Anything a person owns or has a legal interest in at the moment of death is considered an asset in an estate. That includes real estate, vehicles and personal belongings, bank and investment accounts, retirement savings, life insurance, business interests, intellectual property, cryptocurrency and other digital holdings, and even money other people owed the deceased. The federal tax code sweeps broadly: the gross estate takes in all property interests, whether real or personal, tangible or intangible, wherever located.1Office of the Law Revision Counsel. 26 USC 2031 – Definition of Gross Estate Identifying every item matters because the executor has to use the estate’s assets to pay debts and taxes before anything can go to heirs.
Real Property
Land and anything permanently attached to it counts as real property. A primary home is the common example, but vacation houses, rental units, commercial buildings, and vacant lots all qualify. The full value of any real estate titled solely in the deceased’s name enters the estate.2Office of the Law Revision Counsel. 26 USC 2033 – Property in Which the Decedent Had an Interest
Property held under a life estate deed is a partial exception. The owner keeps the right to live in or use the property for life, and a named remainderman takes ownership automatically at death. Title passes by the deed itself, so the property skips probate. The tradeoff is that the owner cannot sell or mortgage the home afterward without the remainderman’s consent.
Personal Property
Personal property covers physical, movable possessions: vehicles, furniture, jewelry, artwork, antiques, tools, clothing, and collectibles. Some pieces carry real market value, others matter only to family, and all of them belong to the estate and have to be accounted for.
Many states let a person attach a personal property memorandum to a will. It is a separate written list naming specific items and recipients, and because it stands apart from the will, it can be updated without redoing the whole document. The will must reference the memorandum for it to take effect, and formatting rules vary by state.
Financial and Intangible Assets
Financial assets include cash in checking and savings accounts, certificates of deposit, stocks, bonds, mutual funds, and exchange-traded funds. Retirement savings in 401(k) plans, IRAs, and pensions count too, though how they transfer depends on whether a beneficiary is named. Health savings accounts are easy to miss in an inventory and should not be.
Intangible assets round out the picture. Business interests in partnerships, LLCs, or closely held corporations are part of the estate. So are intellectual property rights: copyrights, patents, trademarks. Money owed to the deceased at the time of death is an asset. Income the deceased earned but had not yet received, such as a final paycheck or unpaid commissions, also goes into the gross estate.3Internal Revenue Service. Publication 559 – Survivors, Executors, and Administrators
Digital Assets
Cryptocurrency is often the most valuable digital holding in an estate. Bitcoin, Ethereum, and other tokens are treated as property for tax purposes, and the full market value at the date of death enters the estate. Without the private keys or wallet credentials, those assets can be lost in practice even though they still exist on paper.
Beyond crypto, digital assets include online bank and brokerage accounts, email accounts, social media profiles, digital photo and video libraries, music and movie purchases held through streaming platforms, website domain names, and loyalty points like airline miles or credit card rewards. Nearly all states have adopted some version of the Revised Uniform Fiduciary Access to Digital Assets Act, which gives executors and trustees a legal route to access a deceased person’s digital accounts. Without that authority, platform terms of service can shut access down entirely.
Anyone with meaningful digital holdings should keep a secure, current inventory with account names, credentials, and instructions. A hardware wallet with no documented recovery phrase can turn a six-figure crypto position into an unrecoverable loss.
Jointly Owned Property
How a joint title is structured changes what, if anything, lands in the estate.
Joint tenancy with right of survivorship means the surviving co-owner automatically absorbs the deceased owner’s share. The transfer happens by operation of law, outside probate. Married couples often hold property as tenants by the entirety, which carries the same survivorship right but is limited to spouses and in some states adds protection against one spouse’s individual creditors. For federal estate tax purposes, half the value of property held in either form between spouses enters the deceased spouse’s gross estate.3Internal Revenue Service. Publication 559 – Survivors, Executors, and Administrators
Tenancy in common works differently. Each co-owner holds a separate fractional share with no survivorship right. When one owner dies, that share becomes part of their probate estate and passes to their heirs rather than the surviving co-owners. The heirs step in as new co-owners, which can create friction when their plans for the property differ from everyone else’s.
Couples in community property states have an added layer. About nine states treat most property acquired during a marriage as owned equally by both spouses, and a couple in one of those states can title community property with a right of survivorship so the surviving spouse inherits automatically and skips probate.4Legal Information Institute. Community Property With Right of Survivorship
Probate and Non-Probate Assets
Not every estate asset goes through probate. The split determines how quickly property reaches the people entitled to it.
