Wills & Estate Planning for End of Life Preparations
Many people put off estate planning due to uncertainty about the future or discomfort with the idea of talking about death. Others believe that estate planning is only for the wealthy or that it costs too much to hire an attorney.
The truth is that any adult can benefit from comprehensive end-of-life planning. Learn more about the most important aspects of estate planning, including wills, advance directives, and powers of attorney.
Key Takeaways
- Regardless of wealth, having a plan ensures your wishes are respected and eases the burden on your loved ones.
- A will is just one document, while estate planning is a comprehensive process that includes managing assets, healthcare decisions, and appointing representatives to act on your behalf.
- Include powers of attorney and advance directives in your estate plan to protect your interests if incapacitated.
- An attorney can guide you through the process, ensuring your estate plan is complete and legally sound.
Understanding the Difference Between Estate Planning vs. Wills
The main difference between wills and estate planning is that a will is a single legal document. In contrast, estate planning is a process that includes several components. A will, also known as a last will and testament, documents your wishes regarding your assets and, depending on the state, custodial and financial guardianship wishes for minor children. Estate planning is more comprehensive.
What Is Estate Planning?
Estate planning is a legal process that determines what happens to your assets when you pass away[1]. An asset is something of value, such as:
- Motor vehicle
- Fine jewelry
- Original artwork
- Cash
- Stocks
- Bonds
- Bank accounts
- Real estate
- Mutual funds
- Digital video files
- Family heirlooms
- Antique furniture
- Collectibles (stamps, coins, etc.)
Estate planning also allows you to appoint someone to manage your financial affairs or make medical decisions on your behalf should you become incapacitated due to an illness or injury.
Who Needs Estate Planning?
Every adult should have an estate plan, as estate planning is the best way to ensure family members and friends follow your wishes when you pass away. You can benefit from estate planning whether you have a few hundred dollars in your checking account or you’re a millionaire with multiple homes.
Erin L. George, MA-MFT, says some people are even superstitious about planning for death, believing that making a detailed plan will manifest an untimely demise.
Many people suffer from anxiety when even thinking about death, so the idea of planning it or taking those first steps is something some people tend to put off. What they fail to consider is that having a plan can be a great way to reduce anxiety around the future.
Erin L. George, MA-MFT
What Does Estate Planning Cover, and Why Is It Important?
Estate planning is important because it helps your heirs or next of kin carry out your wishes. It can also save your family a lot of heartache, especially if you develop a serious illness and can’t make decisions for yourself. With estate planning, it may even be possible to reduce the taxes owed on your estate, leaving your heirs in a much better financial position.
Estate planning covers two key topics: how your assets will be distributed upon your death and who will make decisions on your behalf if you’re unable to do so. In addition to a last will and testament, your estate plan may include the following:
- Springing power of attorney: If you have a springing power of attorney, your authorized representative can only make decisions on your behalf under certain conditions.
- Healthcare power of attorney: With a healthcare POA, your authorized representative can make medical decisions on your behalf.
- Financial POA: A financial POA gives your authorized representative the power to make financial decisions on your behalf, such as selling property or paying bills from your bank account.
- Advance healthcare directive: Also known as a living will, an advance directive outlines your wishes regarding medical care.
What Is a Will?
A will is a legal document that explains how you want your property distributed when you pass away[2].
Who Needs a Will?
Any adult can benefit from having a will, but it’s especially important to make one if you have young children.
What Does a Will Include, and Why Is It Important?
When you create a will, you get to specify who should receive your assets. If you’re married, you may want to leave everything to your spouse. Parents may split their assets evenly among their children. If you’re single, perhaps you want your nieces, nephews, siblings, or friends to inherit from you.
Creating a will is important because it allows you to pass property to your loved ones. It can also help you prevent certain people from accessing your property. If you have minor children, a will also allows you to designate a guardian in most states, giving you extra peace of mind.
During the probate process, a court authenticates your will and authorizes your executor to start distributing your property[3]. If you die without a will, a probate court gets to decide who receives your property, and the judge’s decision may not match your wishes.
Common Will & Estate Planning FAQs
If you need help writing a will or creating an estate plan, contact an experienced attorney.
You’re not required to hire a lawyer, but working with an attorney can help you avoid common mistakes and ensure your will isn’t missing any important information.
Erin L. George, MA-MFT, says, “Hiring an attorney can be particularly helpful for people who suffer from anxiety when thinking about death. By working with someone who is comfortable with the process of estate planning, it is generally easier to get through the process quickly and will allow for peace of mind in knowing it’s been handled correctly.”
If you die without a will, which is known as “dying intestate,” a judge gets to decide who receives your assets.
It depends on the complexity of your estate plan, your location, and other factors. For a middle-class individual, estate planning may cost up to 10% of the estate’s value[4]. It may cost less if you only have a few assets to distribute.
If you don’t have an estate plan, your loved ones may not be able to carry out your wishes. In some cases, the lack of an estate plan causes a significant amount of stress for family members.
Yes. The structure of your estate could affect the amount of taxes owed by your heirs. Speak with a licensed attorney or tax professional to determine the best way to minimize their tax burden.
Getting Started with Estate Planning
Whether you need a simple will or a complete estate plan, we hope we’ve underscored the importance of starting the process as early as possible. Careful estate planning protects your assets, and it can save your loved ones from going stress of going through a drawn-out probate process.
Written by Leigh Morgan
Leigh Morris has 15 years of experience developing high-converting content for the Web. She enjoys writing about health, law, finance, marketing and careers. Hope has a bachelor's degree in business administration (human resource management) and a master's degree in management and leadership.
Edited by Erin George, MFT
Erin L. George, MFT, holds a master's degree in family therapy focusing on group dynamics in high-risk families. A court-appointed special advocate for children, she is passionate about helping families restore and find healthy connections.
Sources
FINRED. (n.d.). Estate planning [PDF]. Sourced from https://finred.usalearning.gov/assets/downloads/FINRED-EstatePlanning-FS.pdf
New York State Unified Court System. (n.d.). Wills. Sourced from https://www.nycourts.gov/courthelp/whensomeonedies/will.shtml
American Bar Association. (n.d.). The probate process. Sourced from https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/probate-process/
Nevada Deferred Compensation Program. (2018). Estate planning basics seminar [PDF]. Sourced from https://defcomp.nv.gov/uploadedfiles/defcompnvgov/content/Meetings/2018EstatePlanningBasicsSeminar.pdf