It’s not new for people to stumble on the question Is estate planning the same as a will and confuse Estate planning and wills. A will is a part of Estate planning. A will is a legalized document that ensures where one’s properties, such as real estate, cars, assets, or custody of their children.
Those still below 18 (if any) will go after the demise of the one creating the will.
However, although Estate planning is almost the same as a will, a Legal will VS estate plan is a much more complex and broader subject.
To create an estate plan, creating a will is the first and foremost step. Estate planning is the collection of many wills that may get into action even when the one making the estate plans is still alive, or it may apply after the demise or death of the one creating the estate plan.
It is almost a generalized concept that Estate planning is for the rich, rich people, whereas for us commoners, it’s a will and the bitter truth. If one chooses to create only a will, they will not let their loved ones live in peace even after their demise. His estate can go to probate. It takes a lot of headaches and can cost the one involved a lot to get the properties to the beneficiaries. It also can end up being subject to humongous taxes as well. In the following section, we explain the difference between estate planning and wills, along with the role of estate planning and will in this post.
What is a will?
A legalized document is where the creator writes down his wishes about where his physical properties like cars, houses, assets, or custody of minor children will go after the creator’s demise. The creator also has to add the name of an executor who will take out the actions in the will. A will can be created by working with an estate planning attorney, but a considerable number of websites await as well who would be more than willing to walk you along the will creation process.
Leaving a well-organized and clear will before death can be a good idea. However, leaving just a will isn’t a good idea. One should make an estate plan. If one dies without making one will, their heirs might have to spend a lot of time and money to figure out to whom the properties will go after the individual’s death.
Also, not leaving a will can mean that succession laws in the state where the demised person lived determine where and how the properties will go. Hence, their properties might end up with people they didn’t want the properties to go to.
What is Estate Planning?
Is estate planning the same as a will? Although Estate planning and wills are almost identical, it is a complex and broad process. With many wills, it makes an Estate plan. Will is a significant part of an estate plan, but estate planning is more than just one will.
Estate planning is where your assets, properties, cars, financial investments, and personal accolades will go after you die. However, this may also spring into action while you are still alive.
A will is the first step when it comes to creating estate plans. One should make a comprehensive estate plan if one is willing to leave their loved ones or heirs in the best position. Estate consists of everything one individual owns. From savings accounts, investments, cars, homes or other real estate, life insurance, and personal possession to everything one owns.
The primary step in building an estate plan is to write a will. As mentioned earlier, Will is a part of Estate planning. However, there are other tasks to take care of, such as setting up the funeral arrangements of the willmaker. Planning in such a manner that the tax is limited by setting up trusted accounts in the name of the people where the assets and properties will go — setting up a guardian for living dependency.
What is the difference between estate planning and will?
In simple terms, an estate plan is a vast plan which includes several wills. The broader strategy for the assets, properties, financial investments, or personal accolades might apply while you are well and fine or after your demise. However, a will is a part of an estate plan, whereas an estate plan is a collection of many wills. A will decides where your inheritance will go, how and who will get the properties, or how to distribute the property legally.
There is more to talk about the difference between estate planning and wills. An estate plan covers more ground, while a will is often just a part of the estate plan.
An estate plan is more than just distributing one’s assets after their demise. An estate plan guides their heir or any loved ones on how the individual wants to handle their medical care and financial affairs after the demise or death of the individual or while they are alive but couldn’t make their own decisions for the same. As said earlier, an estate plan is a collection of many wills- Last will and testaments, Living will and Health care power of attorney, financial power of attorney, using trusts to reduce as much tax as possible.
The last will and testaments
The majority of Estate planning attorneys who are good in their field will advise you that the last will is a foundation and the beginning of an excellent estate plan. The documents are for the individual’s wishes to distribute the property after death. The people or organizations receiving the properties under the terms and agreement of the individual’s will, are their “Beneficiaries.”
