The Differences Between Will Planning & Estate Planning
People often confuse estate planning and will planning. There are several vital differences between the two, so we will try to explain what each can offer and which one might serve you better.
What Is Will Planning?
Will planning is a relatively straightforward process where a person creates their last will and testament. A will covers who will take care of the person’s children, who will inherit their money, business, real estate, or anything else in a case of passing. Furthermore, a will requires a person to name an executor or an individual who will be in charge of making sure the will is respected and that everything is handled according to your wishes.
A big reason people create wills is for avoiding any potential disputes between family members. When a will is present, there is little to no space for misunderstandings. The document serves as a clear outline and includes directions. Finally, creating one can save your loved ones a lot of time, energy and potential legal delays.
What Is Estate Planning
An estate represents a person’s net worth. It covers their real estate, possessions, bank accounts, potential life insurance policies, various securities, stocks, etc. When we talk about estate planning, it comprises several documents that are more comprehensive than the will and testament.
These contain legal directives whose purpose is to simplify the process of management and disposal of one’s estate after their passing. One of the said documents is usually a will. While it might sound the same as a will and testament, estate planning is a more intensive process. It covers health-related or financial decisions and various scenarios that might happen in the future.
As everyone’s life changes, they can update or alter their plan if needed. If you opt for estate planning, you will have much more control over your estate in case of death. It is strongly recommended to work with an attorney specializing in estate planning/will-related issues. They have the proper knowledge and expertise to assist you with all these matters.
Including a Living Will
Living wills are implemented when the person has specific end-of-life requests. They usually cover things such as the type of medical care that the person needs. These wills are especially vital in cases when a client is unable to speak. They allow a person to choose medical care, end-of-life measures, and anything else that they might not be able to decide for themselves at the moment.
Financial Power of Attorney
This part of an estate plan can help you assign a person who will be in charge of your business and money. They will act on your behalf and ensure that your finances are handled in accordance with your wishes and requests. Here are some of the responsibilities the Power of Attorney (or POA) will have: handling transactions, making potential business decisions, ensuring that your family maintains its financial stability, etc.
Beneficiary Designations and Trust
A living trust is an option that many families prefer. With this document, all assets will remain in your trust, and they are all managed by a person of choice. That will last until beneficiaries are of the age that is stated in the trust. Even though creating a living trust can be more expensive than a will, in case of death, beneficiaries will receive their gift immediately. Furthermore, they will avoid the probate process entirely, and it will save them time.
A living trust will create an outline of what you wish to happen to your finances and property. This document covers who should inherit money from your retirement account, various savings, and life insurance. All of these documents serve to create a solid estate plan that can cover nearly every potential situation.
Estate Planning vs. Will
Deciding the answer to this question is not straightforward since the needs of each individual will differ. Estate planning is more costly however it offers more security and covers a wider variety of options. Its upside is that a person can change their estate plan easier and adapt it to their personal situation.
How Much Does Estate Planning Cost?
A law firm will have to evaluate a person’s financial and family circumstances. After that, they will have to create appropriate legal documents. These can cost anywhere between $800 and $3,500, depending on the situation. While the price might seem steep, keep in mind how much time and money it can save you in the future.