Many people are familiar with the word “probate,” but relatively few can accurately define it or the underlying processes it describes. This is unfortunate because death is an unavoidable fact of life.
At some point, your parent, spouse, or sibling will die, and the process of settling their estate will begin. Being familiar with some basic probate terms will help you get through settling their estate more easily.
Bequest And Devise - Both bequest and devise refer to language used in a will that names someone as the beneficiary of the decedent's estate. However, bequest is usually used in reference to a gift of personal property from the estate, while devise is used in reference to a gift of real property.
Competency - Means that a person is of legal age (at least 18) and has sufficient mental capacity to enter into a particular transaction or execute a particular document.
Creditor Protection Trust - A creditor protection trust is one that prevents or severely limits a creditor’s ability to bring legal action to gain access to the assets of a trust, while simultaneously allowing the trust maker to retain some control over the trust assets, and even to retain access to those assets.
Decedent - The term decedent simply refers to a person who has passed away.
Elective Share - The portion of a decedent's estate that is disposed to his or her spouse by law. In Colorado, the surviving spouse is entitled to 50% of the marital property component of the decedent’s “augmented estate”, which can include the value of non-probate transfers and gifts made by the decedent during the last few years of his or her life. Elective shares protect a surviving spouse from being disinherited by a decedent’s will.
Estate - For probate purposes, an estate is everything the decedent owned at the time of his or her death, including houses and land, business interest, cars in RVs, financial assets, jewelry and art, clothing and furniture, collectibles, insurance, and inheritances.
Estate Planning - Estate planning is the process of
1) ensuring that your estate will be properly managed if you become incapacitated;
2) providing for the well-being of those you care about during and after your lifetime;
3) managing how your assets will be distributed to your loved ones after you pass away.
Fiduciary - A person or entity who is under a duty to act in the best interests of another person or their estate, such as the executor or administrator of a person's probate estate.
Heir, Distributee, and Beneficiary - An individual or entity that is entitled to inherit parts of a decedent's estate. These terms are often used interchangeably, but strictly speaking, an "heir" is someone, besides the surviving spouse, who is entitled to inherit part of an estate in accordance with state intestacy law; a "distributee" is someone entitled to inherit in accordance with a will; and a "beneficiary" is someone entitled to receive distributions from assets held by a trust.
Holographic Will - A will that is written entirely in the testator's (the will maker) handwriting and then signed without any witnesses. Generally speaking, a will must be witnessed in order to be legally valid. But in some states, such as Colorado, a valid will may be created without witnesses, as long as the material portions are written in the testator's own handwriting, it is signed, and there is some evidence that the testator intended the document to be a will.
Joint Tenancy With Right of Survivorship - Joint tenancy is a form of joint ownership in which tenants own property equally. If one dies the other automatically inherits the entire property. This is known as the right of survivorship. Thus, probate is not necessary under a joint tenancy. A joint tenancy cannot be created by law. Therefore the parties must make it clear that they intend to share ownership through joint tenancy in the conveyance document. A joint tenant has the right to sell mortgage or transfer their interest without the consent of the other joint tenants.
Letters Testamentary - A formal document issued by a probate court giving the executor or personal representative the authority to carry out the administration of the decedent's estate according to the terms of the decedent's will.
Personal Representative - The personal, often named in a will, who is responsible for administering the decedent’s estate and ensuring that all the steps of the probate process are properly completed, also called an executor or administrator.
Personal Property - Essentially, any property that you own that is not real estate, including both tangible and intangible property.
Petition For Letters of Administration - A document filed by the personal representative of a person who has died without a will (intestate) requesting letters of administration that will legally authorize he or her to administer the decedent’s estate.
Petition For Probate - A petition filed with the probate court asking that the court open probate, validate the decedent's will (if there is one), nominate an executor or personal representative, and (if the decedent died intestate) determine how the estate should be distributed.
Probate - From a technical perspective, probate is understood to be the legal process of verifying a deceased person's last will and testament, if he or she created a one before dying. But most people recognize probate to be the general process of distributing someone's estate after they have passed away. Under that interpretation, there are three specific phases of probate:
Validating the Will (if one has been left behind), and choosing an executor or administrator;
Gathering and liquidating the deceased’s estate, paying creditors, and filing the deceased’s final tax returns; and
Dispersing what's leftover to the deceased’s heirs and beneficiaries in accordance with the deceased’s will or state intestacy law.
Real Property - Also called real estate, includes all things attached to land and all rights inherent in that land. Real property generally pertains to things that are considered immovable, such as homes and buildings, but could extend to other things such as fixtures, crops, and minerals not yet extracted from the land.
Surviving Spouse - A person that survives the death of someone to whom they were lawfully married, and, in doing so, acquires the legal rights to their deceased spouse's property.
Tangible Personal Property - Tangible property is physical items that can be physically touched, measured, or weighed, as opposed to intangible property, such a patent, trademark, trade secret, or copyright that does not exist physically and is essentially just a bundle of rights.
Tenancy By The Entirety - A married couple can sometimes be considered one single entity, sharing equal ownership of a piece of real estate. This is called tenancy by the entirety or tenancy by the entireties and only applies for couples who are married to each other.
Tenancy by the entirety has the potential to affect a number of different legal issues. For example, tenancy by the entirety presents one spouse from selling the property without the consent of the other. In addition, if someone sues one of the spouses in an attempt to reclaim debt, anything owned through tenancy by the entirety will be off limits to the creditor.
Furthermore, when it comes to issues involving probate, the surviving spouse automatically gains full control of the deceased spouse's share of any property owned through tenancy by the entirety.
Tenancy in Common - Tenancy in common is the most common type of joint ownership. Unless stated otherwise, ownership is assumed to be a tenancy in common. Tenancy in common is a form of joint ownership of title to real estate by two or more persons in which, although they have a unity of possession, they have separate and distinct titles. In the event that one of the tenants in common dies, his title passes not to the other tenant in common, but to his or her estate or heirs.
Transfer On Death Deed - A special deed with a named beneficiary that transfers ownership of real estate to the named beneficiary automatically upon the death of the owner
Testacy - Testacy refers to a person dying “testate”, meaning that they died leaving a will behind. This is in contrast to intestacy, meaning that the person died “intestate” or leaving no will behind.
Will - A will is a document that is created by a person during their lifetime, according to specific legal requirements, and that is left behind after they die to express, amongst other things, how they wish for their estate to be distributed.
Wealth Management - Wealth management is the process of implementing financial, investment, tax, and accounting strategies, as well as, legal and estate planning tools to build and sustain wealth, that can then be passed on to the next generation.