Estate planning and drafting a last will and testament are legal processes that frequently go hand-in-hand. Sometimes people assume that estate planning and creating a will are interchangeable processes, but they aren’t. A will is only one of the many legal documents that should be included in a comprehensive estate plan.
What Is an Estate?
Understanding what an “estate” means is important to understand the difference between a will and an estate plan. Most people leave behind an estate when they pass away. An estate includes everything you own when you pass away, including the following:
- Checking and saving accounts
- Vehicles
- Investments
- Life insurance
- Home and other real estates
- Other personal property
When you pass away, your assets will be distributed to the people you’ve named in your will, called beneficiaries. Your executor must pay any debts to your creditors before your assets are distributed. When a person dies without a will, the state of Massachusetts will distribute his or her property according to its intestacy laws through the probate court.
For example, if someone passes away without a will and has a surviving spouse and no children, the surviving spouse would inherit all of the assets in the estate. When a person who dies has created a trust, his or her assets will be distributed outside of the probate court according to the terms of the trust agreement.
What Is a Last Will and Testament?
When people think about the phrase “estate planning,” they often think about a last will and testament. When you create a legally valid will, the probate court will distribute your property according to the terms of the will.
The Massachusetts probate court supervises the executor to ensure that your wishes have been carried out. A will needs to meet certain requirements to be legally valid. For example, the person who signs the will must be at least 18 and must have the mental capacity necessary to sign. Also, the will needs to be signed with two witnesses present who are over the age of 18.
A will should include two important details. First, your will should clarify how you’d like your assets to be distributed at your death. You may want your surviving spouse to receive all your assets. You may want to divide your assets among your children. Your will should also name a guardian for your minor children, if you have them.
Finally, your will should name an executor who will be responsible for distributing your assets to the right people or charities through the probate court. The executor should be someone you trust to carry out the instructions in your will and manage your estate until they can be distributed to beneficiaries.
The Goal of the Estate Planning Process
The goal of your estate plan should be to create a comprehensive plan that includes documents that are effective during your lifetime. Together these documents will state who has the power to make financial and healthcare decisions for you if you become incapacitated during your lifetime. Your estate plan will also state who will receive your assets after you pass away.
Working with an attorney to draft your last will and testament and other important documents in your estate plan is important, but there are other important legal documents that should be included in your estate plan, such as:
- A durable power of attorney that allows an agent you choose to manage your finances
- A healthcare power of attorney that allows a named agent you choose to make medical decisions on your behalf should you become incapacitated
- An advance directive, which details what types of life-prolonging treatments you would or wouldn’t like to have
Trust-Based Estate Plans
Depending on your estate planning goals and your financial situation, you may benefit from a trust-based estate plan that doesn’t include a will. Instead of creating a will and appointing an executor who will distribute your assets through the probate court, you can create a trust and transfer your assets into the trust. There are many different types of trusts, each serving a unique purpose.
For example, if you have an adult child with special needs, a special needs trust will allow your child to access the assets in the trust without becoming ineligible for public benefits like Social Security and MassHealth. One of the main benefits of creating a trust is to avoid the probate process altogether. An estate planning attorney can help you understand the benefits of creating a trust-based estate plan.
How Is Will Planning Different Than Estate Planning?
A last will and testament is the foundational legal document for many estate plans. However, a will is only one of several legal documents that you should have in your estate plan. An estate plan does much more than indicate how you’d like your assets to be distributed. It provides your surviving loved ones with guidance on a wide range of medical and financial decisions that will need to be made if you become incapacitated or die.
Another goal for the estate plan is to minimize your tax liability, including any estate taxes you may need to pay. Working with an attorney to create an estate plan can help you ensure an orderly distribution of your assets. After creating your comprehensive estate plan, which may include a will or a trust, you can rest assured that you, your assets, and your family members will be protected.
Have Questions About Your Estate Plan? We Can Help
For many, the estate planning process can be confusing and overwhelming. Thinking about what will happen after we pass away can be difficult. However, creating an estate plan is important to protect your assets and your loved ones. At Surprenant & Beneski, PC, we will review your situation and goals and help you decide whether a will or trust-based estate plan is right for you. We will ensure you have all of the legal documents you need. Contact us today to schedule your initial consultation and speak to an estate planning professional.