EstateFinancial Dictionary -> General Finance -> Estate
Estate is a term that is often applied to a large collection of real estate, or a big piece of property owned by person or family. However in actuality a person’s estate is everything they own; all of their assets, real estate, land, other forms of property and liabilities. It is often defined as the net worth of somebody at any given time.
People often consider their wealth as the money they have in the bank, but this is not strictly true. Money is only a small part of somebody’s estate. Your house is part of your estate, as is your widescreen television and your bicycle sitting in storage. If you sold everything you own, including your house and investments, added the money in your bank and then took away any liabilities, this would be closer to your true estate. Think of it as the formula:
Cash + Assets + Investments – Liabilities = Estate.
The term estate is also often used in the process of inheritance. For example “the young master inherited the grand estate of his father.” This simply means either through a will or default, the son inherited everything his father owned, including liabilities; this must be taken out of the inheritance.
If somebody goes bankrupt, aka, they cannot pay off all of their debts, it can have significant consequences for the person’s estate. Anything they own which is deemed valuable enough to pay off debts can be auctioned and sold. The most common in this situation is the person’s house.
In real estate, the singular term estate may also refer to just housing and land, more specifically the houses, extensions, buildings, land and gardens, woodlands, and farmland that is owned by one person, family or interest, on one joined plot of land.
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