I am not the type to wax political but given the upcoming election and this topic I could not resist this title of the article and photo. All jokes aside, the title of my final entry in the “legacy of your pocketbook” series will cover the topic of estates. You might have heard the term “estate sale” and may have bought some things from there (I know I certainly have), but what is an estate and how does it function?

An Estate, in laymen’s terms, is everything comprising the net worth of an individual. These things could include things such as land and real estate, possessions, financial securities, cash and any other assets that a person owns or has controlling interest in; basically, anything they own.  The value of an estate typically shows up in two instances: when the person with an estate declares bankruptcy and when that person passes away. When declaring bankruptcy, the assets in the estate are looked at to judge which debts outstanding will be reasonably expected to be paid on. The legal process involved is rigorous. Estates are most relevant when a person dies. Prior to this there may be estate planning that takes place. Planning the estate is simply managing the division and inheritance of the persons estate and planning the financial aspects of a person’s life. Generally speaking, a personal draws up a will which explains the individual’s intent on dividing up the estate upon death (otherwise known as a beneficiary).

Estates are, in almost all cases, divided among the deceased’s family. This tends to keep wealth within the family for generations after the fact. An inheritance tends to account for a massive proportion of total wealth in the US and around the world and is in part responsible for income inequality (in addition to other factors). Despite this there is an inheritance/ estate tax on the estate and assets could sometimes be required to be sold to help pay on these taxes imposed on beneficiaries. It is also advisable for people with estates to consult an estate attorney to aid in navigating the complex world of estate law (the same applies to trusts as well).

Estates can be a daunting topic to delve into but with an understanding of what an estate is and how it works (and some sound legal counsel) it does not have to be. That is all I have for now in this “legacy of your pocketbook” series. Until the next time dear reader excelsior!