Navigating the complexities of estate planning is a crucial aspect of securing your financial legacy. Central to these discussions is the concept of intestate succession - a legal term that outlines how your estate is distributed if you pass away without a valid will.

If you forgo estate planning, there is no guarantee as to what happens to your assets after you die. The ramifications of dying intestate (without a will) can be significant, often ending in unintended, and sometimes unwanted, outcomes.

When you die without a will or trust, your state's default laws come into play. Default laws are different state by state and they set up the rules on what happens to your estate with potential beneficiaries ranging from your spouse, children, and parents, to more remote relatives in specific situations. It gets especially complicated with blended families which is increasingly common and oftentimes close family members are unintentionally excluded from receiving shares of the estate.

In this blog, we’ll explore the various scenarios of dying intestate in Colorado and how to avoid that from happening.

Proper estate planning in Colorado stands as a powerful tool to ensure your assets are dispersed according to your wishes and not left to the mercy of default state laws - laws that dictate who inherits your estate in the absence of a will.

A well-crafted estate plan in Colorado can help you avoid falling under the umbrella of intestate laws, ensuring your assets are disseminated in accordance with your wishes, and not left to the state’s default laws.

Let’s explore some of the various scenarios of intestate succession.

Scenarios of Intestate Succession in Colorado

In legal terminology, 'intestate' means dying without a valid will, and 'succession' refers to the transfer of property rights, obligations, and assets from the deceased to the legal heirs. Thus, intestate succession laws in Colorado dictate who inherits your assets if you pass away without a valid will. If you die without a will in Colorado, probate will be necessary to administer your estate and will distribute your estate based on default laws. Here are just a handful of scenarios of what might happen to the estate based on Colorado’s default laws.

If you die intestate with…

Children but no spouse: Everything goes to the children in equal shares.
Spouse with no children: Everything goes to the spouse.
Spouse with children from the same spouse: Everything goes to the spouse.
Spouse with children from you and spouse has children from someone else: Spouse gets first $301,000, plus 50% of the balance. Your children inherit the remainder.
Spouse with children from you and you have children from someone else: Spouse gets first $201,000, plus 50% of the balance. The children inherit the remainder.
Spouse and parents: Spouse gets the first $402,000, plus 25% of the balance. Your parents inherit the remainder.
Parents but no spouse, no children: Parents inherit everything.
Siblings but no spouse, no children, no parents: Siblings inherit everything.
No spouse, no children, no parents, no siblings: Everything goes to paternal and maternal grandparents in equal shares.
No spouse, no children, no parents, no grandparents: Everything goes to maternal and paternal aunts and uncles in equal shares.
No relative to claim your estate: The estate will go to the state.

It’s important to know that if there are children receiving shares of the estate they will receive it outright at 18. In intestate succession, you lose the ability to withhold estate shares on certain conditions such as age or addiction issues. Additionally, intestate succession in Colorado relinquishes control over who manages the inheritances.

Additionally, it’s important to keep in mind anything you own jointly (house, bank accounts, investment accounts, cars, etc.) would just be the surviving spouse’s assets. Any individual assets of the first spouse to pass, would be divided and distributed according to the following intestate law scenarios.

Next, we’ll discuss the role of default laws in estate planning.

The Role of Default Laws in Estate Planning in Colorado

Estate planning is not merely about distributing your property after your death; it's a process of planning for the unexpected. However, the process becomes complicated when no estate planning has occurred. This is where Colorado's default laws come into play.

Potential Consequences of Dying Intestate

In Colorado, if an individual passes away without a valid will, their property is distributed according to the state’s intestate succession laws. These laws follow a specific hierarchy based on familial relationships (discussed above). While these laws aim to distribute the deceased's property reasonably, the resulting allocation may not align with the deceased's wishes.

For instance, the law typically allocates the property first to the surviving spouse and children, followed by more distant relatives if necessary. However, situations can get complicated, especially with blended families, unmarried couples, or those who wish to leave their assets to non-family members, such as close friends or charitable organizations. If the deceased has no surviving relatives, the state may end up receiving their assets - a scenario that could be avoided with proper estate planning.

Blended Families and Intestate Succession Challenges

Blended families with stepchildren, stepparents, or half-siblings, are increasingly common. In such situations, Colorado's default laws may not adequately cater to the unique dynamics of these families. For example, stepchildren do not have the same rights as biological or adopted children under intestate laws unless they've been legally adopted by the stepparent. If the deceased wanted to include stepchildren in the distribution of their assets, dying intestate could disrupt these intentions.

Considerations for Childless Couples and Single Individuals

For childless couples and single individuals, intestate succession laws can also result in unintended consequences. A childless individual's property may end up being distributed amongst distant relatives, or in the absence of any, to the state. Single individuals may prefer to leave their property to close friends, charitable organizations, or certain relatives, but intestate succession does not account for these preferences.

Potential Disputes Among Family Members

When an estate goes through intestate succession, potential disputes among family members can arise. For instance, a common source of conflict can be the valuation and division of personal property, particularly if it has sentimental value. Family members may also disagree on who should serve as the personal representative (also known as the executor) of the estate, leading to potential court battles.

By clearly outlining your wishes in an estate plan, you can minimize disputes and ensure a smoother, more efficient administration of your estate.

