Understanding your Estate
Your "estate" is, quite simply, everything you own. Real estate, personal property, stocks, bonds, mutual funds, retirement accounts, and even life insurance death benefits comprise your estate. The size and nature of your estate will often dictate what type of planning is right for you.
The "size" of your estate is important from a tax perspective. Prior to 2006, your estate could be subject to estate taxes if the total value of all of your assets (including life insurance death benefits) is $850,000 or greater. Similarly, your estate could be subject to federal estate taxes if the total value of your assets is $1.5 Million or greater.
The "nature" of the assets comprising your estate is also important to consider. This is because different types of assets will transfer on death in different ways. Some of your assets may pass by "beneficiary designation." In other words, certain types of accounts enable you to state who will receive the proceeds at your death. Typically, these would include assets like: life insurance death benefits; retirement accounts; and annuities. You may also hold certain assets jointly with another individual, with "rights of survivorship." In these cases, the jointly held assets would pass to the remaining joint owner of the asset. The most common example would be real estate held by spouses as "joint tenants." Finally, many of your assets may be held in your name individually, without beneficiary designations. If so, these assets will need to go through a process called "probate" in order to pass to the next generation. | 
