The Difference Between Having A Will and A True Estate Plan

The difference between having an estate plan and just a Last Will and Testament is like the difference between a plain old used Chevy and a decked out new Mercedes!

In many cases, a Will just isn’t enough. Yes, it is true, under the new estate tax laws many people will never pay a penny of estate taxes, however there are a lot of reasons for creating a comprehensive estate plan.

• Reduced expenses
• Reduced hassles
• Privacy
• No Courts
• Transfer property on your terms
• Lifetime protection and management of your property

Not understanding the differences could have devastating affects on your family and loved ones!

Many folks are getting complacent because they know that the estate tax exemptions are in the millions of dollars now.

Estate planning has never been just about taxes.

Many people like simple.  Many people think they can do with just a short simple will since estate tax won’t affect them. But simple wills don’t include the flexibility of a trust to protect your loved ones from creditors and financial predators. Wills also don’t include provisions to protect you later in life when you may need it. Real planning is required

Trusts

A Trust provides protection from creditors, financial predators, and divorces. A Trust give you control over how your loved ones inherit their wealth.  Family members with mental illness and addictions can be protected and shielded from the consequences of inheriting a lump some of money. Trusts have and will continue to help give peace of mind and preserve family wealth for generations to come.

Powers of Attorney

A Durable Power of Attorney names somebody you know and trust to manage your legal and financial affairs later in life when you are unable, or don’t want to anymore. Without a Durable Power of Attorney, your loved ones may be forced into court in guardianship proceedings to take over  managing your affairs. They may end up fighting with each other over who should be in control, perhaps for years.

Living Will/Advance Directive

What about your end of life choices?  Do your loved ones know what you want and don’t want?  Even if they do, the chances are a doctor may ignore them and do what he thinks is best.  Write down your choices in a legally binding document.

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Why Estate Planning?

This is just a quick overview of the major reasons everybody over the age of 18 needs a plan. 

• Plan for your own needs.  You need a plan to protect you and your property if you become mentally disabled by accident, medical incident, or dementia or can’t make decisions for yourself for any reason.
• Avoid Probate – pass property to your heirs and loved ones without hassle or public scrutiny privately, securely, and quickly.
• Protect your money during your lifetime.
• Protect your rights during your lifetime.
• Protect your affairs during your lifetime.
• Protect children from themselves, financial predators, and creditors.
• Protect children with addictions or special needs.
• Protect spouses with dementia, special needs, or addictions.
• Protect and provide for your spouse without dementia.
• Reduce or eliminate capital gains and estate taxes.
• Prevent pounding headaches for you and your family.
• Avoid major messes.

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Do I Have an Estate?

Yes, you have an estate!

You worked hard for your house, cars, retirement accounts, furniture, cash on hand, and a few extras. 

Those things are your estate.

Your estate is everything you own whether it is owned in just your name or with somebody else.  It is all your stuff. Everything you own, wherever it is, and whoever you own it with.  This includes your real estate, money, accounts, jewelry, clothes, pets, cars, and much more.

But you need to think beyond just what you own.

You can think of your “extended” estate as your choices, decisions, wishes, desires, and rights.  The right to make your own decisions.   To make your medical, financial, and legal decisions.  Your freedom of choice.

In the remainder of this book, “estate” will refer to your property.  “Rights” or “Affairs” will refer to your right to manage your medical, financial, and legal affairs the way you want.

Your estate is everything you own. Your rights are your ability to manage your affairs the way you want and choose who you want to manage them if you can’t.

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The Smart Way to Avoid Probate

Living Trusts transfer property to your family and friends privately with less expense and complexity than a Last Will and Testament.  Trust assets pass to your family and friends without the need for the complexity of Probate or going to Probate Court and letting an impersonal judge decide who gets what when.

Trusts

• Avoid Probate
• Saves your family and friends money and time
• Keeps your business and personal affairs private

Flexibility

Revocable Living Trusts are extremely flexible.  You can change (amend) or end the trust at any time you want.  You can add property, take property out, transfer property, add beneficiaries, remove beneficiaries, change trustees, sell, give, and borrow against trust property.

If you become unable to manage your affairs during your lifetime, the successor trustee steps in and manages the property for you and for your benefit.

