Estate Planning

Element III: Family and Personal Finance

An estate is the property to which a person is lawfully entitled. In traditional law, the word referred to property in land; a person's estate consisted of the interest or rights that the person held in land. Courts in the United States have ruled that the word estate covers everything a person owns, both real and personal.

In traditional common law, an estate in fee simple meant complete ownership of real property. The owner was allowed to sell it or dispose of it in any way he or she chose. An estate in fee tail gave possession during the owner's lifetime, though not the power to sell it; when the owner died, the property passed to the owner's descendants. These terms are still used in legal documents.

A common form of estate is the life estate, in which the possessor has an interest only in his or her lifetime. Afterward, it passes to a designated person or reverts to the former owner or to his or her heirs. For example, a person making a will may bequeath property to one person, with the stipulation that upon that person's death, it goes to yet another.

An estate may be held for the beneficial interest of another. In a TRUST, for example, the TRUSTEE has legal title to the trust property, but the beneficiary of the trust has the equitable estate and is entitled to the exclusive benefit of the trust administered by the trustee.

Other kinds of estates are the contingent estate, which is an interest that may or may not take effect in the future upon the occurrence of a certain event, such as the birth of an heir. An expectant estate is one not presently possessed by a person, but which may be possessed in the future. Similarly, a future estate is one that a person receives in the future, usually upon the death of the present owner.

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