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Your estate is what you leave behind, financially speaking, when you die. To figure its worth, your assets are valued to determine your gross estate.
The assets may include cash, investments, retirement accounts, business interests, real estate, precious objects and antiques, and personal effects.
Then all of your outstanding debts, which may include income taxes, loans, or other obligations, are paid, and those plus any costs of settling the estate are subtracted from the gross estate.
If the amount that's left is larger than the amount you can leave to your heirs tax free, you have a taxable estate, and federal estate taxes may be due. Depending on the state where you live and the size of your taxable estate, there may be additional state taxes as well.
After any taxes that may be due are paid, what remains is distributed among your heirs according to the terms of your will, the terms of any trusts you established, and the beneficiaries you named on certain accounts - or the rulings of a court, if you didn't leave a will.
- Browse Related Terms: Back-up withholding, Custodial account, Estate, Estate tax, Gift tax, Income, Income in respect of a decedent, Income stock, National debt, Qualified domestic trust (QDOT), Revocable trust, Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA)
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