Estate

When someone dies, their estate must be gathered, valued and passed on. This includes homes, bank accounts, investments, vehicles, business interests and valuable possessions. Debts, such as mortgages, loans and unpaid bills, are paid from the estate before anything is distributed.

For example, a person who dies owning a house worth 400,000, savings of 50,000 and investments of 80,000, but owing 150,000 on a mortgage, leaves a net estate of 380,000.

The process of administering an estate is often called probate. An executor, named in the will, or an administrator, appointed by a court if there is no will, handles the legal and financial tasks.

Some assets may pass outside the estate. Life insurance proceeds and pension benefits often go directly to named beneficiaries, and jointly owned property may pass automatically to the surviving owner.

In some countries, estates above a certain value are subject to estate or inheritance taxes. The term "estate" is also used more generally for a person's total wealth when planning how it will be passed on.