Probate

What Is Probate?

Probate is the legal process a court oversees after someone dies. Its purpose is to confirm that the person's will is valid, identify what they owned, pay valid debts, and transfer the remaining property to the people entitled to receive it. Probate generally covers assets held in the deceased person's name alone, and the court's role is to make sure the transfer follows the law.

How the Process Works

Details vary by jurisdiction, but probate usually follows a similar sequence:

• The court recognizes a person to act for the estate. This is often the executor named in the will, or an administrator appointed by the court if there is no will or no named executor.
• That person gathers and lists the assets, notifies heirs and creditors, and collects any income owed to the estate.
• Valid creditor claims are paid from estate funds, and any estate tax or income tax owed is settled.
• The remaining property is distributed according to the will. If there is no will, state inheritance rules governing intestacy decide who receives what.
• The representative files a final accounting, and the court closes the estate.

Assets That Often Pass Outside Probate

Not all property goes through probate. Some assets pass by operation of law or by contract and may bypass the court process, including:

• Property held in joint tenancy with rights of survivorship
• Accounts with a named beneficiary, such as some retirement accounts and life insurance policies
• Assets held in a properly funded trust

Whether a specific asset avoids probate depends on how it is titled and on the rules where the person lived.

Why Probate Matters to Investors

For investors, probate affects how and when inherited holdings such as stocks, bonds, and funds reach their beneficiaries. Court processing can take months or longer, and fees and court costs are paid from the estate, which can reduce the amount ultimately distributed. Some estates may also face estate tax, depending on their size and the jurisdiction. In most places, probate filings are public court records, so the inventory and accounting are generally open to interested parties.