Ancillary Probate: Will It Cost You Thousands?
By Douglas A. Turner, Esq. • Oct 9th, 2007 • Category: Estate Planning & Colorado ProbateIf 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.
Probate and Ancillary Probate in Colorado
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 for Colorado Real Estate
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.
Payable on Death Designation a.k.a. The Colorado Beneficiary Deed
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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Does ancillary probate apply to deceased who was a foreign investor also? And how does the cost usually be determined?
Eva:
The need for Colorado ancillary probate is not dependent upon being a foreign investor. It is based upon the law of transfer upon death. The most common example is real estate. However, there are many ways to hold Colorado real estate that will avoid ancillary probate. Please set an appointment to discuss your specific situation.
Thanks,
Doug
Our mother passed away, having domocile in California but having a few real estate properties in Colorado. She avoided probate in California because she has a Living Trust. However, the properties in Colorado were never placed into the Trust. Can ancillary probate be conducted in Colorado if there was NEVER a probate rendering in her State of domocile?