Estate Planning and Wills: What’s the Difference?

While estate planning and drafting a will are similar and go hand in hand, they aren’t the same thing, contrary to popular belief. So, what’s the difference between them? To provide clarity and help you prepare for the future, we’re breaking down the difference between wills and estate planning and how you can better plan for the future.

What Is a Will?

A will, or more formally referred to as a “last will and testament,” is a fairly straightforward legal document designed to provide direction for your estate after you’ve passed. In this document, it’s standard to clearly state:

• Who the executor of your will is in order to settle debts and disperse assets in accordance with your wishes
• How property and assets are dispersed and who gets what
• Assigned guardians for minor children
• Who takes over your business or how business assets are shared

Why Is It Important to Have a Will?

Having a clear, legally binding will and testament provides the following benefits:

• Keeps the estate out of probate, a lengthy legal process that can keep your assets sitting in limbo for months
• Prevents family disputes over how to divide assets
• Ensures your assets go to who you wish rather than being settled in accordance with state inheritance laws
• Ensures your children go to the individual you choose, rather than someone chosen by the state

What Is Estate Planning?

A will is often a small part of estate planning. In reality, estate planning is very broad and can be complicated because it goes far beyond who receives your assets when you’re no longer alive. A comprehensive estate plan includes:

• The last will and testament
• Trusts for charitable donations or to provide minors with financial gifts upon reaching a specific age or to go to college
• Who receives access to your digital information
• Your wishes for burial and documents for any pre-arranged burial or cremation services
• Advanced health care directives to provide guidance to your loved ones about how to make medical decisions based on your wishes
• Appointment of a financial power of attorney, or someone who can make financial decisions on your behalf if you become incapacitated
• A healthcare power of attorney who can make healthcare decisions on your behalf if there is no directive that is applicable
• Paperwork for all financial accounts with updated beneficiaries on life insurance policies, 401(k), and pension accounts as the beneficiary listed on these policies often supersedes the person named in the will

Why Is an Estate Plan Important

As you can see by the comprehensive list above, an estate plan ensures your wishes are carried out in the event you become incapacitated or unable to act in your own best interests. From a financial perspective, having a clear estate plan can save your loved ones a great deal in taxes and probate costs. By having money in trusts and tax-advantageous accounts, your family will receive their inheritance more quickly and without worrying about taxes. Also, your plan goes beyond what a will includes, providing a clear path so your assets, including property, sentimental items, and investments, end up with those who you want to have them.

Schedule a Consultation with an Estate Planning Attorney in Raleigh

If you don’t have an estate plan or will, we can help. Our experienced estate planning lawyers will provide the legal knowledge and guidance to help you create a legal, comprehensive estate plan that ensures your wishes are followed with ease. Schedule a consultation with us today at (919) 615-2473 for our Raleigh location, 919-365-6000 for our Wendell location, or fill out the form below to get started.