By Andy L. Gitkind | Gitkind Law Firm | Boulder County Estate Planning
If you’ve been through probate after losing a family member, you already know what it involves: perhaps waiting months for the court process to run its course, dealing with paperwork and fees, and having your family’s financial affairs become a matter of public record. It’s one of the more stressful things a grieving family can face.
There are two pieces of good news, however: First, the probate process is dictated by state law and probate in Colorado is easier and cheaper than in many states. Second, in Colorado, probate is largely avoidable with the right planning.
What Is Probate, and Why Do People Avoid It?
Probate is the court-supervised process of validating a deceased person’s will (or applying intestacy laws if there is no will), paying outstanding debts and taxes, and distributing assets to beneficiaries.
In Colorado, while probate can be relatively streamlined compared to some other states, it still has real drawbacks:
- Time: Even an uncomplicated Colorado probate typically takes six months to a year. Complex estates can take much longer.
- Cost: Attorney fees, court costs, and executor fees add up. These come out of the estate before your beneficiaries receive anything.
- Public record: Once filed with the court, a will and probate proceedings are public. Anyone can look up what you owned and who received it.
- Stress: Requiring your family to navigate a court process while grieving is a burden most people would prefer to spare them.
What Many Estate Planning Attorneys Won’t Tell You
This is a complex and nuanced topic. Yes, probate in Colorado is easier and cheaper than in many states The attorney you choose owes you a full explanation around probate avaoidance: Some states, like Florida, New York and California have very onerous and expensive probate laws. In Florida, for instance, state statute allows attorneys to charge up to three percent (3%) of the value of an estate to provide probate counsel. You may not be surprised to learn that as a result, many attorneys in that state charge exactly that! That’s a significant expense – one well worth avoiding.
When people in those complex probate states speak with an attorney, the counsel they typically receive is to avoid probate at any cost. And it does cost up to two thousand dollars more to create a trust than to create a similar plan with a will. Much of the press you read and hear about probate also originates from these three states as they are populous states with many press outlets.
Like in Florida, attorneys in Colorado get paid more to create a living trust than to create a will for that same client. For that reason, many estate attorneys here emphasize the importance of probate avoidance – despite the fact that our state has a relatively streamlined probate process. You deserve a balanced presentation of these issues and impartial counsel when deciding on the plan that’s best for you.
The Most Effective Way: A Revocable Living Trust
The most comprehensive way to avoid probate in Colorado, if you choose to do so, is to establish a revocable living trust and transfer your assets into it during your lifetime.
Here’s why it works: when you hold assets in a trust, you’re not the owner of those assets in your individual name—the trust is. When you die, the trust doesn’t die with you. Your successor trustee simply steps in and distributes the assets according to your instructions, without any court involvement.
A revocable living trust also addresses something a will cannot: incapacity. If you become seriously ill or injured and can no longer manage your affairs, your successor trustee can step in immediately, without the need for court-appointed conservatorship or use of a financial power of attorney.
One important caveat: a trust only avoids probate for assets that have been transferred into it. An “unfunded” trust—one where the assets haven’t been re-titled in the trust’s name—won’t accomplish this goal. Funding the trust properly is an essential part of the process.
Beneficiary Designations
For certain types of assets, probate avoidance is built right in. Retirement accounts like IRAs and 401(k)s, life insurance policies, and annuities all allow you to name a beneficiary directly. When you die, those assets pass straight to the named beneficiary—no court required.
The critical thing with beneficiary designations is to keep them current. An outdated designation pointing to an ex-spouse, a deceased relative, or a minor or disabled beneficiary can cause real problems—and typically overrides what your will or trust says. Reviewing your beneficiary designations is a simple step that many people overlook.
Similarly, bank and investment accounts can be set up with a payable-on-death (POD) or transfer-on-death (TOD) designation. That said, we don’t recommend reliance on these, given that a proper and up-to-date Will or living trust, better addresses how such asset are to be distributed under any and all contingencies.
Joint Tenancy with Right of Survivorship
Property held in joint tenancy with right of survivorship—such as a home owned jointly by spouses—passes automatically to the surviving owner when one owner dies, without going through probate. This is a common arrangement for married couples.
However, joint tenancy has limitations. It only works on the first death and it doesn’t help when both owners die simultaneously. It can create unintended gift tax issues if added after the fact, and it doesn’t address incapacity. It’s a useful tool, but generally not a complete substitute for a trust-based plan.
Colorado’s Transfer-on-Death Deed
Colorado allows real estate owners to record a transfer-on-death (TOD) deed, which names a beneficiary to receive the property when the owner dies—without probate. The owner retains full control of the property during their lifetime and can revoke or change the deed at any time.
A TOD deed can be a useful tool, particularly for people whose main asset is their home and whose overall plan is relatively simple. It’s not a full substitute for a trust in most cases, and can have unintended gift tax and Medicaid qualification impacts, but it can be a meaningful piece of the puzzle. Do check with an advisor before taking this action.
Small Estate Procedures
Colorado does have simplified procedures for smaller estates. If an estate consists primarily of personal property (not real estate) and is below a certain value threshold, heirs may be able to use an affidavit process to collect assets without formal probate. For real estate, Colorado allows a simplified probate process for estates below a certain threshold.
These procedures are helpful when they apply, but they’re not a planning strategy—they’re a fallback. Relying on them means your family still has to navigate a legal process at a difficult time.
Putting It All Together
Most comprehensive Colorado estate plans combine several of these tools: a revocable living trust for the bulk of assets, beneficiary designations on retirement accounts and insurance, a pour-over will as a safety net, and powers of attorney for financial and healthcare decisions.
Together, these documents work as a system—protecting you during incapacity, transferring your assets at death without court involvement, and giving your family clear guidance when they need it most.
Working with a Boulder County Estate Planning Attorney
If avoiding probate is a priority for you, the place to start is a conversation about your specific situation. What you own, how it’s titled, who you want to benefit, and what your family dynamics look like all factor into the right approach.
Andy Gitkind has focused exclusively on wills, trusts and estate planning in Boulder County since 2004. The first consultation is always complimentary, and most families can have a complete plan in place in two meetings.
Gitkind Law Firm, P.C. | 801 Main St., Suite 230, Louisville, CO 80027 | 303-960-6628 | gitkindlaw.com