As a personal representative (executor) for someone who has died, you’re responsible for identifying the estate’s creditors and settling all debts before you distribute any assets to the beneficiaries named in the will.
If the estate qualifies as a “small estate” in Colorado (meaning that there are less than a specific amount of money or assets and no real property), you can complete probate by signing a Small Estate affidavit. This affidavit allows you to collect assets, pay off debts, and distribute the remaining proceeds to the beneficiaries of the will.
Informal Probate and Formal Probate
Most uncontested probates will go through the informal process, which is quicker and less expensive. However, even some estates with no disputes will still end up in the formal probate process. Knowing which process you need to be in is important and requires the experienced of a skilled probate lawyer in Colorado. We can help.
One of the first steps you need to take to settle an estate is to obtain a Federal Tax ID number for the estate and open an estate bank account. You’ll transfer money into the account from the deceased’s bank accounts and/or from the sale of assets. You’ll then pay all of the estate’s valid debts from this account.
Most Common Types Of Debt For An Estate
Most estates will have unpaid recurring bills, such as electricity, cable, telephone, etc. In addition, you may need to pay:
credit card bills
federal taxes and Colorado income taxes (for current and/or past years)
Estate Debts Exceed Estate Assets
In the event that the debts of the estate you’re settling exceed the assets, and it’s clear that all of the creditors won’t be paid in full, this is when you can really use the services of a probate attorney. Similar to what occurs in a bankruptcy, some creditors might be in “first position,” giving them preferential treatment over other creditors. In paying off creditors, it’s important that you follow Colorado law, to avoid legal entanglements down the line.
Few Estates Are As Simple As They Seem
Very few estates are “simple,” even though they may seem that way at first. The entire process of probate – including identifying and paying off all creditors – can be less overwhelming with an experienced probate lawyer by your side. We’d be happy to assist you, and it’s permissible to pay our legal fees from the proceeds of the estate.