Approximately 50% of American adults have written a will, and a significant amount of these individuals believe this means they don’t need an estate plan. Although this belief is untrue, it may be the leading reason why only 33% of US adults have an estate plan.
It’s a common misconception that an estate plan and a will are the same. A will is just a single component of an estate plan designed to cover much broader actions while a person is living and after death. A will is a single tool, whereas an estate plan uses multiple documents and legal strategies.
What is a will?
A will is a legal document providing instructions on how to manage your assets after your death. It encompasses names of beneficiaries, guardianship for dependents or minors, and distribution of assets. It also provides an executor for the estate. The executor is responsible for carrying out all actions stated by your will, such as paying debts, estate management, and the distribution of assets.
What is an estate plan?
Estate planning includes thinking through situations beyond basic legal documents. It can be as detailed or as simple as you want. However, there are four essential components that should be included in addition to a will.
- A living will details your wishes for end-of-life medical care. If you can’t communicate or make decisions while in a vegetative state or with a terminal condition, a living will specifies what medical treatments, care, life-sustaining measures, and organ donation preferences you want.
- A health care power of attorney, or health care proxy, is a legal document that appoints an entity or individual to make medical decisions on your behalf if you can’t. This can be used regardless of whether you are at the end of your life. The appointed person makes decisions about procedures, diagnostic exams, medications, long-term or rehab care, surgical intervention, and end-of-life care.
- A financial power of attorney designates someone to act in your place for matters relating to finances. The authorized individual or entity will manage all financial issues if you can’t independently handle financial affairs. This may include paying bills, preparing taxes, making real estate decisions, and managing investments. The power of attorney can be effective immediately or “spring” into effectiveness upon your incapacity.
- A trust is a type of fiduciary relationship where property is held by a trustee for the benefit of the beneficiary. For certain trusts, you can still retain control when living. However, at the time of death, the trustee will distribute the property to the beneficiary. This can be beneficial for distributing assets if privacy is important since it doesn’t involve probate court, and it can significantly reduce succession and probate legal fees and costs after death.
Do you need an estate plan if you have a will?
In short, the answer is yes. While a will is important, it’s only the first step in creating an estate plan. To ensure that your wishes are honored and to leave your loved ones in the best position once you die, a comprehensive estate plan is necessary.
Estate planning is a detailed and complex process. Seeking professional guidance is the best way to ensure that you are fully informed and properly executing your estate plan. Contact our Ruston, LA office by calling us at (318) 255-1760 to speak to one of our experienced estate attorneys about your estate plan.