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The Surprising Challenges People Encounter in Probate
dan • July 9, 2022
When we help people with estate planning, a lot of our clients assure us that their estates are “simple.” Yet a lot of people who have been through an estate administration process tell us that it was harder than they anticipated. Why the disconnect?
My theory is that it is because a lot of people underestimate the complexity and stressfulness of the tasks required in an average probate. Many of these tasks are common. That does not, however, mean they are easy. Selling a house, for example, is a multi-step project with an enormous amount of money on the line. Filing even a basic tax return is a notoriously difficult task. Keeping track of bills and staying on top of finances is a challenge for most people.
Now imagine doing that not with your own assets and finances, but with someone else’s. And imagine that if you a make a mistake, it doesn’t just cost you money, but other people too. And imagine that you didn’t get to choose those other people. You got thrown in with them by fate. Sure, those people are likely family members, but that certainly doesn't mean you get along with them or see eye-to-eye.
With all that in mind, it can become hard to believe it ever goes well. It usually does, but people can be surprised what can cause the process to become complicated, messy, or contested. Many people assume that if the estate is relatively modest and is just going to be equally divided between siblings, then there isn't much possibility for difficulty. Oh, if only that were true!
My theory is that it is because a lot of people underestimate the complexity and stressfulness of the tasks required in an average probate. Many of these tasks are common. That does not, however, mean they are easy. Selling a house, for example, is a multi-step project with an enormous amount of money on the line. Filing even a basic tax return is a notoriously difficult task. Keeping track of bills and staying on top of finances is a challenge for most people.
Now imagine doing that not with your own assets and finances, but with someone else’s. And imagine that if you a make a mistake, it doesn’t just cost you money, but other people too. And imagine that you didn’t get to choose those other people. You got thrown in with them by fate. Sure, those people are likely family members, but that certainly doesn't mean you get along with them or see eye-to-eye.
With all that in mind, it can become hard to believe it ever goes well. It usually does, but people can be surprised what can cause the process to become complicated, messy, or contested. Many people assume that if the estate is relatively modest and is just going to be equally divided between siblings, then there isn't much possibility for difficulty. Oh, if only that were true!
real estate
Most people own real estate at some point in their lives. While real estate transactions can be complicated, regular people with no special training engage in them every day. So why would real estate present any special challenge in an estate administration?
First off, most real estate that ends up in an estate administration process is nowhere near ready to sell. Even well-maintained houses usually require at least a little bit of preparation work — a touch up in paint, replacement of broken hardware, cleaning up landscaping, etc.
A very large portion of houses going through estate administrations, however, are not well maintained. If the owner was elderly, it may have been decades since the house was updated in any significant way. We regularly encounter situations where the house needs substantial work or may be so far out of code, it literally can’t be sold to anyone other than a fix-and-flip investor. Another situation we see more often than you would expect is hoarding, a house full of stuff, most of which is garbage, but some of which may be valuable or contain critical information. Finding those valuable items can be like searching for a needle in a haystack.
Another problem with real estate is that all real estate is unique. The estate’s beneficiaries are not emotionally attached to any particular dollar in a bank account, or any particular share of stock in an investment account. They may, however, have lots of emotional attachment to the real estate.
While it’s not a huge sample size, I can report that, as of this writing, real estate is at the center of the problem in every difficult or contested probate administration in which we are involved.
First off, most real estate that ends up in an estate administration process is nowhere near ready to sell. Even well-maintained houses usually require at least a little bit of preparation work — a touch up in paint, replacement of broken hardware, cleaning up landscaping, etc.
A very large portion of houses going through estate administrations, however, are not well maintained. If the owner was elderly, it may have been decades since the house was updated in any significant way. We regularly encounter situations where the house needs substantial work or may be so far out of code, it literally can’t be sold to anyone other than a fix-and-flip investor. Another situation we see more often than you would expect is hoarding, a house full of stuff, most of which is garbage, but some of which may be valuable or contain critical information. Finding those valuable items can be like searching for a needle in a haystack.
