Estate is a legal term that refers to a person’s total property. The term formerly referred mainly to a person’s land. But today the term is usually associated with the property a person owns at death. In this way, an estate may consist of land, money, stocks, cars, and collections of value, among other items. An estate can also be responsible for paying the debts the person left at the time of death. In the United States, the federal government levies an estate tax on estates above a certain size. The tax is based on the estate’s value at the time of the owner’s death. There are two main kinds of estates—leasehold and freehold.
A leasehold estate is property specified in a contract or a lease by which the owner agrees to let another person use the property. The lease specifies how the property may be used, how long the property may be used, and what rent will be given to the owner (see Lease). A lease may last for life, for many years, or for a shorter period of time. Some leases specify that they may be ended at will. The holder of a leasehold estate may use the property as he or she sees fit, subject to lease terms and local laws, but that person does not own the property.
A freehold estate involves some degree of ownership. In the United States today, there are two principal kinds of freehold estates. One is the life estate, which gives the possessor an interest in the property only during his or her lifetime (see Fee). The other is the estate in fee simple, which represents absolute ownership. However, the use of an estate in fee simple is subject to zoning laws and other legal restrictions.
Another form of estate, known as an estate in fee tail, is an old kind of freehold estate. At one time, the owners of such an estate could not sell or dispose of it. They had to leave it to a specified descendant. In most U.S. states today, however, the fee tail estate has become equivalent to an estate in fee simple.
The term estate meant the same thing as status in the days of feudal landholding in Europe. The king owned much of the land in his realm. Private landholders who were his tenants agreed to certain terms. Their estate, or status, in connection with the land they held, was the whole set of conditions of their tenancy.
