Plenty of federal and state entities have given legal meaning to the words “estate” and “assets,” but in order to keep things as uncomplicated as possible here, we’ll boil it down to their practical definitions.
Simply put, your estate is comprised of all your assets at the time you pass away.
So that would include all your real property, like your primary residence and any vacation homes, and all your personal property, like household items, cars, jewelry, and collectibles. Also included in your estate would be bank accounts, investments, life insurance policies, retirement accounts, any businesses you own, stock options, trademarks, and a myriad of other tangible and intangible assets. This is not a complete list. There are many types of property a person can own.
Probate vs. non-probate assets
You may have heard of “probate” and “non-probate” assets, and it’s important to note the difference between them here. Both of these types of property are included in your estate, but only property classified as probate assets must pass through the court process known as probate to be re-titled and distributed. Title to non-probate assets passes without the need of the court.
Non-probate assets include those where you have named a beneficiary to receive the asset upon your passing, such as 401k accounts, IRAs, and life insurance policies. Similarly, you might own property jointly with another person. Many times joint ownership is such that upon your passing, the other owner automatically gets your share, as with certain bank accounts or contract-driven real property. This type of property does not need to go through the probate process, but is still part of your estate.
Probate assets are basically everything else, since they must be distributed under court supervision.
Other types of property
Some assets may seem like your property but actually wouldn’t be part of your estate at all. For example, in your capacity as trustee you may legally own property held in a trust for the benefit of another person. When you pass, however, the trust property is not part of your estate. Instead, it passes directly to the beneficiary named in the trust document.
Defining your estate
Some estate assets are simple to understand; others are not so simple. Some of them, such as partnership interests, stock options, or intellectual property, may have time limits for decisions to be made about them after you pass. It is important to identify your assets during the estate planning process, so that your plan can be crafted to account for the distribution of everything you own and ensure your assets go where and to whom you wish.