In plain English, an estate is what you leave behind after you die. That includes a house or a car, of course, plus valuables like jewelry and museum quality artwork. But your estate also includes your clothes, books, household furnishings, personal effects and stocks and bonds. In many cases, your estate will include items that hold sentimental value to you or your loved ones, but little or no monetary value.
Many people use a will to settle their final affairs. A will is a legal document that provides instructions on how to distribute assets from the estate of the deceased. The main responsibility for carrying out the instructions of a will fall to the executor, a person designated by the deceased before death. Besides carrying out the final wishes of the deceased, an executor must file the deceased's final tax returns, pay creditors, locate any assets the deceased person may have accumulated and identify eligible heirs. The executor also submits the will to the court for probate, the procedure that determines whether the will is legally valid.
Many people opt for living trusts rather than wills to control the settlement of their estates, to avoid probate and estate taxes and to maintain privacy. Unlike wills, trusts are not submitted to the courts, and are therefore not subject to public inspection. The person who establishes a living trust may administer the trust herself as long as she is mentally competent, which gives her greater control over the distribution of her assets. A "pour-over will" often accompanies a living trust, and directs assets that remain in the possession of the administrator upon her death into the trust. After the administrator dies, a successor trustee named while she was still alive assumes the administration of the trust, and performs many of the duties that an executor handles, including paying the final expenses of the deceased from the assets of the trust.
If you don't make arrangements for settling your final affairs before you die, the courts will take over the task. Dying intestate is the legal term for dying without having a will or living trust in place to settle your estate. The probate court will appoint an administrator -- often a family member -- to act in place of an executor or successor trustee. After paying creditors and filing your final tax returns, the court will distribute your remaining assets according to the intestate succession laws in force in your state. These laws vary, but in many cases spouses and surviving offspring receive most or all of the remaining assets.