Choosing Beneficiaries: Whether Property Falls Inside Or Outside The Estate Matters

Whether you are an executor taking care of the estate of a loved one, or you are engaging in estate planning for yourself, it is important to differentiate between property that falls inside the estate and property that falls outside. By understanding the difference in treatment of each category, you can administer estates more easily and plan better for the future.

What are the Two Categories?

Property owned by an individual on his or her death will fall into one of two categories: for simplicity, I will refer to them as "inside the estate" and "outside the estate". When property falls outside the estate, it means that the deceased person has specifically selected a person (or persons) to be the beneficiary (or beneficiaries) of the property. The selection can take one of two forms: (1) the deceased designates a specific person as the beneficiary of the particular property in the document that governs that piece of property; or (2) the deceased person owns the