When someone dies, they typically leave behind various estate assets. This may include cash, investments, personal property or real property. All of the decedents property must be legally transferred upon his or her death. How the property is handled depends on a number of factors.
Property held in joint tenancy with another person will pass by operation of law to the surviving joint tenant when the one of the joint tenant dies. In many cases, property held by husband and wife as community property can also pass automatically to the surviving spouse.
Some property may be transferred automatically upon the death of the decedent. Property held in a trust, for example, may already be legally owned by the trust when the decedent dies or may automatically transfer upon death to the trust. Accounts that are held as “pay on death” or “transfer on death” also automatically transfer to designated beneficiaries as will life insurance proceeds.
If the decedent left behind a valid Last Will and Testament, property that did not automatically transfer will be part of the probate process. Specific bequests will eventually be transferred to the named beneficiary. For example, if the decedent bequeathed his personal residence to his son in his Will, the title will eventually be transferred to the son.
Property that did not automatically transfer, or that was not part of a specific bequest, will be transferred to beneficiaries if a Will was left, or heirs if the decedent died intestate, after the probate process is completed. Non-liquid assets will be sold by the executor or personal representative and turned into cash. Once all assets have been liquidated, the executor or personal representative will distribute the cash pursuant to the Will terms or pursuant to the state intestate laws if no Will was left behind.
Problems associated with using a Will as the basis for transfering assets at death include higher administration costs, delays and loss of control and privacy because, except for modest estates, it is likely the estate will have to go through the probate process at the court house before assets can be distributed.