Many individuals mistakenly believe that creating a will and an estate plan are the same thing, but they are actually only two parts of the same process. Simply defined, an estate plan represents a more comprehensive strategy for managing the assets that could be used both during and after your life. In contrast, a will defines how your fortune will be distributed, who will be the guardian of your young children, and other details. So, even though a will is frequently included in an estate plan, the latter is far more comprehensive. It could be a great idea to see a local financial advisor if you’re considering making your will or establishing an estate plan.

But in this article we will be going through the difference between a will and estate planning.

A Will: What Is It?

A will is a legal document which contains how your possessions should be transferred after your death. It can also specify how you want your children to be raised after you pass away. Wills also appoint an executor, who is responsible for carrying out your wishes after you pass away.

To write a will, you can collaborate through an estate planning lawyer. However, there are a lot of resources online that can guide you through the will-writing procedure. Popular choices include Trust & Will and Quicken WillMaker & Trust.

Having a will is frequently advisable since it contains phrases that are precisely specified. Without your will, the heirs might find themselves spending a significant amount of time, money, and effort determining how to split the assets through the state’s estate court system. Additionally, the succession rules of the state in which you reside will decide how the property will be divided if you pass away intestate. That means without a will. Your assets can end up going to people you didn’t particularly want them to during this drawn-out procedure.

What is involved in a Will?

Will And Estate Planning

You can specify how your valuables, such as cash in the bank, real estate, or valuable items, should be dispersed by making a will. Your will can indicate who gets your business or investments and when you have either.

You can also designate a charity (and charities) to receive assets through a will. A will can also ensure that your wishes are followed if you want to leave assets to a business or organization.

While the majority of your assets are usually covered by your will, some aren’t. Payouts from testator’s life insurance policies are among those omissions. The proceeds will be distributed to the named beneficiaries of the policy. The same is probably true for every investment account that has “transfer on death” set as their designation.

There is one important exception: If a beneficiary of such assets outlives the testator, the policy as well as account reverts to estate and is distributed in accordance with the terms of a will or, in the absence of a will, by a probate court, a division of the legal system that deals primarily with wills, estates, and related issues.

The majority of states have optional or community property rules that forbid persons from excluding their spouses from their estates. A court may overrule a will if it leaves the surviving spouse with less of these assets than what is required by state law, which is often between 30% and 50%.

A will specify your choices for who you want to be the guardian of your young children in the case of your death, in addition to allocating your assets.

Estate planning: What Is It?

Writing a will is far more narrowly focused and simple than estate planning. A will serves as a single tool, whereas an estate plan uses several. Wills, advance directives, powers of attorney, trusts, and other legal documents are frequently included. Durable powers of attorney for financial and healthcare decisions in the event of incapacitation can both be included in estate plans.

Planning an estate may entail considering issues that go beyond legal documentation. In addition to selecting how your assets will be allocated after your death, these decisions may include things like who has the authority to make healthcare choices on your behalf when you are still alive.

Regardless of what estate planning normally comprises, it can be as broad or as specific as the individual desires. Complex wills, trusts, and estate planning instruments may be desired by those with more intricate estates. In order to reduce taxes on assets that may later pass to heirs, they might even want to donate to charities. But if your inheritance can be divided and your intentions are carried out with merely a will, that could be sufficient.

What is involved in estate planning?

The key components of estate planning would be these.

A will or trust

During the will, you should specify who you intend to leave your property to as well as appoint a guardian for your children. You can name someone in a trust to manage your children’s funds, whether it’s their guardian or another person you trust.

Names of beneficiaries

The majority of your financial accounts, including your investment, retirement accounts, and bank account, or certain life insurance policies, need you to name a beneficiary who will receive the payouts in the event of your passing. Many people are unaware that the provisions in these forms take precedence over those in your will. To ensure that your assets get to the people you want to receive them, make sure they are updated to match your current desires.

