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Simple English definitions for legal terms
gross estate
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A quick definition of gross estate:
Term: Gross estate
Definition: Gross estate is all the valuable things a person owns when they die. This includes things like houses, money, stocks, jewelry, and debts owed to them. To figure out how much tax the estate owes, the gross estate is calculated by adding up the value of everything. This is important because the more valuable the estate, the more tax that needs to be paid. It's different from probate estate, which is just the property that needs to go through a legal process after someone dies.
A more thorough explanation:
Gross estate refers to all of the assets owned by a person at the time of their death. It is used to calculate whether an estate is subject to federal and state estate taxes and how much. Gross estate includes all valuable property such as real estate, cash, stocks, life insurance, jewelry, furniture, and owed debts.
- A person owns a house worth $500,000, has $100,000 in a savings account, and $50,000 in stocks. They also have a life insurance policy worth $1 million. When this person dies, their gross estate would be $1.65 million.
- Another person owns a small business worth $200,000, has $20,000 in a checking account, and a car worth $10,000. When this person dies, their gross estate would be $230,000.
These examples illustrate how gross estate includes all valuable property owned by a person at the time of their death. It is important to calculate the gross estate in order to determine if the estate is subject to estate taxes and how much.