The assets covered in your will and planning directives do not pass directly to your heirs. First, your heirs must prove that:

• The will is valid.
• You do in fact own the assets listed in the will.
• There are no claims or debts against your estate.

The process by which your heirs provide this proof is call probate. During probate, the executor or your will must:

Assemble the will, directives, and other documents
Send a notice of death to your creditors
File an estate tax return
File a final tax return

In most states, the executor also must set up court appearances to officially "clear" your assets. Some states allow informal probate, which requires no court appearances. Even when everything goes smoothly, "probating" an estate regularly takes 9-18 months and can cost thousands of dollars in court and legal fees. If your estate includes real estate, the costs may be tens of thousands of dollars. Special circumstances such as when the deceased owned property in two states-can make probate even more time consuming and expensive.

Assets Subject to Probate

Any assets covered by your will must go through probate:

• Stocks, bonds, mutual funds, and other personally owned investments.
• Checking, savings, CDs, and other cash accounts
• Assets to which you personally hold title (homes, land, cars, or other personal property)
• Your share of ownership in a business
• Insurance benefits paid to your estate

The only way to keep any of these assets out of probate is to put them in a trust. In fact, avoiding the costs of probate is one reason why people put their assets into trusts.

Assets Not Subject to Probate

Assets with named beneficiaries do not go through probate, including:

• Annuities
• Jointly-owned property
• Assets that are Payable on Death (POD)
• Life insurance with a named beneficiary other than your estate
• Assets in retirement plans (401(k), IRA, etc.)