Another problem with real estate is that all real estate is unique. The estate’s beneficiaries are not emotionally attached to any particular dollar in a bank account, or any particular share of stock in an investment account. They may, however, have lots of emotional attachment to the real estate.
While it’s not a huge sample size, I can report that, as of this writing, real estate is at the center of the problem in every difficult or contested probate administration in which we are involved.
People in Possession of Property That Isn’t Theirs
One of the first things the executor of an estate should do is find and secure the Decedent's property. This can be difficult when the property is in the possession of someone else. The most common situation that we see this arise is where someone is living in a house that isn’t theirs. Perhaps a child who never left home or one that moved back in with parents to help them in their elder years. It can also happen with cars and personal property.
The problem in all these scenarios is that the person in possession of the property and the people entitled to receive that property usually are not the same people. And depending on the circumstances that led to this situation, the person in possession of the property may think of it as theirs.
Sorting this situation out can require some awkward conversations and hurt feelings, if not litigation. It is not unheard of, for example, to have to evict siblings, or send the police to repossess personal items.
The problem in all these scenarios is that the person in possession of the property and the people entitled to receive that property usually are not the same people. And depending on the circumstances that led to this situation, the person in possession of the property may think of it as theirs.
Sorting this situation out can require some awkward conversations and hurt feelings, if not litigation. It is not unheard of, for example, to have to evict siblings, or send the police to repossess personal items.
Property That Is Difficult to Value
Fairly and a
ccurately distributing an estate of course requires completely and accurately identifying and valuing the estate’s assets. Bank accounts, publicly traded investments, and residential real estate is typically easy to find and value.
But every estate has tangible personal property ( i.e. , furnishings, jewelry, artwork, clothing, collectibles, etc. inside the house). Most of the time, the hardest problem created by tangible personal property is figuring out how to get rid of it. Sometimes, however, there are unique items with sentimental or market value. These situations can be very difficult. The underlying problem in these situations is that personal property is usually not easy to divide. And unlike a bank account, that is worth exactly the same amount to everyone, different people value different personal property differently.
Other assets that can be difficult to value and divide are closely held businesses and non-residential real estate.
But every estate has tangible personal property ( i.e. , furnishings, jewelry, artwork, clothing, collectibles, etc. inside the house). Most of the time, the hardest problem created by tangible personal property is figuring out how to get rid of it. Sometimes, however, there are unique items with sentimental or market value. These situations can be very difficult. The underlying problem in these situations is that personal property is usually not easy to divide. And unlike a bank account, that is worth exactly the same amount to everyone, different people value different personal property differently.
Other assets that can be difficult to value and divide are closely held businesses and non-residential real estate.
Difficult Creditor Issues
Most people go into estate administrations focused on the beneficiaries — the people who are going to be receiving assets from the estate. Creditors, however, are just as much a part of the process. The Personal Representative or Trustee has fiduciary duties to the estate’s creditors too, meaning that they are expected to deal with those creditors openly and fairly, and get the best outcome possible for them. They can't hide from those creditors, or mislead them about the estate's financial wherewithal to pay its debts.
In most probate cases, the creditor claims are manageable and unsurprising. Sometimes, however, neither turns out to be true. It’s not unusual, for example, for there to be substantial medical bills from the Decedent's end-of-life care. In rare cases, the estate can become involved in litigation (or can already be in litigation from something that happened during the Decedent’s lifetime). These situations can lead to long delays and complicated court processes.
In most probate cases, the creditor claims are manageable and unsurprising. Sometimes, however, neither turns out to be true. It’s not unusual, for example, for there to be substantial medical bills from the Decedent's end-of-life care. In rare cases, the estate can become involved in litigation (or can already be in litigation from something that happened during the Decedent’s lifetime). These situations can lead to long delays and complicated court processes.
