Five Common Client Misconceptions about Estate Planning Clarifying the Plan, 1218 COBJ, Vol. 47, No. 11 Pg. 60
| Author | By CHARLES E. ROUNDS AND EMILY L. BOWMAN |
| Position | Vol. 47, 11 [Page 60] |
TRUST AND ESTATE LAW
By CHARLES E. ROUNDS AND EMILY L. BOWMAN
This article identifies five common client misconceptions about estate planning and suggests how to clarify a client's understanding about these issues.
Part of an estate planning attorney's role involves responding to deeply ingrained public misconceptions regarding the legal options available when a person dies. This article identifies five common client misconceptions and offers explanations in response to clarify these misconceptions. The key to helping clients understand the probate process is to communicate to them the analysis underlying the attorney's proposed probate plan.
Misconception 1:
Avoid Probate at All Costs
Clients who believe it's best to avoid probate at all costs need to understand that having an estate pass by will is often less expensive and more efficient than relying on probate avoidance techniques. Colorado law provides for informal probate,1 which is an administrative procedure rather than a judicial proceeding. Judges or magistrates do not become involved in an informal probate administration unless their involvement is requested by a party or later required. There are no mandatory hearings or court reviews of accountings and inventories, which can minimize the cost of estate administration. Instead, the court registrar typically processes a probate application and appoints the personal representative administratively without a court hearing.2The personal representative can then proceed to administer the estate free of court involvement.
The Colorado Probate Code structures estate administration by, for example, requiring the personal representative to publish notice to creditors and to prepare an inventory and accountings.3 These important actions are often lacking in the transfer of assets by non-probate vehicles, which may cause costly disputes later on. Even with informal probate, the court has jurisdiction over the personal representative and is always available to address and resolve any difficult issues or conflicts that might arise during the course of the estate administration. Either the personal representative or an interested party, such as a devisee or heir, can involve the court. For example, a devisee or heir can take advantage of the court's jurisdiction by seeking court involvement if there is evidence that the personal representative is acting improperly, delaying administration, or otherwise breaching his or her fiduciary duties.
Another advantage of probate administration is that a single person can be placed in charge of the administration, while some probate avoidance techniques create situations in which multiple individuals are involved and must agree on the handling of the decedent's assets. This can result in chaos, uncertainty, disputes, income tax problems, and ultimately more costs than if one personal representative (who can be supervised by the court if necessary) were in charge of the estate administration.
Colorado also offers the useful tool of "Determination of Matters by Hearing Without Appearance" under Colorado Rule of Probate Procedure (CRPP) 24. Rule 24 replaced CRPP 8.8 (Non-Appearance Hearings) effective September 1, 2018.4 By setting a matter in this fashion and delivering copies of the pleading, the proposed order, and notice of hearing without appearance to all interested parties, the personal representative or others can obtain court protection for past, present, or future actions or decisions related to the estate administration. The rule provides interested persons an opportunity to be heard by establishing a deadline by which written objections to the requested relief must be filed with the court. If the deadline passes without objection, the court can take action on the matter without the need to schedule a hearing with party appearances.
In the past, each judicial district and its judicial officers had different views on the appropriate scope of matters suitable for non-appearance hearings. This is because there is a delicate balance between due process protections and judicial economy when using this procedural tool. Former Rule 8.8 limited the use of the non-appearance hearing to "matters that are routine and are expected to be unopposed." Whether a matter met such standard was often subject to debate. But new Rule 24 eliminates that restriction and bro a dens the range of non-appearance hearings. Rule 24 should result in more efficient administration of probate cases because parties contemplating or threatening objections to estate administration decisions can now be (1) forced to commit on whether to initiate litigation within a compressed time period, and (2) required to state their position in a more expeditious fashion.
The hearing without appearance docket is a good example of how the Colorado Probate Code and CRPP streamline the probate process in Colorado: They provide a framework for probate administration while allowing the personal representative to be self-regulated, with interested parties bearing the responsibility for protecting their own rights and interests in the estate. The burden lies with the personal representatives and those they serve to be proactive and seek court involvement, but only if and when they believe it is warranted.
Another efficient Colorado...
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