While Colorado's default laws aim to provide a fair and logical distribution of an estate, the outcomes may not always match the deceased's wishes. This makes it crucial to understand the potential implications of these laws and highlights the importance of proactive estate planning in Colorado. In the next section, we will discuss how the spouse's elective share comes into play in Colorado and how to avoid intestate laws through various estate planning tools.

Estate Planning Solutions to Avoid Intestate Laws

Proactive and comprehensive estate planning can mitigate many of the uncertainties and challenges that intestate succession laws present. By carefully drafting a customized estate plan, individuals can maintain control over the distribution of their assets, specify guardians for minor children, and designate trustworthy executors. This section explores several strategies to sidestep the complexities of intestate succession in Colorado.

Importance of Creating a Comprehensive Estate Plan

A comprehensive estate plan goes beyond simply drafting a will—it provides an organized and thorough approach to the disposition of one's assets after death. It also establishes clear instructions for managing your financial and healthcare decisions should you become incapacitated or pass away. An effective estate plan can preserve your legacy, protect your loved ones, and provide peace of mind. It can also significantly reduce potential family disputes and legal challenges after your passing.

Benefits of Having a Will or Living Trust

A well-drafted will is a fundamental part of estate planning. It allows you to dictate the distribution of your property, nominate a guardian for minor children, and appoint an executor to administer your estate. Without a will, these critical decisions are left to Colorado's intestate succession laws and the courts.

A living trust, on the other hand, offers additional benefits. It can help your estate avoid probate—a potentially time-consuming and costly legal process. Also, unlike a will, a living trust can provide for the management of your assets during your lifetime if you become incapacitated.

Choosing Beneficiaries for Investment Accounts and IRAs

Investment accounts and Individual Retirement Accounts (IRAs) typically allow for the designation of beneficiaries. These designations supersede any instructions in a will or trust, ensuring that these assets bypass probate and go directly to the chosen beneficiaries. Regularly reviewing and updating these designations is a key step in the estate planning process, ensuring that they align with your current wishes and circumstances.

Setting Up Trusts to Protect Minor Beneficiaries

If your beneficiaries include minors, setting up trusts can be an effective way to protect their inheritance until they reach a suitable age. Without a trust, a court could end up appointing the guardian or a conservator to manage any inherited assets until the child reaches the age of majority, which in Colorado is 18. By setting up a trust, you have control over who manages these assets and can specify the age at which the minor receives them.

Considerations for Special Needs Beneficiaries

If you're leaving assets to a loved one with special needs, it's critical to do so in a way that doesn't disqualify them from receiving essential government benefits. A Special Needs Trust can help preserve these benefits while also providing supplementary financial support. These trusts require careful drafting, so it's recommended to consult an estate attorney in Colorado experienced in this area of law.

Nominating Guardians for Minor Children

Nominating a guardian in your will is of utmost importance when minors are involved. Should something happen to both parents, a nominated guardian will step into this critical role, providing care and making decisions for the minors. If you don't specify your choice, the decision is left to the courts, which may not align with your preferences.

Designating Personal Representatives and Trustees

Finally, your estate plan should designate trustworthy and capable individuals to serve as your personal representative (also known as an executor) and trustee, if you establish any trusts. These individuals will have substantial responsibilities, so it's crucial to discuss these roles with them beforehand. If you don’t have individuals you trust to serve in these roles, you can appoint a professional fiduciary or corporate trustee to serve as personal representative or trustee.

Conclusion: Summing Up Intestate Succession in Colorado

Considering Colorado's intestate succession laws and the elective share, it's evident that estate planning is not a luxury, but rather a necessity. As we have seen in our examination of Colorado's default inheritance laws, the absence of a comprehensive estate plan could result in outcomes that might not align with your wishes and could potentially lead to family disputes and legal battles.

Importance of Proactive Estate Planning in Colorado

Proactive estate planning provides a sense of control over unpredictable life events. It's about more than just having a will or trust; it's about creating a blueprint for the future that addresses your unique situation and objectives. By planning ahead, you are taking a significant step in safeguarding your legacy, providing for your loved ones, and ensuring your estate is handled according to your wishes.

Taking Control of Your Inheritance with an Estate Plan

An estate plan gives you the autonomy to direct the division of your assets, regardless of your family structure or financial status. It allows you to make thoughtful and personal decisions that reflect your values and the needs of your beneficiaries. Whether it's providing for minor children, protecting a special needs loved one, or ensuring a spouse is adequately provided for, an estate plan is the most effective tool to ensure your legacy is honored as you intend.

Seeking Professional Guidance for Estate Planning Needs

The complexity of estate planning laws, the dynamic nature of family relationships, and the uniqueness of personal wishes make each estate plan a custom job. An experienced estate planning attorney, like RBS Law, can provide essential guidance. We can help navigate Colorado's intestate succession laws, the elective share, and other intricacies of estate planning.

The team at RBS Law not only helps create legally sound estate plans but also ensures these documents reflect your intentions. We can guide you in routinely reviewing your plan to accommodate changes in your personal circumstances, your assets, or the law.

While death and incapacitation are sensitive topics many prefer to avoid, it's vitally important to face these issues head-on. Engaging in comprehensive estate planning allows you to express your wishes clearly and provide for your loved ones effectively. To get started on crafting an estate plan that meets your unique needs, or for a review of an existing plan, don't hesitate to contact RBS Law. Our expert team is ready and willing to guide you through this critical process in Colorado, providing peace of mind for your future.

Education

Intestate Succession in Colorado