The first time I read about dead people and their ‘estates’ suing other people, I was confused. How could a piece of land sue people? After reading a bit further, I reached the understanding that ‘estate’, in this case, meant the person’s fortune and possessions, including property, and not just something like a piece of land with lots of trees. (Road trips in Malaysia were inevitably full of landscapes with oil palm plantations or rubber estates.) So how do estates, trusts and wills relate to each other, and what do they mean?
An estate is the net worth of a person at any point in time, whether alive or dead, and refers to the sum of the person’s assets, which can include real estate, art collections, collectibles, antiques, jewelry, legal rights, interests, and entitlements to property of any kind. Simply put, it is the valuable things an individual owns, and is not limited to physical items but also intangible assets like investments and insurance.
Depending on context, the term can be used to refer to real estate (property), personal estate, or the sum of an individual’s assets.
In legal law terms, a trust is a relationship in which the trustor or settlor (person owning property or assets), gives another party known as the trustee the right to hold title to said property or assets for a third party, which is the beneficiary. Trusts may be created during a person’s life or after death in wills, which states how money and property will be handled for children or other beneficiaries.
If you’ve watched enough soap operas or TV series, you’re probably familiar with the scenario (but with with additional helpings of drama). For example, a trust can be used if the beneficiary is under-age or has a mental disability that does not allow the person to manage their own finances or assets. Once they are able to do so, either through coming of age or recovery from disease, the beneficiary will then receive possession of the assets stated in the trust. The trustee may be compensated for their duty in the trust.
A will or testament is a legally enforced declaration of how a person provides for the distribution of his or her property after death, and some may name a guardian for his or her children in such an event. You will also hear of a “last will and testament”, which is a legal document that communicates a person’s final wishes before their death concerning what will be done to their possessions (estate) and responsibility towards dependents.
How it all ties together
The value of a personal estate usually becomes very significant upon the death of an individual, especially if he or she had many possessions or a large fortune before passing away. That is when a will becomes an important legal document, as it will state what will happen to their possessions (and dependents, if any). A still-living person is named as the executor of the estate, and that person is responsible for ensuring that what is specified in the will is carried out. In the event that a trust has been set up, the trustee will be entrusted with the assets outlined in the terms, until the time when the terms are met for the beneficiary to take over said assets.
So there you have it. Next time you read the news or watch a courthouse drama, you’ll be able to know what it’s all about. 😉