One of the common misconceptions about an estate plan is that it is one document. Think of it more along the lines of an umbrella term that covers several documents. These come together to form a solid estate plan that conveys your intentions after you pass away when executed and planned correctly.
Each document or piece of your estate plan is a tool. Different ones serve different purposes. After people learn of trusts and wills, they often ask about which one they need. The answer will be specific to your unique situation, but you may need both.
That’s because there are things a trust can do that simply is not in the scope of what a will can achieve. There are several types of trusts, but you should understand what a will can and cannot do for you before you pursue one.
How A Will Can Be Used
There are essentially two things a will can do. The first being that it allows you to designate beneficiaries. These are the people who will take ownership of your assets after you pass away.
When people pass away without a will, their property and belongings become subject to intestacy laws. The state takes your assets and distributes them according to law and not your wishes. By creating a will, you avoid this.
Secondly, you can designate a guardian for your children. Young couples often are driven to create a will for this exact purpose. If they pass away unexpectedly and simultaneously, they know who will care for and raise their children.
What A Will Cannot Do
Although you can designate where your assets will go, you will be unable to pass on property held jointly. For instance, your home may be titled in both your and your spouse’s name.
It is also fair to point out that you choose a beneficiary when you take out a life insurance policy. When you write out a will, you cannot re-designate your life insurance policy to someone else. Your retirement plan—i.e., a 401(k) or a pension, follows in the same fashion. Those have beneficiaries attached to them already. Your will does not eliminate or replace them.
When you sit down with your estate planning attorney, you will likely also discover that there are estate taxes to take into account. If you want to limit your tax liability, a will is probably not going to accomplish that.
Law Office of Alexander Sherwood Keenan
Experienced estate planning attorneys understand the capabilities and limitations of each document. If you are ready to build yours, contact the Law Office of Alexander Sherwood Keenan. The peace of mind that comes with estate planning will only indeed be achieved if you craft one with a firm foundation.
