What comes to your mind when you hear the word ‘estate’? Well, most of us think about a plantation-style property with several buildings, a large house, and a piece of land.
Even though this is true, the term estate holds a different meaning in the field of real estate. If you are wondering what it could mean, keep scrolling as we tell you more about it and how large it can be.
What is an estate?
Colloquially, estate refers to the land and improvements on a property such as a homestead or a farm, or a historic family home.
However, in the legal and financial sense, an estate is everything of value that a person controls or owns, such as real estate, investments, antique items, insurance policies, art collections, and any other entitlements and assets. Legally, your estate is simply your total assets minus liabilities.
How is an estate formed?
In most cases, estates are formed through voluntary alienation – a process that an individual exchanges land voluntarily. In a case where exchanges are made against an individual’s desire, such as the cases of bankruptcy, it’s called involuntary alienation.
Most importantly, many estates are usually formed through the estate planning process – which entails will preparation.
Through this process, a person evaluates the value of everything they have and decides what will happen to them when they die. If an individual dies without a will, the state law settles the estate and decides what to be done with the possessions. If you are in Arizona and you don’t have an idea on how to manage an estate, consult scottsdale az realtor for advice as well as transparent estate management.
So, how large is an estate?
Now that you understand what an estate is and how it’s formed, the question that could be going through your mind right now is how large it could be. Well, there’s no specific answer to that question as the size of an estate is determined by the entire net worth of your assets minus liabilities. In other words, it can be small or large, depending on how much you own.