Probate laws, which vary by state, govern the process used to distribute your assets when you die. Whether or not you make a valid will, your assets will likely have to go through the probate process to pay your final debts and distribute your assets to your heirs and beneficiaries. While some property, like life insurance or trust assets, transfers to your beneficiaries outside the probate process, other property can only be distributed after your estate's probate case is complete.
Beginning a Probate Case
After you pass away, your loved ones or another interested party must open a probate case for your estate. States typically offer different types of probate processes depending on the size of your estate and the issues involved. For example, a state may offer an informal process for lower value estates and a formal, court-intensive process for large estates. Typically, both formal and informal cases begin when an interested party files a petition with the state court that handles probate cases. If you leave a will, it must be submitted to the court with your probate case, so it is often wise to let your friends and family know where you keep the original document.
The probate court that handles your estate appoints an administrator to manage your estate through the probate process, sometimes called a personal representative or executor, depending on your state's probate laws. If, in your will, you name someone to act in this capacity, the court will likely appoint that person. This representative acts as the contact person for all matters involving your estate while it is in probate. For example, if you leave rental property as part of your estate, your personal representative may manage that rental property until it can be distributed to your beneficiaries.
Inventory and Claims
Under probate laws, your personal representative must assemble all of your probate assets and inventory them. The inventory must be given to the probate court and it may include items like money from bank accounts, personal property, vehicles and real estate. Your personal representative uses those assets to pay your creditors. The creditor notification process varies by state, but may include sending letters to known creditors and publishing notice in a newspaper. Creditors must send claims to your personal representative who determines whether the claims are valid before using your estate's assets to pay them.
Distribution of Assets
Once your personal representative has completed all the steps of probate in your state, including gathering your assets and paying creditors' claims, he can obtain permission from the court to distribute your assets. If you left a valid will, the court will approve a distribution in accordance with your will's terms. If you did not leave a will, you are said to have died intestate and your assets must be distributed according to your state's intestate succession laws. Typically, these laws give a share of your estate to your spouse, and may give a share to your children or parents as well.