Estate

The term encompasses all the assets owned by an individual, such as land, possessions, financial investments, cash, and other valuable belongings that they control or have ownership of, forming their total net worth.

Jointly, “estate” is often associated with large properties like farms or historic family homes. However, in a financial and legal context, it refers to all valuable assets owned by an individual – real estate, artwork, investments, insurance, and more. It’s also a term used to describe a person’s overall net worth. Legally, an estate is calculated by subtracting liabilities from total assets.

The importance of a personal estate’s value comes into focus in two situations:

• Bankruptcy declaration
• Death

In bankruptcy cases, the estate is evaluated to see which debts the individual can repay. This evaluation mirrors the thorough legal process that takes place when an individual passes away.

Estates become significant when an individual passes away. Estate planning involves organising the distribution and inheritance of one’s personal assets and is considered a crucial aspect of financial planning. It’s essential to note that each country has its own regulations regarding the transfer of wealth, including limits and approved estate planning mechanisms.

Typically, an individual creates a will to outline how they want their estate distributed after they pass away. The recipient of assets from the will is known as a beneficiary.