Heirs With Expectations out of sync with Reality
People creating an estate plan sometimes agonize over whether to share the details of that plan with the estate's beneficiaries. On one hand, telling people what the plan says can make it difficult to change the plan later on. On the other hand, if the plan differs from what the beneficiaries expect, perhaps it is better to find out about that while the person who has the power to change it is still around to do so.
Like a lot of things in life, it’s not necessarily the result that’s the problem. It’s how that result compares to expectations. A person who would have been perfectly happy to receive $50,000 finds that amount to be intolerable disappointing if he was expecting it to be $100,000. That disappointment is exacerbated tenfold if that $100,000 goes to a sibling instead.
It can be very difficult to predict at the beginning of an estate administration process whether it is going to be easy or hard. The problems listed above don’t necessarily crop up immediately. But if you see the potential for these issues to arise in an estate in which you have ask interest, either as an executor or a beneficiary, being alert to the possibilities can help head them off.
Like a lot of things in life, it’s not necessarily the result that’s the problem. It’s how that result compares to expectations. A person who would have been perfectly happy to receive $50,000 finds that amount to be intolerable disappointing if he was expecting it to be $100,000. That disappointment is exacerbated tenfold if that $100,000 goes to a sibling instead.
It can be very difficult to predict at the beginning of an estate administration process whether it is going to be easy or hard. The problems listed above don’t necessarily crop up immediately. But if you see the potential for these issues to arise in an estate in which you have ask interest, either as an executor or a beneficiary, being alert to the possibilities can help head them off.
What Next?
If you are involved in an estate administration process, either as the executor or as a beneficiary and might benefit from legal advice, you can:
- Give us a call at 720-821-7604 to schedule a "Discovery Session" at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
- Visit our estate administration to learn more about how proactively thinking through your estate plan can protect you and your family, minimize hassle, lower the chance of family discord, and minimize or eliminate taxes.
- Learn more by reading our blog or watching our videos .
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Dealing with the death of a loved one is never easy, and navigating the legal process that follows can add stress during an already difficult time. In Colorado, probate is the legal process by which a deceased person’s estate is administered, their debts are paid, and their assets are distributed to beneficiaries. Whether you’re an executor, beneficiary, or family member, understanding how probate works in Colorado can help you anticipate the steps involved and your potential responsibilities. This blog post will provide an overview of the probate process in Colorado, outline when probate is necessary, and offer guidance on how to navigate the system effectively.  What is Probate? Probate is the legal process that occurs after someone dies to ensure their assets are distributed according to their will or, if there is no will, according to state law. The probate process includes validating the will, inventorying the deceased’s assets, paying off debts and taxes, and distributing the remaining assets to the rightful heirs. While probate is often associated with lengthy court proceedings, not all estates require formal probate. Colorado offers several options depending on the size and complexity of the estate, which can help simplify the process in many cases. When is Probate Necessary in Colorado? Probate is not always required in Colorado. Whether an estate must go through probate depends on the types and value of the deceased’s assets. Generally, probate is necessary if: The deceased owned real estate solely in their name. The deceased’s assets, such as bank accounts or investments, were not held in joint tenancy or designated to transfer on death. The deceased had personal property valued at over $74,000 (as of 2023). If an estate falls below this threshold and does not include real estate, the beneficiaries can often use a Small Estate Affidavit to claim the assets without going through probate. Types of Probate in Colorado Colorado has three main types of probate procedures: small estate procedures, informal probate, and formal probate. The type of probate required depends on the estate’s value and whether there are disputes among heirs or creditors. Small Estate Procedure (Collection by Affidavit) The small estate procedure can be used if the value of the deceased’s assets is less than $74,000 and does not include real estate. This process involves filling out a Small Estate Affidavit, which allows the heirs to collect and distribute the assets without opening a probate case in court. It is the simplest and fastest way to handle a small estate. Informal Probate Informal probate is used when there is a valid will and no disputes among heirs or creditors. The process is overseen by a court-appointed Personal Representative (executor), but there is minimal court supervision. Most of the process, such as distributing assets and paying debts, is handled by the Personal Representative, with only basic filings required with the court. Informal probate is less time-consuming and costly than formal probate. Formal Probate Formal probate is required when there are disputes regarding the will’s validity, disagreements among heirs, or if the estate is complex and needs court intervention. The process is supervised by the court, and all major decisions, such as approving the distribution of assets, must be approved by a judge. Formal probate can take much longer and involve more legal fees than informal probate. Steps in the Colorado Probate Process While the specific steps in probate can vary depending on the type of probate and the complexity of the estate, the general process in Colorado typically includes the following: Filing the Probate Petition The process begins with filing a Petition for Probate with the appropriate Colorado probate court. The petition is usually filed by the executor named in the will or an interested party if no will exists. Appointment of the Personal Representative The court will appoint a Personal Representative (executor) to manage the estate. If there is a valid will, the person named as executor is typically appointed. If no will exists, the court will appoint someone, usually a family member, to serve as the Personal Representative. Notice to Heirs and Creditors The Personal Representative must notify all potential heirs and creditors of the probate proceeding. This step is essential for providing an opportunity for interested parties to come forward and make claims against the estate. Inventory and Appraisal of Assets The Personal Representative must create an inventory of all the deceased’s assets and have them appraised if necessary. This inventory will include real estate, personal property, financial accounts, investments, and any other assets owned by the deceased. Paying Debts and Taxes Before distributing assets, the Personal Representative must pay off the deceased’s debts and any taxes owed. If the estate does not have enough assets to cover all debts, Colorado law dictates the order in which creditors are paid. Distribution of Assets Once all debts and taxes have been paid, the Personal Representative can distribute the remaining assets to the beneficiaries according to the will or, if no will exists, according to Colorado’s intestacy laws. Closing the Estate After all assets have been distributed and all required filings have been made with the court, the Personal Representative can file a Petition for Final Settlement to close the estate. Once approved, the Personal Representative’s responsibilities are complete. Challenges and Disputes in Colorado Probate Unfortunately, probate can sometimes become contentious, especially in cases involving high-value estates or when family members disagree on how assets should be distributed. Some common challenges in Colorado probate include: Will Contests Heirs or beneficiaries may challenge the validity of a will, claiming it was signed under duress, there was undue influence, or the deceased lacked the capacity to create the will. Will contests can significantly delay the probate process and require formal probate to resolve. Executor Misconduct If an executor is not fulfilling their duties or is mishandling estate assets, beneficiaries can file a complaint with the court and request the executor’s removal. Disputes Among Beneficiaries Disputes can arise over specific bequests, how assets are divided, or even the valuation of estate property. Mediation or formal court intervention may be necessary to resolve these disputes. How a Colorado Probate Attorney Can Help Navigating the probate process can be overwhelming, particularly when dealing with the emotional aftermath of losing a loved one. An experienced probate attorney can help in several ways: Guiding You Through the Process An attorney can explain the probate process, help you understand your rights and responsibilities, and ensure all legal requirements are met. Managing Court Filings and Deadlines Probate involves numerous legal documents and deadlines. An attorney can handle these tasks, ensuring that everything is filed correctly and on time. Resolving Disputes If disputes arise, an attorney can provide representation in negotiations, mediation, or court hearings to protect your interests and work toward a fair resolution. Minimizing Costs and Delays With the guidance of a skilled attorney, you can often minimize the time and expense associated with probate, helping ensure the process goes as smoothly as possible. How The McKenzie Law Firm, LLC Can Help At The McKenzie Law Firm, LLC, we understand the complexities of the probate process and are committed to helping families navigate it with compassion and expertise. Whether you’re an executor needing assistance with your duties or a family member looking to understand your rights, our experienced probate attorneys can provide the support you need. If you have questions about probate in Colorado or need legal assistance, contact us today to schedule a consultation. We are here to guide you through the process and ensure your loved one’s wishes are honored.
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