For many in Colorado, creating an estate plan has one goal: to avoid probate. Why is it that probate has gotten such a bad rap? If you have never had to deal with the probate process for a someone who died without an estate plan, you may not realize what your loved ones may have to go through if you do not have a will or trust in place.
The purpose of probate is not to create stress or hardships for your survivors. It is a legal process for verifying the ownership of your assets and the identity of your heirs. Much of probate also involves paying off any debts or taxes you may leave behind. While these may sound like reasonable steps, they can also be frustrating and time-consuming for your loved ones at a time when they are already suffering.
What’s wrong with probate?
You may be surprised to learn that probate can take as long as a year. If your estate is especially complex, it may take even longer. That means your loved ones will be waiting for months and months before they can distribute your assets and move forward with their lives. Additionally, probate can get very expensive if you leave your estate unprepared. In addition to paying someone to administrate your estate, your loved ones may have to pay for accountants, appraisers and other professionals to deal with the following:
- Gathering and protecting assets
- Maintaining the value of certain assets, such as real estate and investments
- Valuating any unusual assets
- Completing, filing and paying your taxes
- Dealing with federal estate taxes if your estate qualifies
- Handling any disputes among heirs
If you leave a will, there is always the chance that an heir will file a contest in probate court to dispute the terms of the will. Without a will, the court will determine who gets what, according to state law.
It is true that probate may go off without a hitch, but you may never know whether your will or verbal instructions are enough to shield your loved ones from a stressful experience. Instead, you may wish to investigate the benefits of a trust. By funding your assets to a trust, they can bypass the probate process and go directly to your heirs in keeping with the trust’s instructions. A trust may also reduce the tax ramifications your loved ones might face.
A trust is only one way for your estate to avoid probate. If this is your goal for your loved ones, you would be wise to learn about your options and take the appropriate steps before it is too late.