Do You Need a WILL or ESTATE PLAN?

It’s not uncommon to hear people confuse a will and an estate plan. A will can be part of an estate plan, but is not a complete estate plan.

The question is, what is a “complete” family estate plan? Here’s my definition broken down into bullet points:

  1. Provides a legacy that your loved ones will be proud of for years to come;
  2. Ensures your property passes to whom you wish it to pass;
  3. Protects the inheritance from outside forces, such as creditors, divorces and lawsuits;
  4. Addresses incapacity and long-term illness planning; and
  5. Saves your heirs every tax dollar possible, and saves them from making mistakes when inheriting your estate.
 
A Last Will & Testament only helps with one of the five items, item #2.  Item 2 is important, but aren’t the other four equally important? 

I could make a case that each one of the five are the most important items on the list, but the truth is, they’re all important. One remarkable but little-known truth of estate planning is that in the modern estate, typically only half of the estate passes through the will. The other half passes by beneficiary form. Think about your IRA’s, life insurance policies and annuities: They all have beneficiary designation forms. IRA’s in particular offer great rewards, but great dangers to your heirs if they inherit them without knowing what to do. 

The best advice (perhaps biased advice) that I can give you is to design your entire estate plan with an estate planning attorney. He or she can walk you through all of the steps, and discuss all of the points above. Every plan is different. The plan really depends on your goals, the types of assets you own, your family and more. 

Don’t get a false sense of security if you have a simple will. If you haven’t visited with an estate planning attorney, take the initiative to do so. If nothing else, you’ll learn a lot!