An estate refers to the total collection of a person’s assets, property, and debts at the time of their death. It encompasses everything an individual owns and owes, which is managed and distributed through the estate administration process.
What Is Included in an Estate?
Assets:
The property and items a person owned, including:Real Estate: Homes, land, rental properties.
Financial Accounts: Bank accounts, investments, stocks, and bonds.
Personal Property: Jewelry, vehicles, art, collectibles, and other tangible items.
Retirement Accounts and Life Insurance: While these are typically distributed to named beneficiaries, they are still considered part of the estate for tax purposes.
Business Interests: Ownership in a company or partnership.
Digital Assets: Online accounts, intellectual property, and cryptocurrency.
Debts and Liabilities:
Any outstanding financial obligations, such as:Mortgages or home equity loans.
Credit card balances.
Medical bills.
Personal loans.
Taxes owed (income or estate taxes).
What Happens to an Estate After Death?
Inventory and Valuation:
All assets and debts are identified and valued to determine the estate’s total worth.Payment of Debts and Taxes:
Outstanding debts and any applicable taxes are paid out of the estate.Distribution to Heirs or Beneficiaries:
The remaining assets are distributed according to the deceased’s Will or, if no Will exists, according to state intestacy laws.