Final answer:
Real estate inherited from someone who died with a will is known as a bequest. Intestate means there is no will, and state laws dictate estate distribution. Trusts provide a private transfer of assets, executed by an executor and trustee(s), and are irrevocable upon death.
Step-by-step explanation:
Real estate that is inherited from a person who died testate is known as a bequest or legacy. When an individual dies testate, it means they have left behind a will that dictates how their assets should be distributed. A will is a legal document that communicates a person's final wishes regarding the distribution of their assets and the care of any dependents. In contrast, if an individual dies intestate, it implies the absence of a valid will, and state intestacy laws will determine the distribution of the estate's assets. In addition, a trust can also be set up for the purpose of managing one's estate, wherein the assets are transferred to heirs in a private manner, avoiding probate court. Inherited real estate arranged through a will or trust ensures that the property is transferred according to the deceased person's explicit instructions.
As an estate planning tool, a trust is designed to hold assets during a person's lifetime and specify how those assets are distributed after their death. This type of arrangement is managed by an executor and trustee(s), who ensure that the assets within the trust are distributed according to the deceased's instructions, which typically become immutable upon death.
The importance of a will cannot be overstated, as it establishes clear directives for estate distribution and can prevent potential disputes among heirs. It is essential for individuals to be aware that the validity of wills can often be contested, making the execution process very public. To minimize estate taxes and ensure that assets go to intended recipients, the estate value thresholds for taxation should be considered, with only large estates typically subject to estate tax.