A Will, also referred to as a Last Will and testament, is the document that most people consider essential to ensure that their wishes are carried out after their passing. On the other hand, many people do not think that they have enough money to warrant having an Estate Plan. While both are integral parts of the broader field of estate management, they serve distinct purposes and involve different legal processes.
What is a Will?
A Will is a legal document that outlines an individual’s wishes regarding the distribution of their assets after death. It typically designates beneficiaries who will inherit specific properties, financial assets, or personal belongings.
A Will should also appoint an executor, who is the person responsible for ensuring that the terms of the will are carried out. One of the key advantages of having a will is that it allows the testator (the person creating the will) to have control over the distribution of their assets and to provide for loved ones, including spouses, children, and other family members.
Without a Will, a deceased person’s assets are distributed in accordance with State laws, which may not be in line with what the decedent wanted.
One thing that many people do not realize, though, is that a Will only covers the distribution of certain assets. If an asset is jointly owned with another person or if there are designated beneficiaries for an asset, then those assets will pass to those people regardless of what the person’s Will says and not vice versa. This is where Estate Planning is important, no matter how large or small the value of the estate.
What Is Estate Planning?
Estate Planning is a more comprehensive process that involves analyzing all of a person’s assets and how they will pass to ensure that an incorrectly titled asset or decades-old beneficiary designation does not defeat the testator’s intentions.
Estate Planning also encompasses a range of legal strategies and tools to maximize the value of an estate, minimize taxes, and address issues such as incapacity or disability.
Unlike a Will, which only becomes effective upon death, estate planning takes into account the individual’s entire financial picture and aims to ensure the efficient management of assets while the person is still alive.
Estate planning often includes the creation of a variety of legal documents, such as trusts, powers of attorney, and healthcare directives.
Trusts, for example, allow individuals to transfer assets to a separate legal entity that holds and manages those assets for the benefit of designated beneficiaries. This can provide advantages in terms of privacy, protection and preservation, avoiding probate, and ensuring a smoother transition of assets.
While wills and estate planning share the common goal of facilitating the transfer of assets, estate planning offers a more comprehensive and proactive approach. It takes into consideration the potential challenges and opportunities that may arise during an individual’s lifetime, such as changes in financial circumstances, family dynamics, or health issues.
In summary, the main difference between a will and estate planning lies in their scope and timing. A will specifically addresses the distribution of assets after death, while estate planning involves a broader, ongoing process that aims to manage assets efficiently during an individual’s lifetime and plan for their seamless transfer to heirs.
Both are crucial components of a well-rounded approach to managing one’s affairs and ensuring that their wishes are honored in the future. Consulting with legal professionals, such as estate planning attorneys, can help individuals navigate these complex processes and create plans tailored to their unique needs and circumstances.
Joan Reed Wilson Esq. – Managing Partner
Practices in the areas of estate planning, elder law, Medicaid planning, conservatorships, probate and trust administration, and real estate. Admitted to practice in the States of Connecticut and California, she is the President of the CT Chapter of the National Academy of Elder Law Attorneys (NAELA), an active member of the Elder Law Section of the Connecticut Bar Association, accredited with the PLAN of CT for Pooled Trusts, with the Veteran’s Administration to assist clients with obtaining Aid & Attendance benefits for long-term care needs and with the Agency on Aging’s CareLink Network.