What is an estate?

There are several methods to transfer property such as wills, trusts, owning property jointly, naming beneficiaries on insurance policies, and retirement plans. But you can’t decide how to pass on your estate unless you know what comprises an estate.

Your estate includes everything you own at the time of your death: your house and its contents, all of your possessions (such as jewelry), car, savings accounts, insurance policies and securities. Although the actual value of your estate cannot be computed until your death, for good estate planning, you need to estimate the value for yourself. Why? Because only by knowing that value can you estimate the estate taxes due when you die. Sadly, many rightful heirs have lost entire estates because they could not pay the estate taxes. This is especially true of the hefty death tax on large tracts of land.

Tax laws change and the federal/state taxation on your estate changes with them. Figuring out the value of what you own is tricky because property can be owned in a variety of ways and the laws differ from state to state. Regardless of where you live, please consult an attorney if you are uncertain about ownership.

In fact, writing a will is one area where it pays to hire a lawyer. Spending a modest fee now to draw up an estate plan may save your heirs thousands of dollars later and it will help ensure that your heirs receive what you want them to receive.