Planning your financial future for loved ones and your financial holdings is an important step at any stage of life. If you’ve put it off, you should take care of it now. Passing without the right legal preparations can lead to a messy legal battle among your heirs if they disagree on who gets what and how to handle certain responsibilities. You can work with experts and consult family members to clarify your final wishes. The first step is figuring out whether you need a will or an estate plan. To do that, you need to know what the difference between these two options is.
The Purpose of a Will
Everyone should have a Last Will and Testament prepared while they are still healthy and clear-minded. Templates for writing your own will are available online or through office supply stores. However, it is usually best to work with a lawyer to make sure you cover all of your bases.
The complexity of the document will depend on your circumstances. It might be more complicated if you have a family, minor children, property, or sizable financial assets. If you don’t have a will, the state can take your assets and distribute them however it sees fit.
It can also assign minor children to new guardians. If you have living family members, usually your children will be sent to live with your next of kin. However, you might not agree with their child rearing practices. If you don’t have living family members, your children will be put in the foster care system and potentially adopted. To prevent either of these options, it’s best to have a guardian assigned in your will. This can be a family member or family friend who you trust to raise your children the way you would raise them if you could.
The Purpose of an Estate Plan
An estate plan is more comprehensive than a personal will. In fact, while it usually includes a will, an estate plan doesn’t just cover what happens if you die. The plan can include additional documents like a living will. This provides instructions for someone you name to be in charge of your financial and medical responsibilities if you become incapacitated temporarily or permanently. For example, if you fell into a coma due to an accident, your living will would come into effect. A living will activate, with your pre-planned guidance, for a temporary or permanent change in your health. It usually includes the decision of whether to be given mechanical life support if offered.
The estate plan may also include trust accounts for beneficiaries who will inherit a portion of your estate later. A common example is to set up a trust account for a child to inherit a bequest from the will at a certain age. You can also set up accounts that dispense only in certain circumstances or at certain times. For example, if you want to ensure your kids get college degrees, you may make that a requirement of the trust. If you have a child who you expect might spend all of their money at once on poor choices, you might set up the trust to only give them an allowance of a certain amount each year.
Not all states allow you to place conditions on inheritances, so do your research to ensure that your state does. The estate plan also allows you to put someone in charge of these trust accounts until they are dispensed. This person will need to make sure that heirs follow through on conditions. Choose someone who is trustworthy and who your beneficiaries will be comfortable working with.
Do You Need Both?
While everyone should have an up-to-date will that is signed, dated, and notarized or witnessed, not every person will necessarily need the other documents mentioned above. For example, if you don’t have significant assets and you don’t want a living will, you might forgo a full estate plan. If circumstances change later, you can revise the will then, or you can expand to an estate plan.
However, if you have strong opinions on life support, have significant assets, or you want to put trusts in place, you will likely need an estate plan. Additionally, if you do choose to create an estate plan, it will include your will.
Finally, remember that you can adjust either of these documents later.
Work With an Estate Planning Lawyer
While you can find DIY templates online for creating wills and even estate plans, keep in mind that these documents have far-reaching consequences. Making a mistake can lead years of probate for your heirs, which likely isn’t what you wanted at all. To understand the intricacies of preparing a Last Will and Testament as well as the advisability of having an estate plan, talk to an estate planning attorney. They will be able to answer your questions and give you legal help in preparing the documents. That way, you will know that everything is in order and legally sound for the future.
No one wants to think about their own passing. However, it is an important consideration to make. Properly planning ahead of time can reduce stress and confusion for your loved ones in the event of your death. A will and an estate plan can help to make the dispersion of your personal assets easier to manage for loved ones. Get legal advice to learn more about these essential documents.