Your estate refers to everything you own. It is what makes up your net worth. Some of the things that make up your estate include cash, financial securities, physical possessions, and real estate.
What Is An Estate?
The word estate mostly comes to mind when talking about farms and historic homes. However, it is a lot more than that legally. An estate is anything valuable that you own. It may include antique items, pieces of art, investments, insurance, and all other types of assets and entitlements. Legally, a person’s estate consists of their assets minus liabilities.
The value of your estate is relevant when you declare bankruptcy and when you die. When a debtor declares bankruptcy, their estate will be assessed to determine debts that they can still pay. Bankruptcy proceedings are just as long and complicated as the hearings following death.
When one dies, estate planning helps manage inheritance and the division of their estate. It is one of the most important types of financial planning in life. You create a will explaining your intentions regarding the division of your estate. Those who benefit from your assets are also known as beneficiaries.
How Are Estates Formed?
Most estates are formed through voluntary alienation. It is the process through which one willingly exchanges land. If, however, you exchange it against your desires, like in the event of bankruptcy, it is known as involuntary alienation.
Estate planning has aided the creation of many estates. Therefore, preparing a will is very important. During estate planning, one takes everything they own into consideration. They decide what will happen to their estate in case of their death. If you die with no will, a descent will settle your estate. It is the process through which your state determines what will happen to your possessions.
Are There Alternative Ways of Gaining an Estate?
Apart from voluntary or involuntary alienation, there are a few other ways to gain estate.
Writing a Will
Wills are legal documents meant to give guidelines on how property will be handled following the death of the property owner. A will may also provide instructions regarding the custody of minor children. When writing your will, you can name your executor or trustee. They are responsible for ensuring that your will is executed.
Depending on your intentions, a trust may be created. It can go into effect while you are still alive (living trust) or after you die (testamentary trust.) Probate is the first step towards executing your will. After your death, the custodian of your will takes it to probate court or to the executor of the will. They have to do this within a specified period after your death.
The probate process is overseen by the court. The goal is to prove the validity and authenticity of the will before it can be executed. When the process is completed, the court will officially appoint an executor. They can act on behalf of the deceased legally.
If you have any questions or concerns regarding your estate, it would be best to seek the opinion of your lawyer as soon as possible.