname@example.org. As a gentle reminder, please be advised that this column is for general informational purposes only and does not constitute legal advice.