The process of creating a plan for the orderly administration and distribution of a person’s property after death. Proper estate planning allows a person to minimize taxes, make necessary arrangements for dependents and beneficiaries and distribute wealth and assets according to his or her wishes.

All the assets owned by a person at the time of his or her death. An estate includes such items as funds, real estate, investments, life insurance and other valuables.

The average, or actual, amount that a taxpayer pays on income. The effective tax rate takes all forms of taxes into account. It is calculated by dividing total tax paid by taxable income.