Did you know that more than 50% of Americans do not have an estate plan or will in place?
Many people wonder if they need estate planning if they are young or do not own much.
Read on as we answer that question and look at the differences between estate planning vs. wills.
What Is a Will?
A will is a legal document that outlines your wishes regarding the distribution of property when you die.
A will can also include instructions regarding the care of children that are minors.
If you have a family or assets of any kind (a house, car, investments, furniture), you should make a will.
What Is an Estate Plan?
An estate is something everyone has. It is not just for the wealthy.
An estate is everything you own: real estate, the funds in your accounts, life insurance policies, personal possessions like family albums and fine china.
Rich or poor, when you die, you cannot take your estate with you. If you have a will, it outlines who inherits your estate when you die.
But An estate plan goes much further than a will. The foundation of an estate plan has three parts: a will, an Enduring or Durable Power of Attorney, and a Personal Directive.
Enduring or Durable Power of Attorney
An enduring or durable power of attorney protects the management of your affairs. This document gives someone you appoint the ability to control your finances if you become mentally incapable of doing so.
But, if you do not have an Enduring or Durable Power of Attorney, your family cannot manage your affairs.
A Personal Directive is sometimes called a living will. It allows a person you appoint to make decisions about your health care and personal needs if you cannot make those decisions yourself.
Without this document, your loved ones have no say about where you live, how you live or even about end of life care.
Minimize Your Income Taxes at Death
A lot of people wonder if they need an estate plan if their estate is modest. The fact is that those the people that need an estate plan more than anyone.
When you die, the government looks at all your assets and calculates taxes on your estate. This can be a hefty bill for your surviving family members to have to bear.
But, having an estate plan allows you to transfer ownership of your property. This reduces the taxes your loved one will have to pay.
Having an estate plan helps your family keep more of your modest estate than they would otherwise.
Estate Planning vs Will
As you can see, you do not need to choose between estate planning vs a will. Both are essential pieces in giving you peace of mind.
With proper estate planning, you can rest assured that your property and your care will be handled just as you wish.
It’s important to understand that estate planning is not a one-time document you sign and never look at again.
Your estate plan needs to be reviewed any time your family or financial situation changes.
Contact us at Lilac City Law to schedule a consultation.