From Our “Ask a Question,” Mailbag: “What is the difference between will and estate planning?”
What is the difference between will and estate planning?
Whether you are doing Estate Planning in Pennsylvania, Estate Planning in New Jersey, or any state, this question comes up all the time. In short, a Will is part of your Estate Plan. So, when you are doing Estate Planning, you will consider many documents, including a Will. Let me give you some details.
What exactly is an Estate Plan?
First, realize that you have an estate. It might be just clothing and a Television, but those are your things. Your estate is the total of your assets (and liabilities). Many estates include a bank account, a 401k or IRA, a home, and automobiles. Some estates are large, some small. Your Plan is what happens to all these things when you die. You may have an active Plan that reflects your wishes, or you may have an inactive plan implemented by the Government.
You Already Have An Estate Plan (It just might be a bad one).
If you have not done a formal estate plan with an estate planning attorney, then the state steps in and makes a plan for you. Call it a default plan. If you die without doing a Will or Revocable Trust, then your estate passes through the Rules of Intestacy. For example, follow this link for the New Jersey Rules of Intestacy. Each state has intestacy rules. It could be that the default plan is okay with you, but for most people, it is not satisfactory. For example, in Pennsylvania if you die without a will while married and no children, 1/2 your probate estate passes to your parents, and NOT to your spouse.
A Will is Part of Your Estate Plan.
A typical plan includes a Will, Power of Attorney, and Living Will Medical Power of Attorney. Here is a quick introduction, but if you want more details, follow this link to Estate Planning All You Need to Know.
The Will dictates who gets your things at your death. Your Will may include a protective trust for your spouse to help shelter them from future creditors and their next spouse. If you have children, the Will also forms protective trusts. Trusts for minor children put a trusted person in charge of the money to property provide for their care. For older children, the child is often the trustee, and the trust’s purpose is to shelter assets from their potential divorce(s).
The Financial Power of Attorney appoints your Agent. This Agent has the power to act for you financially. If you are ever incapacitated, this person can write checks, sell your house, pay your taxes, and more.
The Living Will and Medical Power of Attorney appoint your Surrogate. This Surrogate makes medical decisions for you if you become incapacitated. These decisions could be if you have surgery or not and what doctor you see. The document also gives the Surrogate the power to remove you from medical care.
For more detailed information Wills, see my article “Last Wills and Testament All You Need to Know.”
In Conclusion: What is the difference between will and estate planning.
I hope you found helpful this short article about What is the difference between will and estate planning. I have also included some links for more detailed information. If you are curious about updating your Will, Power of Attorney, or Living Will, contact us and let our Estate Planning Lawyers help walk you through what can be a confusing process. In fact, feel free to contact our office for a free consultation.
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