If a person has to die, then Colorado is the best place to do it. Colorado’s Legislature has made transferring title about as simple and cost-effective as it can be, but some planning is required.
There is no time like the present to plan for a transfer of assets upon death. If there has been a significant change in your life, such as marriage, a new baby, the death of a loved one, divorce, a move to a new state or even the kids giving you the guest room back, then it is time to review the disposition of property when you pass on to whatever lies beyond.
Colorado has a manageable probate code, designed for use by civilians (non-attorney types), as well as attorneys. You can find the probate code at 15 CRS 101, et seq.
The Colorado State Judicial Branch publishes the probate forms, with instructions on its website. Naturally, I would not recommend that civilians practice law without a license. It is a sure way to create lots of legal problems later. Unless the deceased made other arrangements before death, probate is necessary to transfer title to real estate.
Arrangements to transfer title on death, and to avoid probate, can be found by researching Colorado statutes, but a competent lawyer can explain and implement them for you. Nearly all of the alternative methods require advance planning. If two or more people are on a deed, a motor vehicle title or a financial account as joint tenants, the surviving joint tenant takes all.
Recording a death certificate in the county where the real estate is located, or presenting the death certificate to DMV or the financial institution will vest title in the surviving joint tenant. (This will not work for those holding title as tenants in common).
Colorado’s Legislature recognized that for many people, probate would not be required but for the need to transfer title to the family home. Colorado permits homeowners to give property away after their deaths, by signing and recording a beneficiary deed. That deed will transfer title upon recording of a death certificate.
A homeowner always has the right, before death, to change his or her mind, and record a new beneficiary deed, or to sell the property. Same thing for motor vehicles. Avoiding probate doesn’t always mean that you’ve avoided the fight. Pick your beneficiaries carefully. Hoping that one heir will share with another heir is not good enough.
Granting title to one heir to the exclusion of the others because you think one is better than the others at taking care of business is pretty much guaranteed to provoke a battle, hurt feelings, anger and dissipation of assets. You might be better off in probate, where a personal representative has a fiduciary duty to make sure your heirs take in accordance with your wishes.
Banks and other financial institutions may permit account holders to designate beneficiaries, to whom the accounts are payable upon death (no probate required). Certain securities, such as some stocks and bonds, can be registered to transfer on death.
Other title transfer devices require a skillful hand (a trained lawyer) but avoid probate. That includes putting the property into a trust, or a limited liability company, or a limited partnership.
If you own real estate in two states, then by planning now with a device such as a revocable trust, you can avoid probate in two states.
You may have already taken these steps, but it is never too soon to check your beneficiary designations on life insurance policies, IRAs, retirement plans and any other instrument by which you plan to transfer title on death. Might have been wise at the time to name your parents as beneficiaries on a policy, but now that those parents are or will soon be gone, it is time to update. It is generally a bad idea to name your estate as the beneficiary on a life insurance policy, or IRA or retirement plan. That adds another layer of paperwork, cost and expense, and delays delivery of your gift to your intended recipient.
Grief is dreadful enough without a clear understanding of who gets what when, and who is in charge. Colorado’s probate code is easy to navigate, and when properly applied, is inexpensive to navigate.
Taking care of business now, while you are healthy and can think clearly, is a gift to your family that will save money, time, headaches and even more grief.
Julie Riley is a Durango attorney and member of the Southwest Colorado Bar Association. Reach her at jriley4744@comcast.net.