And, when the time comes, the successor trustee will transfer the property to your family and friends as stated in the trust document.  The courts will not have to be involved.  The terms of your trust will remain private and not be in the public record.

Learn a LOT more about the Revocable Living Trust

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Where do We Start Our Estate Planning?

My wife and I have been married for 10 years and have not done any estate planning. Where do we need to start? We have 2 kids and 3 animals.

This is a great question and one I wish more families would ask.

In my opinion, you should start with durable powers of attorney, healthcare powers of attorney, and a trust.

Let me explain.

I have to assume that your children are under 18.

If you just have a Will, then your estate would have to go through probate and your children’s money will be managed by their guardian, perhaps through the court.  When they turn 18, they get their share outright.  You don’t get to make the rules for the money.  You don’t get to decide how it is spent or who oversees it without a Trust.

The trust can provide for your pets.  In Arkansas, you can create a trust just for your pets.  You set aside money and name the person who will take care of them.  The money is there for that person to use.

Also, without a Trust, any life insurance proceeds could be held by the insurance company and paid out in a lump sum when a child turns 18.

You also need to nominate guardians for your children, and this would be done through another document.

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Why You Need a Lawyer to Write Your Estate Plan

Why shouldn’t you just get a Will kit or use an online service to write your Will?  The real question isn’t can you write your own Will, its should you write your own will?  Will the Will you write hold up in court?

Reason #1 – You need more than just a Last Will and Testament

You don’t just need a Will, you need an estate plan.  They are actually 2 different things.  A Will is just part of an estate plan.  An estate plan is a set of documents and actions to prepare for the time when you can’t manage your own affairs due to any reason.  A Will is just one piece of the puzzle.

If you look at an estate plan as a set of documents, there are six you must have:  a Will, a Durable Power of Attorney, a Healthcare Power of Attorney, an Advance Directive, final wishes, and disposition of personal property.

Reason #2 – Save Time

Writing a Will that will hold up in court and includes everything it needs takes a lot of time.  It’ll take a big burden off you by letting a professional shoulder that load.  It’s a lot of work and time to write a comprehensive estate plan that’ll hold up in court.

Reason #3 – Save Energy

See Reason #2.  Writing a comprehensive estate plan the first time takes a lot of energy.  You’ll have to look up a lot of definitions and do a lot of reading.

Reason #4 – Save Money

An experienced estate planning lawyer knows where to look and how to save you more money than you probably can.  From just plain waste to tax savings, there are a lot of places to save.

Reason #5 – Complexity

Creating an estate plan is part art and part science.  If you get the blend wrong, your plan may fail.  Phrases and words can make a plan work, or fail.  And, the rules change all the time.  Congress just can’t leave the tax rules alone.

It takes a long time to learn all the rules the first time and a lot of time keeping up with the rules.

Reason #6 – One Try to Get it Right

Unless you are planning on coming back, you have one try to get it right.  You don’t get a second chance to get it right.

Reason #7 – Objective Viewpoint

A seasoned estate planning attorney is going to point out things you won’t see because you are too close to them.  A lawyer can give you unbiased advice.

Reason #8 – The Law and Lawyers

Who is going to determine if your documents are valid?  Lawyers.  A Judge, who of course is a lawyer, is going to examine your documents and determine if they are valid.

Reason #9 – Insurance

Here is a current quote from LegalZoom, a leader in online document creation services:

“LegalZoom is not a law firm, and the employees of LegalZoom are not acting as your attorney. LegalZoom’s legal document service is not a substitute for the advice of an attorney. LegalZoom cannot provide legal advice and can only provide self-help services at your specific direction. LegalZoom is not permitted to engage in the practice of law. LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.”

And, it goes on to state:

“LegalZoom is not responsible for any loss, injury, claim, liability, or damage related to your use of this site or any site linked to this site, whether from errors or omissions in the content of our site or any other linked sites, from the site being down or from any other use of the site. In short, your use of the site is at your own risk.”

Read the full disclaimer at: https://www.legalzoom.com/disclaimer.html

As you can see, they disclaim any and all loss, injury, claim or liability. Lawyers on the other hand are fully responsible for their actions and carry insurance.

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