Estate Planning is a procedure of arranging for the management and distribution of assets after the death or incapacitation of the owner. An Estate Plan includes several tools like a Will, a Trust, an Advanced Directive, or Power of Attorney applicable on financial assets like Bank Accounts, Jewelry, Stocks, Life Insurance, Property, Vehicles, and Digital Assets.
A Will is a legal document that states your desires regarding the distribution of your financial assets among your beneficiaries and specifies an Executor who will be responsible for this distribution. A Will can also describe the ways to take care of your children(if minor), in case you pass away.
Will is a part of an Estate Plan and both come within the sphere of Estate Planning. It should have been clear now that Estate Planning is a process while Will is a document. But this is not the only difference between the two of them.
Often people assume that Estate Planning and Will provide similar legal benefits and leave behind a Will only. The reason behind this assumption is the following benefits that Estate Planning and a well-charted Will, both provide:
Appropriate distribution of assets among your family members according to your preferences.
Desired legal guardian for your minor children, in case you pass away young.
Exemption or reduction on the estate or income taxes.
Minimizing the possibility of family conflicts or legal battles.
But leaving solely a Will for your assets can overturn its benefits and result in family disputes and unwanted distribution of assets after your death. The drawbacks of a Will are:
- The Will can go through Probate if your assets lack proper paperwork or include personal possessions like artwork, clothes, or jewelry leading to a waste of estate funds and your grieving family members’ time.
- A poorly planned Will could end up with your beneficiaries paying heavy inheritance tax and your estate applicable for estate taxes.
- Once Probate is filed, the Will becomes a public record. Who wants unknown people to know about their assets?
Estate Planning caters to all your needs, be it planning for your assets, your family, or your last days in the hospital. It’s a procedure where you consult legal and medical professionals and discuss with family about unprecedented situations of the future and then plan out required steps for them.
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The process ends after sorting out your needs and giving shape to your plans by creating different legal documents. Estate Planning can come in effect during a lifetime and after death, unlike a Will that comes in effect only after the death of the testator.
Estate Planning seems to be a lengthy process to many due to which they prefer to design a Will and consider the work done but with some help, you can easily plan out your Estate be it physical or digital. Secure your family, assets, and yourself with more than a Will and stay prepared for any adversity.