What is the difference between will and estate planning?
Many of us seldom think about our own mortality, tending to think that the “hereafter” is reserved for someone else. Obviously we know better, yet we put off planning for the future or thinking about what would happen if we should suddenly pass.
Who would get my things? Who would care for my children?
Those questions and many more could easily be solved with a will and estate planning documents that will ensure your concerns are taken care of after you are gone.
What is will planning?
A will, also known as a Last Will and Testament, is a legal document that instructs an attorney or an executor how your assets and affairs will be handled. The document protects your assets and ensures that your final wishes are carried out, detailing who is entitled to your property and how that property will be distributed.
The document can be one page or multiple pages depending on the number of individuals and items listed. The will can also be part of an estate plan.
If there are children to consider, a will can also lay out a plan for guardianship. You can also designate someone as executor who will oversee the entire process, including the distribution of property, and the resolution of taxes or debts.
Four main types of wills
Depending on your needs there are 4-types of wills available, all are similar in their ability to protect and distribute your assets, with slight modifications
- Simple Will: a legal document designed for an individual regarding which assets gets distributed to which person, as well as who will look after children, if there are any to consider.
- Joint Will: identical to a simple will concerning the distribution of assets, the only distinction is that the document is designed for two individuals which both need to sign
- A living will: a legal document geared towards the medical needs of the individual, detailing the types of medication and healthcare treatments given in the event the individual becomes incapacitated.
- Testamentary Trust: a legal document requiring assets to be distributed through the probate process
Note: without a documented will, distribution of your assets and execution of your final wishes will be left to chance. The state, in some instances, may arbitrarily distribute your assets to individuals whom you may not have wanted receiving your assets.
What is estate planning?
As the name implies, estate planning is a legal plan in how you will distribute your estate after you pass or become incapacitated. An estate can include almost any item deemed valuable, including: homes, real estate, stocks and bonds, vehicles, furnishings, bank accounts, jewelry, etc. Estate planning can also include business assets.
Although a will and estate plans are similar in distributing your assets, an estate plan encompasses a much broader strategy than a will. It may include a variety of legal documents, including a will, a living trust, power-of-attorney, letters of intent, beneficiary designation, property or title transfer, and more.