What Are the Differences Between Wills and Estate Planning?
For many individuals, a will is what they think about when considering the future of their estate. But a will is only one tiny piece of the broader estate planning puzzle.
While creating a will is a fundamental part of an individual’s estate planning, estate planning and wills are different things. A will is just one estate planning tool that specifically names an executor, dictates how your estate will be distributed upon your death, and who will become your children’s guardian. Estate planning is an umbrella term that deals with many different things, including how your assets are protected throughout your life, managed if you become incapacitated, or distributed after you die.
In other words, a will is a small part of the larger reach of estate planning. While estate planning often involves the creation of a will, it is much broader in scope and can have many essential functions.
What Does a Will Do?
A will is a legal document that sets out how your estate will be distributed upon your death. Your will names an executor who handles that distribution and any other actions regarding the will. It will also name a guardian for any minor children who must be cared for after your death.
It is a myth that only people with great wealth require a will. Anyone with any assets or minor children needs a will to define how your assets will be distributed and who will care for your children. If you die without a will, California’s intestate law will determine who gets your estate. The court will name a guardian for your children. All of these will have no bearing on what you may have wanted, but it is nonetheless the law.
What is Estate Planning?
While a will is a specific tool used in estate planning, estate planning itself deals with all aspects of an individual’s estate, from management and protection of assets to what happens in the event that someone becomes incapacitated or dies.
Successful estate planning will have many broad goals for both your assets and what happens should you be unable to manage them. These will include lessening the impact of taxes, avoiding probate, setting out directives for healthcare and long-term care, as well as providing for the distribution of assets upon your death.
While asset distribution upon death is one critical part of a comprehensive estate plan, it will also consider who can make decisions for your assets and finances if you become unable to. It will also designate someone who can make medical decisions for you if you are unable to make these decisions for yourself. Consequently, estate planning is a collection of legal instruments that will be highly individualized, depending on the individual and their unique circumstances. Estate planning will encompass
- Different types of trusts, depending on the goals and needs of the individual
- A durable power of attorney for healthcare
- A durable power of attorney for property
- An advance healthcare directive
- Any beneficiary designations for investments, life insurance policies, or other assets
- Considerations for how properties are deeded
- Considering and naming an executor, guardian, or trustee
- Considering how beneficiaries may manage funds or what may happen in specific life events.
Estate planning will look at many possible scenarios and attempt to ensure that you and your heirs are protected.
While Having a Will is Important, Customized Estate Planning is Critical
No two individuals are alike when it comes to their estate and their personal wishes for themselves and their asset distribution. While there are forms online that can do the basics of creating a simple will, these are not legally comprehensive and don’t consider all the possible legal scenarios that may affect your unique situation.
Estate planning can be complex, and there are many laws and circumstances that should be considered. At the Law Offices of Roshni T. Desai, our team of Orange County, California estate planning professionals will discuss all these considerations to ensure that your estate planning is comprehensive, complete, and correct. To schedule a no-cost consultation to discuss any of your estate planning questions, call us at (714) 694-1200 or contact us online.