In this chapter, modified techniques for fault estimation in linear dynamic systems are proposed, which give the possibility to simultaneously estimate the system state as well as slowly varying faults. Using the continuous-time adaptive observer form, the considered faults are assumed to be additive, thereby the principles can be applied for a broader class of fault signals. Enhanced algorithms using H ∞ approach are provided to verify stability of the observers, giving algorithms with improved performance of fault estimation. Exploiting the procedure for transforming the model with additive faults into an extended form, the proposed technique allows to obtain fault estimates that can be used for fault compensation in the fault tolerant control scheme. Analyzing the ambit of performances given on the mixed H 2 /H ∞ design of the fault tolerant control, the joint design conditions are formulated as a minimization problem subject to convex constraints expressed by a system of linear matrix inequalities. Applied enhanced design conditions increase estimation rapidity also in noise environment and formulate a general framework for fault estimation using augmented or adaptive observer structures and active fault tolerant control in linear dynamic systems.