Essentially, a will is a set of basic instructions to be followed by the estate’s executor (The person responsible for administering the estate). The executor must be someone the individual trusts to fulfill their wishes. Every state has its own rules. A court will find a will valid if the one who signed it is over 18 years of age. Also, at least two witnesses above 18 years must sign the will.
Living will and the health care
Power of attorney
This type of will allows your beneficiary to make major critical decisions for you when you cannot make your own decisions due to illness. A healthcare power of attorney lets the individual take legally authorized critical decisions regarding the individual’s medical care. These are often called “advanced medical directives” and usually state the individual’s wishes concerning life support if they cannot decide for themselves.
Financial Power of Attorney
This will is also the same type of will as health care power of attorney, but this is monetary issue related. The financial power of attorney allows the individual’s beneficiary to manage the assets and the finance on the individual’s behalf when the individual cannot decide on their own.
Suppose the individual has not given someone the financial power of attorney and cannot make the decision for themselves. In that situation, a probate court will bring and appoint a person on behalf of the individual. However, whoever gets the financial power of attorney must act in the individual’s best interest. They must manage the individual’s finances and assets reasonably and honestly, their interest shouldn’t clash with the individuals, and they have to keep a detailed record of the actions done on the individual’s behalf.
Using trust for Estate planning
A fiduciary relationship where one of the parties gives another party, also known as the” trustee,” the right to hold properties or assets for the benefit of a third party is called a trust. The person establishing the trust is known as the “grantor”. Many people choose to create separate trusts; it allows their assets to go outside of probate and might reduce the inheritance taxes due.
Revocable trusts are also living trusts because they can be revoked or modified during the grantor’s lifetime. This trust gives maximum flexibility in estate planning but doesn’t provide much asset protection.
The revocable trust becomes an irrevocable trust after the grantor’s demise. The initial stage of trust creation also has the terms and conditions of the irrevocable trust mentioned beforehand. After that point, even if the grantor wants to change the terms, it can’t be done.
Below we mention a complete will and estate planning checklist for a broader understanding of Legal will VS estate plan and to save time.
Estate planning tips
- Find a very trustable and responsible Estate administrator.
- Make a list of your inventory. List all the physical properties you can find, which includes your home, jewelry, cars, bikes, computer, laptops, etc.
- Itemize your non-physical assets next. These include your IRAs, bank account, insurances, etc.
- Now, make a list of debts. The list of debts includes loans, mortgages, and any debts you owe.
- After you finish your lists, make at least three copies. The original for the estate administrator, one copy for your spouse, one to keep in a safe deposit box, and the last one for yourself.
- Review your retirement accounts.
- As with your retirement accounts, update your insurances as well.
- Consult with your Estate attorney or financial planner.
- Simplify all of your finances.
- Take advantage of college funding accounts.
Will Planning Tips
- Think about what type of will you want to make. There are wide varieties; however, a simple or last will and testaments are enough for commoners.
- Make a list of the assets you want to include and your will.
- Choose the beneficiary who will receive your assets once you enter eternity’s slumber.
- Decide on your executor.
- If you have minor children, choose who you want to take care of them.
- Decide on which charity you want to donate the amount to.
- Find witnesses and sign it in their presence to make it legalized.
- Make copies of the will and store them safely and soundly.
- Tell your executor, heirs, and loved ones where you have kept the will to let them access it after your demise.
- Whenever you witness a significant change in your life, update your will.
If you follow the above-mentioned will and estate planning checklist, then you can save yourself a lot of trouble. Ultimately, we want to conclude that it is crucial for everyone to go through and create estate planning. Just a will won’t be as sufficient as you think it would be.
Additionally, you might have priceless memories that you want to leave loved ones in your digital assets. Compile a list of all your accounts and passwords and send a hard copy with your estate planning paperwork. This is where the concept of social media will comes in. We at Clocr help you to get a social media will, taking care of your digital presence even after you bid farewell to the world.
Our digital estate and legacy planning services ensure that your loved ones are left in any kind of turmoil after your demise, especially when it comes to your digital assets. Join Clocr today and leave a lasting legacy.