So you’ve heard you should have an estate plan. Isn’t that basically the same thing as having a will? No, it isn’t. A will can be a really good start, but an estate plan is concerned with more than just what happens when you die. Estate planning is about making important legal decisions that will protect you during your lifetime and help take care of your family when you’re gone.
Planning your estate is about sitting down with someone who can prompt you to consider what you want to have happen in certain life situations and can help you create a legal strategy for managing your future.
You might be able to get by with just a will, but as you will learn below, creating an estate plan offers legal and tactical advantages that a will cannot provide. As always, please consult an estate planning attorney with experience and knowledge in this particular area of law when making these major decisions.
What a Will Can Do
A will is a legal document that directs what you want done with your possessions when you die. You can appoint a person (executor) to administer the terms of your will. Your executor must be formally recognized by a probate court, which will typically supervise the administration of your estate. You may also use a will to appoint persons whom you would like to serve as guardians for your minor children.
A will has no legal force during your lifetime, and you can change the provisions at any time. A will becomes valid and enforceable only after a probate petition is filed and the court enters an order opening a decedent’s estate.
After the probate estate is opened, the executor gathers and inventories property, notifies and pays creditors, and distributes the remaining property according to the terms of the will.
What a Will Can’t Do
A will really can’t do anything as long as the creator (testator) is alive. If you suffer a bad accident and are unconscious, a will is of no help in directing medical professionals as to your wishes regarding treatment. Nor can a will authorize someone to handle your financial and personal affairs while you are incapacitated.
If you don’t have powers of attorney in place, state law identifies your health care surrogates, persons to whom medical professionals can turn for decision-making authority regarding your care. There is no similar law for business and personal matters. An interested person would have to petition a court to appoint a guardian to act on your behalf.
Even after death, a will can’t transfer property automatically like some other estate planning tools. Court supervision and approval are required to transfer all real estate included in the probate estate.
Only estates valued at $150,000 or less with no real property can bypass probate using a small estate affidavit.
What is Typically Included in an Estate Plan
Estate plans can be as varied and complex as circumstances require, or as simple and straightforward as current needs require. Having the right estate plan in place can save precious time when it matters most, avoid costly delays, and preserve family legacies for generations to come.
A basic estate plan typically includes the following documents.
- Will – A will is either the primary document used to distribute your property or a catch-all to transfer property to a trust.
- Trust – A trust is optional, but may be used as the primary means of distributing property when avoiding probate is a goal.
- Durable Power of Attorney Healthcare – You appoint a person to make healthcare decisions for you when you are unable to.
- Durable Power of Attorney Property – You appoint a person to manage business and personal affairs for you when you are unable to.
- Living Will – You let medical professionals know your decisions regarding life-sustaining treatment if you are suffering a terminal condition and are unable to express your wishes.
Everyone should have powers of attorney and a living will, but there are other ways to transfer property at death besides a will or a trust. Pay-on-death beneficiary designations can be used to transfer bank, investment, and retirement accounts outside of probate. Real estate can be transferred automatically using a Transfer on Death Instrument (TODI).
We’ve also written a separate page to help our readers understand some common estate planning documents.
The Advantages of Creating an Estate Plan vs only Executing a Will
If you only execute a will, it’s like doing only a small part of the job and leaving much of the crucial work unfinished. The various legal tools used to create an estate plan comprise a strategy designed to protect your personal and business interests during your lifetime and after death.
Creating an estate plan has the following benefits:
- Allows you to plan for incapacity during life
- Allows you the choice to avoid probate (and other court interventions)
- Protects privacy
- Gives you the ability to minimize taxes
- Allows you to maximize asset protection
- Allows you to provide for family members with special needs
- Gives you more control over asset distribution
- Facilitates succession of business interests
When you create an estate plan, you have more tools at your disposal, which gives you the ability to maintain more control during your life and allows your estate and beneficiaries to retain more of your assets after death.
When it’s a Job worth Doing, You Owe it to Yourself to do it Well
That’s a fact. We’re talking about your life and making things as simple and beneficial as possible for you and your family during difficult times. A comprehensive estate plan provides everything you need to maintain control on your terms and maximize your family legacy.
At Plan Forward Legal, we work with Chicago-area families to create comprehensive estate plans that fit their current circumstances and have room to grow as life unfolds. Estate planning is most definitely a job worth doing, and Plan Forward Legal can help you do it well.
