An estate is the total sum of a person's assets, belongings, and liabilities at the time of their death. It encompasses all of their financial and tangible possessions, real estate properties, investments, personal belongings, and any outstanding debts or liabilities. The estate reflects a person's net worth and represents everything they own and owe.
When someone passes away, their estate goes through a legal process known as estate settlement or probate. During probate, the deceased person's will (if they had one) gets validated, and a court or designated executor will oversee the distribution of assets and settlement of debts. If the deceased did not have a will, their estate will be distributed according to the laws of intestacy in their jurisdiction.
The goal of estate planning is to ensure a person's assets get distributed according to their wishes and that their beneficiaries are taken care of after their death. Estate planning also involves minimizing potential tax liabilities and avoiding probate if possible. This process often includes creating wills, trusts, and other legal documents to protect and transfer assets in a controlled manner.
Estate planning is not just for the wealthy; people of all income levels can benefit from organizing their affairs and ensuring their assets get handled as intended. Seeking advice from estate planning attorneys or financial advisors can help create a personalized estate plan that aligns with individual goals and circumstances.