Durable power of attorney

In the event of your incapacitation, this paperwork specifies who you desire to handle your financial or medical affairs. You can assign the same individual to both tasks or you can designate distinct employees for each. In the event that your main appointee becomes unable or unable to carry out the duties, make sure you have some backup person named.

Advance health care directive (AHCD)

Your AHCD will include a living will and medical power of attorney. If you become incapacitated as a result of an illness or injury, a person living will must outline your medical preferences for life support and resuscitation. It’s an important move to take these difficult choices off your family’s shoulders during a trying moment.

Letter of intent

This letter provides the executor of the estate with personal insight into your mindset, including directions for the style of burial and funeral you choose to any parting words you have towards your family concerning your beliefs and goals for their future. It is not a legally enforceable document.

Digital asset accessibility

Nowadays, you spend the majority of your time online. Therefore, your executor and heirs have to know how and when to access everything, including your email on your personal social media accounts, in order to take care of any outstanding payments and other web-related accounts. Additionally, you can have priceless memories that you’d like to leave with loved ones within your digital assets.

As a result, compile a list of any and all your personal accounts and passwords and attach a tangible copy within the estate planning documents. Include the names of everybody you are granting access to your accounts. So that your executor has the most recent information, keep in mind that you should update this document whenever you update any online account information.

Who is in need of an estate plan?

Estate plans give your loved ones a roadmap of what you want done after your death. This is especially beneficial for individuals who:

  • have been in more than one marriage.
  • runs a business
  • aspire to give a portion of its assets to charity
  • have unique demands about their health and/or possessions because they are worried that their wishes would be disregarded or that the wrong individuals might receive their possessions.

What documents comprise your estate plan?

An estate plan includes the following:

  • Healthcare power of attorney – enables designated agents to make health choices on your behalf in the event that you are unable to do so yourself.
  • Durable power of attorney permits a representative to manage your finances.
  • Advanced directive – it describes your wishes for life-sustaining treatments.

What role does a Will play in an estate plan?

A will, which is a binding legal document, specifies what happens to your property after your death and names someone to care for your children. It doesn’t deal with jointly owned property, property held in a family trust, or property controlled by a private firm, because it merely deals with assets which are part of your estate. Superannuation and insurance coverage might not be covered.

Some things you might want to think about when making your will include:

  • Listing your assets and determining which ones are part of your estate.
  • Making the decision to leave certain assets to certain beneficiaries.
  • Selecting the beneficiaries of your estate.
  • Selecting a person to serve as your executor.

The difference between will and estate planning

A will is a legally binding document that expresses your final wishes, including information about your beneficiaries, how you desire your assets distributed, and all other appropriate post-mortem measures. A will could be highly beneficial to those who are left behind, since it can specify how your assets will be distributed and who will receive them. In conclusion, the two main reasons people make their wills are beneficiary selection and the transfer of their assets after death.

In contrast, estate planning is a word used to describe the extensive procedures necessary to secure assets following your death, which are often carried out in accordance with your will. A thorough estate plan includes both documents that take effect immediately upon your death and others that take effect only after your passing. This doesn’t apply directly to a will, since a will often takes effect after the person who drafted it has passed away.

You should now be able to see why a will is only a small component of estate planning, because a will or perhaps a living trust is what truly initiates estate planning. As you can see, there isn’t much of a distinction between estate planning and wills because they go with each other and you need one to use the other.

Conclusion

You should either seek clarification or consult with an expert lawyer before acting on any advice given to you on anything related to estate planning and or writing of your will. Don’t leap to conclusions, since it’s crucial for everyone to properly plan for the future to first understand the distinction between a will and estate planning.

Consult an Estate Planning Attorney now

A skilled estate planning attorney can help you draft legal instructions in the event that you become ill and could provide you with the best solutions to meet your individual needs. Call (702) 388-9800 to schedule a consultation with a Las Vegas lawyer from The Law Office of Roger A. Giuliani.

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