The word “estate” can be a confusing one, with slightly different meanings in different contexts. As it relates to planning for your death or incapacitation, the most basic definition of estate is your net worth. Essentially, your estate includes all the assets that you possess, as well as the debts that you owe. However, it is possible to break it down further and describe the different types of assets that your estate includes.
Real Property
Real property includes land that you own and the structures upon it. Both residential and commercial real estate are included in real property. It does not matter whether you use the land yourself or rent it out to someone else. Real property that you own is part of your estate, as are your interests in any property in which you have a partial stake.
Tangible Property
The word “tangible” means “able to be touched.” Therefore, your tangible property includes most of your personal possessions: Large items, such as cars and furniture, as well as small items, such as photographs or hand tools. It includes utilitarian possessions such as clothing and decorative items such as jewelry. Some pieces may have great value while others may be almost worthless, but all are included in tangible property.
Intangible Assets
Intangible assets are things that you cannot touch that nevertheless hold great value. Examples of intangible assets include copyrights, stock options, business interests, insurance policies, retirement plans, and financial investments. Even the money held in your bank account is considered an intangible asset.
Debt
Your estate includes more than your assets. It also includes what you owe to others as debts. Your debts decrease the overall net worth of your estate. While some debts may be forgiven upon your death, others outlive you, in which case your obligations can extend to your family members. Debts that are often outstanding when a person dies include income taxes, mortgages, medical bills, student loans, and credit card debt.
Assets Not Included
If you don’t want real property, intangible assets, and tangible property to be included in your estate, you can put them in a trust. This retitles the assets in a name other than yours. Since you technically no longer own them, they are not included in your estate. Other assets not included in your estate include property jointly owned with someone else and pay-on-death accounts.
Even if your estate is relatively straightforward, it is still important to take steps to protect it. Contact an estate planning lawyer, like from Yee Law Group, to arrange a consultation with an attorney who can help you to set your estate planning priorities and goals.