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What is Your Estate

An estate is the physical possessions that a person has ownership of at the time of death. An estate can include clothes, jewelry, tools, cars, musical instruments, a house, land the house is built on, cash, bank accounts, retirement accounts, stocks, bonds, and other items. A person's estate must be distributed after he or she dies.

The way the estate is distributed is determined by several factors, including the will, the beneficiaries named (if any), the way the property is titled, any letter of instructions, and the laws of the state in which the person lived. Expenses of the estate, debts of the person who died, and estate taxes, if applicable, must all be paid. The remainder is divided among survivors. This dividing up of a person's belongings is called settling the estate. A small estate often can be settled in a few weeks or months, and most larger estates are settled within a year and a half.

Probate court manages the business of an estate until it is divided. This process is called probate. Generally, certain property that was in a decadent's name alone must first go through probate before heirs or other survivors can use it. This property might include bank and brokerage accounts, stocks, bonds, mutual funds, business interests, retirement plans, or life insurance proceeds if the estate (instead of a person) is the named beneficiary. If the value a decadent's estate is small (the amount is determined by each state and ranges from $25,000 to $75,000), it may be exempt from the probate process. Some estates can use simplified probate, which involves registering the will with the clerk of the state probate court, carrying out the terms of the will, and proving to the clerk that it has been done.