Planning for a future that doesn’t even include you is an act of responsibility and love for those you’ll eventually leave behind, and it generally involves making a lot of decisions about how to safeguard your legacy.
Before you decide how to go about that process, it’s helpful to understand the difference between a will and an estate plan – because they aren’t the same thing.
What’s a will?
A last will and testament is a document that details your wishes regarding the disposition of your assets after you die. It can also be used to nominate a guardian for your minor children. It is a foundational part of good estate planning but represents only one facet of the comprehensive approach.
What’s an estate plan?
An estate plan is a strategic approach to the future and takes into account both end-of-life planning and what should happen after. Estate plans go far beyond the scope of a simple will and can include:
- Trusts: These are legal arrangements that can help you transfer assets out of reach of creditors, lower your estate taxes, avoid probate and make sure that whatever you leave behind does the most good for your chosen beneficiaries.
- Powers of attorney: These are documents that designate someone to step into your shoes and exert decision-making authority on your behalf if you’re incapacitated before your death. They can address medical or financial issues (or both).
- Health care directives: Also called “living wills,” these outline your preferences for medical care, and they can be used in conjunction with a medical power of attorney to make sure that you receive the end-of-life care you want.
- Funeral prepayment plans: It is not uncommon for people to pre-plan their final arrangements, whether they want to be buried or cremated. Pre-planning takes a significant burden off your loved ones’ shoulders.
If you already have a will, that’s great – but an estate plan is even better. It can provide you and your loved ones some sense of surety and security in your final hours.