Probate Assets
Probate assets are anything that must pass through court-supervised administration. The court validates the will, appoints an executor (called a personal representative in some states), and oversees payment of debts and distribution to beneficiaries.3Internal Revenue Service. Publication 559 – Survivors, Executors, and Administrators Without a will, state intestacy law decides who inherits, usually prioritizing a surviving spouse and children.
Non-Probate Assets
Non-probate assets bypass the court process and go directly to a named person. Life insurance policies and retirement accounts with a designated beneficiary are the most common. Bank and brokerage accounts with a Payable on Death or Transfer on Death designation work the same way: the institution releases the funds once it receives a death certificate.
Beneficiary designations are contractual, and they override whatever the will says. If a will leaves a retirement account to a daughter but the account’s beneficiary form names a son, the son gets the money. This catches families by surprise more often than it should, especially after a divorce when the account holder never updated the form. Reviewing designations after any major life event is one of the highest-value estate planning moves a person can make.
Assets held in a revocable living trust also skip probate. The trust owns them, so there is nothing for the probate court to transfer, and the trustee distributes them under the terms of the trust document. The catch is that every asset has to be formally retitled into the trust’s name. Anything the trust creator forgot to transfer still runs through probate, which is the single most common reason living trusts fail to deliver what their creators expected.
Debts Reduce What Heirs Receive
An estate is not just assets. Every outstanding debt the deceased owed comes out of the estate before beneficiaries receive anything. The executor’s core duties include collecting all assets, paying creditors, and distributing only the remainder.3Internal Revenue Service. Publication 559 – Survivors, Executors, and Administrators Credit card balances, medical bills, personal loans, and unpaid taxes all sit on the liability side.
Secured debts stay with the property. A mortgage does not vanish when the homeowner dies; if the real estate passes to a beneficiary, the mortgage follows. In community property states, a surviving spouse may be responsible for a mortgage even without being on the loan.
When total debts exceed total assets, the estate is insolvent. The executor pays claims in a priority order set by state law, starting with administrative costs and certain taxes and working down through secured debts and general unsecured claims. Creditors at the same level share what is available on a proportional basis, and beneficiaries receive nothing from an insolvent estate. Heirs and family members are generally not personally liable for the deceased’s debts; the obligation belongs to the estate. Exceptions apply to co-signers, joint account holders, and in some cases surviving spouses in community property states.
How Estate Assets Are Valued
Every asset needs a dollar value. The standard is fair market value on the date of death, meaning the price a willing buyer would pay a willing seller when neither is under pressure to close.5Internal Revenue Service. Revenue Procedure 98-34 Bank accounts and publicly traded securities are easy. Real estate, closely held business interests, artwork, and collectibles usually require a formal appraisal from a qualified professional.
The Alternate Valuation Date
If values fall in the months after death, the executor can elect to value the estate six months later. The election is not automatic. It can only be used if it both reduces the gross estate’s total value and reduces the estate tax owed.6Office of the Law Revision Counsel. 26 USC 2032 – Alternate Valuation Any property sold or distributed within the six months is valued as of the date it left the estate rather than the six-month mark. The election is made on the estate tax return and is irrevocable once filed.
Stepped-Up Basis
When someone inherits an asset, the tax basis resets to fair market value at the date of death.7Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent If a parent bought stock for $10,000 and it was worth $100,000 at death, the heir’s basis is $100,000. Selling right away triggers little or no capital gains tax. Without the step-up, the heir would owe tax on $90,000 of gain they never personally enjoyed.
Not every inherited asset qualifies. Retirement accounts like IRAs and 401(k)s, annuities, and U.S. savings bond interest are classified as “income in respect of a decedent” and do not get a stepped-up basis. The beneficiary pays ordinary income tax on withdrawals just as the original owner would have. The distinction shapes planning: assets that do get the step-up (stocks, real estate, business interests) are generally better held until death, while retirement accounts may be better drawn down during life.
Federal Estate Tax Exemption
Most estates owe no federal estate tax. For 2026, the exemption is $15,000,000 per person, or $30,000,000 for a married couple.8Internal Revenue Service. Whats New – Estate and Gift Tax Amounts above the exemption are taxed at a flat 40%. The same $15,000,000 exemption applies to the generation-skipping transfer tax, which covers transfers to grandchildren and more remote descendants. Beginning in 2027, the exemption will be adjusted annually for inflation. Many states impose their own estate or inheritance taxes with much lower thresholds, so an estate that owes nothing federally can still face a state-level bill.