Understanding how assets pass from the deceased to the beneficiary is the first and most important step of the inheritance process. There are two different paths, through which assets can pass — through probate or outside probate. The assets that pass through probate are controlled by the will, assuming a will exists and is filed for probate. If no will is filed, the probate process is controlled by the laws of intestacy.

The will specifies how and to whom the estate's assets should be distributed in the event of death. A will names the executor, or personal representative in charge of settling and distributing the estate, passes guardianship of any minor children, and states when and how the assets are to be distributed to the beneficiaries. Named beneficiaries on retirement accounts, insurance policies and investments registered as transfer on death, ownership registered with joint tenants of survivorship, and ownership by a trust are the only titles that take precedent over a will in determining to whom the assets are transferred. Assets covered by these titles pass outside the probate estate.

Assets Passing Through Probate
Property that is individually owned and does not have a beneficiary is part of the probate estate. Assets in investment accounts where ownership is tenants in common or community property are also part of the probate estate.

Settlement of estates varies from state to state, however there are settlement options that vary according to the overall value of the estate. Smaller estates can generally be settled more informally while, the state's probate court usually has to validate the will for large estates.

For more information on the probate process, visit our Overview of the Probate Process tutorial.

Assets Passing Outside Probate
Retirement accounts, insurance policies, and accounts registered as transfer on death that have a specified beneficiary other than the estate are all assets that pass outside probate. This also includes investment accounts with designations of joint ownership with rights to survivorship and tenants by entirety.

It is not necessary to use an executor when passing assets outside probate. Generally, passing assets outside probate is a matter of filing the required paperwork, which is why beneficiaries and co-owners can usually handle the transfer process on their own.

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