Although you are not required to have a will (or any other estate planning document), it is a good idea to have one in place when you pass away. Having a will in place allows you to dictate who will inherit your property and how much they get.
Without a will in place, the state's intestate succession laws will dictate how your hard earned assets will pass on to your heirs. This can have unintended consequences, since these laws don't consider your wishes nor your family's most important needs.
Consequently, the driving force behind writing a will, for most people, is the potential to manage the distribution of their property after they pass away. Understanding what happens to your property after you pass away in Colorado without a will can help you understand the significance of proper estate planning.
Nearly all estates in Colorado have to go through the state's probate process and whether you die with or without a will in place will determine a number of things, including:
- The kind of probate administration that can be used;
- The specific probate procedures involved;
- Who will inherit your property; and
- The level of court supervision necessary.
Assets That Bypass Probate
When you die without a will, you have missed the chance to apply estate planning strategies that might have removed property from your probate estate, potentially saving you and your loved ones time and money. Federal and state laws allow some property to be considered outside of your estate for probate purposes, such as:
- Proceeds from life insurance policies;
- Property held in a living trust;
- Retirement accounts, like a 401K account;
- Money, securities, and other assets held in a payable-on-death or transfer-on-death account; and
- Real estate held as joint tenants with rights of survivorship or as tenants by the entirety.
Colorado Intestate Succession Laws
Passing away with a will in place is referred to as dying testate. Passing away without a will in place is referred to as dying intestate.
When you pass away intestate, Colorado intestate succession laws will disperse your estate as follows:
- Children but no spouse - everything goes to the children in equal shares.
- Spouse with no children - everything goes to the spouse.
- Spouse with children from the same spouse - everything goes to the spouse.
- Spouse with children from you and spouse has children from someone else - spouse gets first $225,000, plus 50% of the balance. Your children inherit the remainder.
- Spouse with children from you and you have children from someone else - spouse gets first $150,000, plus 50% of the balance. The children inherit the remainder.
- Spouse and parents - spouse gets the first $300,000, plus 25% of the balance. Your parents inherit the remainder.
- Parents but no spouse, no children - parents inherit everything.
- Siblings but no spouse, no children, no parents - siblings inherit everything.
- No spouse, no children, no parents, no siblings - everything goes to paternal and maternal grandparents in equal shares.
- No spouse, no children, no parents, no grandparents - everything goes to maternal and paternal aunts and uncles in equal shares.
- Finally, if no relative can be found to claim your estate, it will go to the state.
The word "children" refers to both children and grandchildren. In the event that a child dies before a parent, but the grandchildren are alive, the grandchildren will inherit the child/parent's share.
Spousal Rights overrule a will, except when the parties have entered into a pre or post-nuptial agreement. The spouse can choose to take against the will if it allows them to inherit more property by law than the will.
Unwanted Consequences of Dying Without a Will
Dying intestate in Colorado often brings about a number of unwanted consequences, like:
- Loss of control - the most obvious drawback to dying without a will is the fact that you lose control of the distribution of your property. This means that the people and organizations that are important to you may not get anything from your estate.
- Loss of certain assets - the probate process sometimes calls for the sale of certain assets to allow for an equitable distribution of your estate.
- Lengthy probate - a properly written will can drastically decrease the time it takes to probate an estate. On the other hand, dying intestate often means that it will take longer for your estate to pass through probate and for your heirs to inherit your assets.
To find out more about dying with or without a will in Colorado, consult with an experienced Colorado estate planning attorney.