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Estate Planning vs. Wills: What is the difference?

When it comes to estate planning, there are a lot of misconceptions about what exactly it is. A lot of people think that estate planning vs. wills mean the same, but this is not the case. Estate planning is the process of arranging for the management and disposal of a person’s estate during their lifetime and after death. It can be done through a will, trust, or other estate planning documents. In other words, a will is part of an estate plan but not the same thing as an estate plan.

In this blog post, we will discuss the differences between estate planning and wills so that you can make an informed decision about which option is right for you.

It isn’t easy to understand how all parts of your estate plan, including your will, fit together

What Is Estate Planning?

The goal of estate planning is to ensure that your assets are distributed in the way you want them to be, that your loved ones are taken care of financially after you die, and that estate taxes are minimized. If you don’t have an estate plan in place, the state will make decisions about how your assets are distributed, which may not be what you would have wanted.

There are a number of different estate planning tools available, each with its own benefits and drawbacks. The most common estate planning tools are wills, revocable trusts and irrevocable trusts. Let’s take a closer look at each one.

What Is A Will?

Wills are a common estate planning tool because they are relatively simple to create and they offer a number of benefits. Wills allow you to name an executor who will be responsible for carrying out your wishes after your death. They can also be used to appoint guardians for your children and to set aside money for their care. Estate planning wills are typically less expensive than trusts and they are valid in all states. It is one of the most common estate planning tools, but there are a few things to to address about will and estate differences.

First of all, a will does not take effect until after you die. This means that it won’t help you take care of your loved ones during your lifetime or manage your estate while you’re still alive. In addition, a will can be challenged in court by family members who feel they should have received more inheritance than they did. For these reasons, it’s important to have other estate planning structures like trusts.

Wills are an important part of estate planning, but they don’t address everything. They are useful for stating who should receive your assets after you die and setting out funeral arrangements, but they don’t help you take care of your loved ones during your lifetime or manage your estate while you’re still alive. In addition, wills estate planning can be easier to contest that revocable trusts.

Revocable and Irrevocable Trusts

Revocable trusts are another popular estate planning tool. A revocable trust allows you to designate someone to manage your assets after you die. A revocable trust allows you to designate someone to manage your assets after you die. This can be a helpful estate planning tool for people who want to ensure that their loved ones will have access to their finances and medical records if they become incapacitated.

An irrevocable trust is a type of estate planning tool that allows you to designate someone to manage your assets after you die. This can be a helpful estate planning tool for people who want to ensure that their loved ones will have access to their finances and medical records if they become incapacitated. Irrevocable trusts offer a number of other benefits, including estate tax savings and asset protection. The value of the trust is not included in your estate when it’s calculated for estate taxes, which can save you a lot of money in the long run. In addition, irrevocable trusts offer asset protection from creditors. If you owe money to creditors, they cannot seize any assets that are held in an irrevocable trust. But it’s important to understand that once you transfer assets into the trust, you won’t be able to get them back.

Conclusion

So, it’s clear that will and estate planning are two different things. Estate planning is an important process that everyone should go through. While wills are a common and important part of estate planning, they are just one part of estate planning.

Everyone should be looking to setup a will or revocable trust but if you are looking to focus on some of the other aspects of your estate plan such as estate tax savings and asset protection, check out our overview on an estate tax savings trust structure called a Grantor Retained Annuity Trust or GRAT or set up a call here to chat with our team.