What is probate?  Probate involves four basic steps: 1st proving whether the deceased person had a valid will; 2nd  identifying what property he owned; 3rd paying creditors; and 4th transferring property as directed by his will.  This process is also called estate administration.  If a person dies without a will, Colorado law determines who is entitled to inherit his property.  Whether a person leaves a will (called a testate estate) or dies without one (called an intestate estate), probate involves the same four basic steps, except that in an intestate estate, it is Colorado law–and not a will--that proves who is entitled to the property. The Colorado Probate Code.  In Colorado, probate, estate administration and administration of trusts  is governed by the Colorado Probate Code, which is designed to streamline the probate process with as little supervision by the court as possible.  In fact, probate can often be done over the internet without ever personally appearing in court.  The Probate Code provides differing degrees of court supervision that can be tailored to the needs of your case. What is an Estate?  When a person dies, all of her property is called her estate.   Property that requires action by a court to pass ownership to the heirs is called the probate estate.  Not all property, however, has to be probated with a court.  Some property passes automatically to others by operation of law without probate.  This includes any property that is owned as joint tenants with another person, property held in most living trusts, and insurance policies and retirement plans that name a beneficiary.  Such property is called the non-probate estate.  Transferring title to most kinds of non-probate property is as simple as contacting the responsible party and presenting them with a copy of the death certificate.   Many estates have both probate and non-probate assets. What Happens When There is a Living Trust?  A living trust is a trust created by someone before they die, and which acts like a substitute for a will.  Often a will is executed at the same time as the trust, which gives any property not in trust at the time of death, to the trust.  In such cases, following the death of the person or persons who created the trust, the trust must be registered with the district court and notice of the trust must be given by the trustee to the beneficiaries of the trust.  The trustee serves much the same function as a personal representative in transferring property from the trust to its beneficiaries. What is a Personal Representative?  A Personal Representative (which is the same thing as an executor) is the person who has the responsibility to do the things necessary to complete the four steps involved in estate administration.  They may be paid for their services.  It is usually advisable that the Personal Representative employ the assistance of both legal counsel and an accountant.   People named in a will have priority to serve as a Personal Representative, but if there is no will, the surviving spouse, other heirs, and even creditors may be appointed.  The Probate Code provides an order of priority for appointment.  Family and heirs may agree who will serve as personal representative before a probate case is opened, even deviating from the will and the order of priority in the Probate Code. Opening a probate case.  If there is a will, a probate case is opened by filing an Application for Informal Probate of Will and Informal Appointment of Personal Representative with the appropriate district court.  The original will must be filed with the court.   If there is no will, an Application for Informal Appointment of Personal Representative is filed instead.   In either case, a copy of the death certificate is filed with the application.  On the basis of the information presented in the Application, the Registrar of the district court (not a judge) will ordinarily accept the application and appoint a personal representative immediately.   This is called an informal proceeding and does not require a hearing or prior notice to anyone.   The Registrar does this by issuing Letters that evidence authority to administer the estate and by signing an Informal Probe of Will and an Informal Appointment of Personal Representative.   (In rare circumstances, it may be advisable to open an estate by petitioning the court for a formal proceeding, which requires a hearing before a judge, with prior notice given to anyone who has an interest in the estate, to determine if a will is valid, who the heirs are, or who should be the personal representative.)         Estate Administration.  Once appointed, the personal representative is appointed, she should work diligently with the estate’s attorney and an accountant to administer the estate.   The personal representative usually does her job without court supervision (called an unsupervised administration).  In rare cases, the court will be called upon to supervise the administration of the estate (called supervised administration).   In either case, estate administration involves attending to the following tasks: 1.  Give Notice to interested persons.  Notice is required to be given to everyone who has in interest in the estate throughout the probate process.  Every natural heir, whether or not named a beneficiary in the will, and all people who are named in the will must be given notice.  This is ordinarily done by mail.  Anyone with an interest in the estate should also be given notice of papers filed with the court, and of any hearings.   Giving formal notice is usually handled by the estate’s attorney, but the personal representative should also keep the heirs informed of progress as well. 2.  Notice to creditors.  Usually notice to creditors must be published in a local newspaper.  Actual notice should be mailed to known creditors.  This is usually handled by the estate’s attorney. 3.  Identify and Inventory Property.  As soon as possible, but not later than three months after appointment of the personal representative, an inventory listing the estate’s assets should be filed with the Court.   Supplemental inventories may need to be filed later.  Preparing an accurate inventory is one of the single most important tasks of the personal representative and attorney.  It is advisable to mail a copy of the inventory to all beneficiaries whether requested or not.  In more complex estates  it can be necessary to obtain a professional appraisals of assets.  This office will work closely with you to prepare inventories and coordinate valuation of assets. 4.  Property in Other States.  There are often assets in other states.  Most intangible assets such as bank accounts and investment funds can be transferred on the basis of the Colorado documents.  Occasionally (such as when the decedent owned real property in another state) it becomes necessary to request that the court in another state recognize the authority of the Colorado personal representative.  This process is called an ancillary probate and usually involves employing an attorney in that state.  Ancillary probate usually is a simple streamlined process.  This office will subcontract with an attorney in another jurisdiction if necessary. 5.  Accounting.  It is critical that the personal representative have an acceptable system to keep track of the assets, income and expenses of the estate.  How involved this accounting system needs to be varies with the complexity of the estate.  It can range from opening a checking account and keeping a check book register (which is required in almost every estate) up to employing a professional accountant to keep the books.  The personal representative and the estate’s attorney should determine early on what accounting method to use.  The available time and financial skills of the personal representative must be considered, as well as the size and liquidity of the estate.    The personal representative can be ordered to give an accounting to the court of the estate’s property. 6.  Claims and Creditors.  The expenses and debts of the estate must be paid by the personal representative.  If a dispute arises over the validity of a creditor’s claim, the Probate Code provides a way to challenge the creditor’s claim.  Claims from creditors can be in any form, and it is critical that the personal representative communicate promptly with counsel regarding any questionable claims.   7.  Working With Your Tax Advisor.  There are two types of taxes that apply anytime someone dies: estate (or death) taxes and income taxes.   These taxes are not avoided by a living trust or through non-probate transfers.   Estate taxes are likely to be due only in relatively large estates (including all probate, not probate and living trust assets) that have a value of over $1,500,000 in 2005 and $2,000,000 in 2006.  Nevertheless, an accountant should be consulted regarding estate tax return filing requirements in every estate.  Income taxes consist of the decedent’s final income tax return for the year of her death, and income taxes on any income the estate generates (including income from a living trust).   This office will work with the accountant of your choosing or will subcontract with an accountant if you do not have one to ensure that these filing requirements are met. 8.  Distributing property.  The personal representative will work with the estate’s attorney to distribute property to those persons named in the will or the heirs defined by the Probate Code.  Real property requires transfer by deed and sometimes a court order in order to meet title standards.  Other kinds of property are transferred by check, bill of sale, title and so on.  It is possible to transfer some of the estate’s assets early on in administration, keeping in mind, however, that enough cash must be kept to pay debts, taxes and expenses.  Deciding how much to distribute, and when, is a decision that should be made only after collaborating with the estate’s attorney and accountant. Closing The Estate  When the estate has been fully administered (meaning that expenses and debts have been paid, creditor’s claims settled, tax returns filed, and property distributed) the estate may be closed.  In most cases, this is done in an informal closing by filing a statement with the Registrar of court. The personal representative’s authority continues for another year after the statement is filed.  Rarely, the closing will take place in a formal closing with a hearing before a judge.  An estate may be closed 6 months after the probate was opened or 1 year after the date of death, which ever is first.