As soon as one begins looking into estate planning and creating a plan to leave property to heirs and beneficiaries, it doesn’t take long to run up against the looming possibility of probate. When an estate passes through probate, the state assumes an individual’s estate and distributes it, but at great potential expense to the value of the estate and significantly increasing the amount of time that beneficiaries must wait to receive anything.
For many individuals, estate planning focuses on circumventing the probate process entirely or working to reduce the portion of one’s estate that the process affects and the amount of time it takes to resolve the matter. While avoiding probate is not always possible, it is generally better for all parties involved for anyone with significant assets to consider how they might deal with probate before the state steps in.
If you believe that your estate may have to pass through probate, it is wise to address this issue as soon as you can, with great attention to detail. You may find that you have more legal tools and opportunities available than you realize to protect your estate and your interests.
Does everyone deal with probate?
Each state maintains its own laws that dictate whose estates must pass through probate. Clearly, forcing a person with very little to his or her name to pass an estate through probate would likely diminish the value of the estate severely and may cost more to execute than the worth of the estate itself.
In Colorado, only estates that exceed $60,000 are subject to probate, meaning that an estate that does not exceed that threshold does not need to pass through probate upon the death of the estate’s owner.
How can an estate avoid probate if it exceeds the threshold?
If an estate does exceed the threshold, then it must pass through probate, so how is it possible to avoid probate at all for anyone who owns a home or builds up even modest assets? For many individuals, establishing a trust to hold their property and reduce their personal net worth is sufficient.
When an individual creates a trust, he or she essentially creates a legal box that can hold property on behalf of that individual. Depending on the type of trust one chooses, this may mean that the creator of the trust must determine how the trust operates and the restrictions the creator must obey, because the property placed within the trust no longer legally belongs to trust creator.
Once created, a trust holds the creator’s property, allowing limited access to the assets in return for legal protections for the assets themselves and the trust creator. Among these benefits is the ability to bypass probate by reducing the personal net worth of the trust creator below the probate threshold.
If you believe a trust of your own may address your estate planning concerns, do not hesitate to use the legal resources you have to create a trust that protects your property and your rights, establishing the legacy that you wish to leave.
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