How to Avoid Probate
Even if you have a Will or Trust this alone does not avoid the probate process when someone dies.
How to Avoid Probate for Financial Accounts
One way to avoid probate on financial accounts is to name a Payable on Death (POD) beneficiary also known as a Transfer on Death (TOD) designation. This appointment of a beneficiary transfers the money directly to the person named no matter what the Will or Trust says. This applies to life insurance policies, bank accounts, investments, and all similar financial accounts.
Another way to avoid probate for financial accounts is to have a co-owner on the account. The co-owner automatically inherits the account when the other owner dies. There are tax reasons to be careful regarding this option that should be discussed with an attorney and a CPA.
One aspect to be aware of is if you previously appointed a divorced spouse as a beneficiary, the account needs to be updated after the date of the divorce/dissolution of marriage to be valid. Colorado law voids a beneficiary designation to a spouse made before a divorce dissolution of marriage.
How to Avoid Probate for Real Estate
Similar rules apply to real estate. You can sign a simple form called a Beneficiary Deed, appointing a person to inherit the property upon death. This usually helps avoid probate for the property. Signing this form has tax, Medicaid, and other consequences so an attorney should be consulted before signing any documents.
Another way you can avoid probate for property is to jointly own the property with someone else. There are two common ways of co-owning property in Colorado, joint tenancy and tenants-in-common. Joint tenancy avoids probate and tenancy-in-common does not avoid probate. If the original deed does not mention which form of ownership exists, the default is tenants in common.
Lastly, any property deeded into a trust usually avoids probate.
How to Avoid Probate for Vehicles
Normally, vehicles in Colorado are considered personal property. Usually with a death certificate and some paperwork at the DMV, vehicles can be inherited without filing a probate case.
How to Avoid Probate for Trust Assets
Any assets transferred into a trust avoid probate. However, transferring assets into a trust during life can sometimes have tax consequences. Before transferring real estate, financial accounts, or other assets into a trust a meeting with an attorney is necessary.
If you have additional questions about how to avoid probate in these cases please contact Rossi Law.