Beneficiary Deeds & Timeshares: A Perfect Fit?
By Douglas A. Turner, Esq. • Apr 14th, 2007 • Category: Estate Planning & Colorado Probate, FeaturesAncillary Probate Can Cause Thousands
If a person dies owning real estate outside of their state of domicile, their heirs may needlessly pay thousands in ancillary probate expense. The expense of ancillary probate can be avoided by using a beneficiary deed, a trust or a company.
Colorado probate is a legal process by which title to property is formally transferred to heirs upon death. A primary probate proceeding is opened in the state where the deceased is domiciled at time of death. Ancillary probate is a probate proceeding opened in another state to transfer property owned by the deceased in that state. Typically, real estate is the property to be transferred in an ancillary probate proceeding. Sometimes the cost of a single ancillary probate proceeding can be thousands of dollars just to transfer a single parcel of real estate.
How to Avoid Ancillary Probate in Colorado
Avoiding ancillary probate is easy. By putting real estate into something called a nominee trust or living trust, ancillary probate proceedings and the associated expense can be avoided. As an alternative to a living trust, a limited liability company can be created, the real estate transferred to the company and then ownership in the company can be transferred to the heirs through the primary probate proceeding.
Recently, Colorado has enacted another method to avoid a Colorado probate proceeding just to transfer Colorado real estate. In Colorado, a person can create a payable on death designation for Colorado real estate. Colorado calls this a beneficiary deed. While a Colorado beneficiary deed is executed and recorded today, it passes no interest in the real estate until the death of the current owner. Since 1995, at least seven other states have enacted laws allowing some type of beneficiary deed. Hopefully, even more states will follow.
The cost of ancillary probate is easily avoided. If you own real estate outside of your state of domicile, consider using a trust or beneficiary deed to avoid an ancillary probate.
Douglas A. Turner, Esq.. This column is not legal advice nor does it create an attorney-client relationship with the reader. Due to limited space, complex legal concepts and rules may be stated in terms of general concepts. Based on 2007 Colorado and Federal law. Consult legal counsel before acting on any information contained in this column.
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decide to wish you Thanks....
In regard to beneficiary deeds, are there any restrictions on how many properties can be included or the value of the properties ? Thanks, Cami
Cami:
In general, each Colorado property requires a separate Colorado beneficiary deed. There is no limit on the value of the Colorado property transferred by beneficiary deed. However, with higher value properties, other estate planning issues may arise.
Thank you,
Douglas Turner
I am Ron Warner, President of the Eagles Nest Timeshare Assocation in Mt Crested Butte, Colorado. 4 of the 40 units in our complex are deeded time-share units.
A few years ago, A Texas owner with 3 weeks died intestate. Weeks are titled in his name only. We don’t believe his estate ever went through formal probate.
I would like to discuss your involvement to get title to the weeks so we can move on. We are not interested in collecting delinquent dues.
I live in St Louis, Missouri My cell phone is 314 306 9496
Another solution we have found when working with clients is to analyze whether they want to hold on to the timeshare at all. in about half the cases it made more sense for them to sell the timeshare and reinvest the money or gift it to their grandshildren’s 529 plan. Obviously if they are still active and love to travel this may not be ideal, but in a few cases the timeshares were impulse buys that don’t justify contiued expense.