Although many people picture a large home with rolling lawns in the country when they think of an estate, the legal term is far different. An estate simply is the collection of property that someone owns.
An estate could consist of liquid assets only, like cash or investments. It could consist primarily of property like cars, furniture, or a large home. More frequently, it consists of a mixture of these assets.
Understanding the assets a loved one has in their estate makes it easier to prepare for passing these assets to heirs or beneficiaries upon their death.
What Items Can Be Part of an Estate?
Even if you don’t think a loved one had a lot of assets in their estate, the total list may surprise you. Some of the items that may be part of an estate include:
- Real estate
- Land
- Home
- Motor vehicles
- Boats
- Collections
- Antiques
- Family heirlooms
- Cash
- Savings
- Investments
- Stocks
- Bonds
- Business interests
The estate may only contain a few of these items, or it may contain most of them.
Why Is Understanding an Estate Important?
When someone dies, the estate passes to heirs and inheritors. Individuals should take certain steps to prepare their estate before they die.
Creating an Estate Plan
Regardless of the age or the size of an estate, the owner can create documents that prepare the estate for the possibility of their death.
Through an estate plan, a person can make their wishes known about who will receive each of their assets. A will or a living trust can be part of an estate plan.
Valuing the Estate
When creating a will or living trust, the owner needs to understand the value of the estate. If the estate consists primarily of cash, determining the value of the estate is easier. If it consists mainly of pieces of jewelry or antiques, though, figuring out the valuation is challenging. The owner may need to seek out appraisals to receive an accurate valuation.
Additionally, with assets like precious metals, collectibles, or antiques, the valuation may change quite a bit over a few years. The owner may need updated appraisals regularly.
If a person continues to accumulate assets, they’ll want to regularly update their list of assets.
Having an up-to-date value can be helpful when deciding which heirs will receive which assets. If a person wants to provide heirs with portions of their estate that have relatively equal percentages of the estate’s value, accurate valuations can ensure things remain equal.
Protecting Your Estate’s Value
Having an accurate list of the assets in an estate helps protect the assets from taxes when the person passes away. When a person knows exactly what their assets are worth and which assets make up their estate, they can take specific steps to protect the value from estate taxes and inheritance taxes.
Types of Estates
When a loved one passes away, their estate typically fits into one of three potential types of estates, based on any estate planning steps they took during their life.
Traditional Estate
The traditional estate includes a will and a named executor. The will lists the assets and which beneficiaries or heirs will receive them. The executor manages the estate after a person’s death by paying debts, considering creditor claims, and distributing the assets to the heirs.
A traditional estate with a will still needs to go through probate court in most states. However, the will usually makes the process go smoothly, as long as no one protests the will.
Trust Estate
A trust estate occurs when a person creates a living trust and places their assets inside the trust. The trust holds the assets, rather than keeping the assets in the decedent’s name. The trust is an independent entity.
The trustor can continue to control the assets inside the trust, or they can have a third party control the assets. Because these assets are not in the trustor’s name at the time of their death, the assets do not have to go through probate.
Probate Estate
When someone dies without a will, it’s a probate estate that goes through probate court. Your state’s intestate succession laws then determine which heirs receive the estate’s assets. Because the decedent left no will, the wishes regarding the estate’s distribution are unknown.
If Your Inheritance Is in Probate, Consider a Cash Advance From Rockpoint Probate Funding
When you are preparing to inherit the estate of your deceased loved one, the probate process may catch you off guard. It can take several months or longer for an estate to move through probate. You may need the assets from your inheritance now for paying debts or making investments.
Rockpoint Probate Funding offers cash advances to heirs whose inheritance is in probate. We base the amount of cash you could receive on the expected inheritance you’ll have from the estate. To discuss for free whether a cash advance is beneficial to your financial situation, contact Rockpoint Probate Funding at (888) 263-8588 today.
