An estate plan does more than distribute your assets after you die. Learn the difference between estate planning vs. will here.
While most Americans know that having an estate plan is important, 67% of them have taken no measures to establish one. While thinking about death can be uncomfortable, it’s essential that you work with an estate planning lawyer to ensure that the process of transferring property after your death goes smoothly. This will ensure that you protect your family in a difficult time.
Part of this is writing a last will and testament, but that’s far from the only consideration. Here, we’re going to discuss the difference between estate planning vs will writing. Read on to learn how you can plan your estate the right way.
Estate Planning vs Will Writing: The Basics
Estate planning is a broad plan for what will happen to your assets after your death. It is a complex process that involved many different processes and tools.
You will detail powers of attorney, advance directives, asset distributions, trusts, and wills. You also will determine who can make end-of-life medical decisions for you in the event that you cannot do so yourself.
A will is one single aspect of estate planning. A will is a single legal document that includes information such as:
- How assets should be distributed after your death
- Who should care for children and dependants upon your death
- Who will be the executor in charge of carrying out your will’s instructions
Basically, estate planning is an umbrella term that encompasses many activities. Writing a last will and testament is one of those specific activities that fall under the estate planning umbrella.
What Goes Into Estate Planning?
It’s important to define what an estate is before you can fully understand how estate planning works. An “estate” isn’t necessarily the large luxurious property that many people think it is. It simply is a term referring to everything that you own.
Estates include properties, cars, financial investments, the contents of checking and savings accounts, life insurance, and your personal possessions. The latter is a broad term that includes furniture, collectible items, digital assets such as cryptocurrency, and more.
So, estate planning is simply the process of deciding what will happen to your possessions after you pass away.
There are multiple components of estate planning. Durable power of attorney is one of the most important. It lets you designate a trusted person like a spouse or adult child to manage your financial and legal affairs when you no longer can do so on your own.
This same individual will usually also be given medical power of attorney. This means that they can make healthcare decisions for you when you’re unable to do so.
This is essential even if you have an advance healthcare directive that dictates medical decisions that you would want to make if you were terminally ill, in a coma, or facing late-stage dementia. You should also have this living will. It can alleviate stress from your trusted loved one in times of crisis and pain.
You also need to designate beneficiaries for your assets. They need to be named officially so that benefits can go directly to them without the process of going through the state. If your beneficiaries are not up to date, your assets may be taxed and the beneficiaries might receive a smaller sum.
Wills and trusts are critical for naming beneficiaries.
How Can You Draft a Will the Right Way?
As we said earlier, a will is an essential part of estate planning. The broad term and specific will-writing process are often mixed up because of how important drafting a will is. It is often considered the most important part of the estate planning process.
To create a will appropriately, it’s critical that you work with an estate planning lawyer. Wills are legal documents, so you need to make sure that you do everything perfectly. You want it to be ironclad enough to ensure that your assets can go to beneficiaries smoothly without legal disputes or taxation.
Make sure that you:
- Put your name at the top of the will
- Name your executor
- Name someone to handle your estate’s probate process
- Distribute your property among loved ones and heirs after you pass away
- Name guardians for children and adult dependants (elders, disabled people, etc)
- Name a caregiver for your pet(s)
A will can also serve as a backup for a living trust.
Wills and Trusts
Trusts are another important aspect of estate planning that goes hand-in-hand with will writing.
A will goes into effect after you die. A trust goes into effect as soon as you sign the documents.
In many cases, you can transfer property when you are still alive. These trusts are referred to as “living trusts.” The trustee can receive the assets outlined in such a document upon a certain milestone or birthday even if you are still alive.
Many living trusts are irrevocable, though some are revocable. This means that you, the grantor, can change them within your lifetime.
Testamentary trusts are a little different. They are created with the instructions in a last will and testament after your death. These trusts are basically what allow a third-party trustee to manage assets on behalf of beneficiaries.
If you’re unsure of what documents you need for estate planning, a lawyer can help. Every case is different because each person has individual estate needs. Plus, since these attorneys will also help draft your will, it makes sense to ask them for assistance with other facets of your estate plan.
Talk With an Estate Planning Attorney
While writing a last will and testament is an important part of the estate planning process, it’s far from the only thing you need to consider. Now that you know the difference between estate planning vs will writing, it’s time to get started. Johnson/Turner’s legal experts are committed to helping you plan your estate and transfer your property to the appropriate beneficiaries.
We can help you create both will-based and trust-based estate plans depending on your individual needs. Plus, since we offer flat fee costs for firm services rather than hourly rates, you won’t need to worry about hidden fees. Contact us to schedule a Quick Guidance Call and discuss your specific needs.