Wills, Trusts, Probate and More, Explained
End of life planning and estate planning can be overwhelming, particularly when you don't quite understand what you're doing. Legal jargon, lawyers fees, and family disputes can make it even harder. While we recommend that you consult a lawyer when setting up your estate and wills, here is a quick guide to the terms you'll see when you start digging in.
Estate - All of the money and property owned by a person, especially at the time of death.
Probate - Probate is the legal process that deals with separating at dispersing any assets and debts that are left behind when someone dies.
The court process can include dealing with all aspects such as;
Proving the validity of a will, if one exists.
Choosing an administrator, executor or representative.
Totaling all assets both in and out of the estate.
Paying all estate taxes and debts.
People often try to avoid probate because it is a time consuming and expensive process. Many states require a 30 to 90 day waiting period. If anyone contests the will or claims that the deceased was not stable at the time the will was created, then probate can take even longer.
Will - A will is a legally binding document that lets you determine how you would like your estate handled upon your death.
Without a will, you cannot guarantee that your wished and intentions will be carried out. In the event that you do not have a will, the probate court will decide how to divide your estate without your input. Having a will in place will speed up the probate process which can often be lengthy and expensive. It also allows you to do things like deciding who will care for your minor children, minimize estate taxes, assign executors to your estate, make donations and distribute gifts, and even disinherit family members.
There are many ways to create a will. You can consult an estate lawyer which can cost between $100 - $1000 or more, depending on the size of your estate and how complex it is. You can also use online software to create your own with sites like Willing.com.
Trust - A trust is a legal arrangement where the property is managed by one person called "the trustee" for the benefit of another person called "the beneficiary." A trust is created during the grantors lifetime rather than being only applicable at the time of death.
The reason that a family or person would create a trust would be to avoid the probate proceedings. Some other reasons why one would create a trust is to reduce taxes, ensure financial privacy and regulating the use of any of all assets in the event that the owner becomes incapacitated.
Conservator - A person, official or institution that is appointed by the court to take over and manage the estate of an incompetent person. A way to avoid a court-appointed conservator would be to clearly write into your will or trust what your wishes are in the event that you become incapacitated.
For more information on Colorado's Probate and Estate Tax Laws click here.