What I’ve Learned: Probate

“My dad died about a year ago.  My mom died in 2000, so I knew what a parent’s death had in store for me, but honestly, I was unprepared to be a 48 year old ‘orphan.’  My dad left me tangible and intangible gifts, but the one that keeps on giving is that he named me as his personal representative for his estate.  When someone is alive, it is an honor to be named the personal representative, but when you actually assume the position, you may feel that a target has been placed on your forehead.

But, first things first.  A person only receives the dubious honor of becoming a personal representative if there is a probate estate.  What that means is that the person who died had assets that need to be retitled and/or has liabilities that need to be dealt with.   A huge majority of people die and don’t have assets that need to be retitled – not necessarily because they don’t have anything, but because their assets pass on to their loved ones by virtue of titling (jointly titled assets), or via beneficiary designations (like life insurance or an IRA).  This is a very good way to set up an estate, but it can be difficult to divide the estate as a whole with this method.

If an asset does need to be retitled after a death, a probate estate needs to be opened and a personal representative needs to be appointed by the court.  Probate is the official way that an estate gets settled under the supervision of the court. The personal representative is nominated under the will and appointed by the court.  Once appointed, the personal representative has the legal authority to gather the assets owned by the estate, to pay bills and taxes, and to distribute the assets to the beneficiaries under the will.

The purpose of probate is to assure that assets and debts are dealt with according to the decedent’s wishes, and to prevent fraud and bad faith dealing after someone’s death. It is a way to freeze the estate until everyone who should be has been notified, that all the property in the estate has been identified and valued, that creditors have been paid, and all outstanding taxes have been satisfied.

And, if the personal representative is truly blessed, he can go through some extra entertaining exercises.  Like having to finalize lawsuits that began before or those that started after the death. If the decedent had a business, the personal representative gets to figure out how to run it and either dissolve or sell it.  If there are liabilities, the personal representative is in charge of deciding whether liabilities are valid. The personal representative needs to deal with taxes of all sorts, including, very rarely now, estate taxes.  The personal representative needs to decide whether to file a Form 706 for the step up in basis or to set the portable unused exemption amount.\

The icing on the cake is that the personal representative is to decide how to give each beneficiary his or her value.  It’s one thing if the estate just consists of cash. But how do you make sure beneficiaries are satisfied if one gets $10 of cash and the other gets a car valued at $10? All of this is made more difficult if the beneficiaries do not trust the personal representative for any reason – and a lot of reasons bubble to the surface once someone has died.

In Colorado, probate is fairly easy. The personal representative, or heirs, can ask for more or less involvement from the court.  If someone asks the court to be involved, a judge might need to approve certain actions taken by the personal representative, such as selling estate property, or distributing assets, or paying an attorney. A judge can also settle disputes between beneficiaries over the distribution of assets, the interpretation of certain provisions of a Will, or the amounts due to certain creditors. Or, a judge can be asked to supervise the entire probate process.  While this might seem to be exactly what you don’t want for the estate, it’s actually helpful for the personal representative – the judge is there to take the target off the personal representative’s forehead and place it on their own.

As a Denver estate planning attorney I have learned that it is often kind of difficult to choose someone to be the personal representative for your estate.  It should be someone in Colorado, someone organized, someone who is competent to deal with assets and the court system, someone with extra time on their hands, and the grit to be questioned about everything.  It should also be someone that the heirs and beneficiaries don’t hate, and better yet, do trust. Finally, the personal representative can look for a lifeline in the estate administration in the form of the court, an attorney, or a professional fiduciary.

If you do find yourself given the gift of being someone’s personal representative, never fear!  The probate process doesn’t have to be painful. Gather information, outline what needs to be done and ask for help from an estate administration lawyer if you need it” (Willoughby).

Willoughby, K. R. Esq., Genesee Living Magazine.


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