Upon your death, your estate enters the court-supervised probate process to determine the validity of your will and monitor the execution of its provisions. Probate applies only to certain property owned in your name individually or as tenants in common at the time of death or to property for which your estate is listed as the beneficiary. Other assets, such as those titled as joint tenancy with rights of survivorship, beneficiary designations, or existing trusts that were funded before your death, are designed to pass automatically at your death outside the probate process. In the event there is no will, the laws of your legal state of residence determine the disposition of your assets.
During the probate process, your executor, under the supervision of the local probate court, appraises and catalogs all of your assets and all claims made on the estate. The court ensures that your debts are paid, your proper heirs are identified, and your remaining probate assets are distributed.
Without a valid will, the probate court appoints an administrator to perform these tasks and distribute assets to those designated by state law. If you have a valid will and did not select an executor (or the executor has died or declines to act), the court appoints one to carry out the provisions in your will. Designating an executor and alternate executor in advance helps save both time and money.
Some people believe that probate is a slow and bureaucratic process that would be better to avoid. However, probate does have the advantages of court supervision and rules concerning the final settlement of creditors' claims on your estate. Some states may even offer an expedited process, which may be both faster and cheaper. A potential disadvantage is a lack of confidentiality, since court records are generally public information.
Some people may be under the impression that only assets that go through probate are subject to estate taxes, but this is generally not the case. For example, your share of assets owned jointly with rights of survivorship, the value of assets in a revocable trust, and the balance of your retirement account that has a beneficiary designation all would be included in calculating the value of your estate for tax purposes.