Do you remember the last time you went to a movie?
I guess you haven’t forgotten how you prepared for it:
- You considered who you wanted to share this experience with.
- You thought about what genre of movie you wanted to watch.
- You checked whether this genre suited your friends.
- You chose the most popular movie with the most recommendations, among the ones available in cinemas.
- You checked the prices to see whether they suited your budget.
- You decided on the cinema that best suited your preferences and budget.
- You and your friends were excited about the choice you had just made.
You are probably already wondering, “Why am I reading this? What do watching a movie with friends and Estate Planning vs Last Will and Testament have in common?”
Well, there is a lot in common, and the process starts with thinking. Basically, when talking about how to choose between estate planning and preparing a last will and testament, we have to follow almost the same steps.
Let’s start with a brief definition of each.
Last Will and Testament vs. Estate Planning: What’s the Difference?
Last Will and Testament
A last will and testament is the final document you create outlining and detailing who will inherit your estate.
A will is a powerful legal tool that gives you the ability to distribute your assets, such as:
- real estate
- company stocks
- company shares
A will also enables you to designate beneficiaries among your family and loved ones or donate some or all of your assets to charities or NGOs. A last will and testament is part of the broader process of estate planning.
Estate planning, on the other hand, is, as the name suggests, making a plan about how you want your estate to be handled, designating the people or organizations you want to inherit your assets, and assigning trustees to them.
But a comprehensive estate plan is much more than just the drawing up of a will.
An estate plan includes many more legal tools, such as:
- Establishment of a Trust
- Financial Power of Attorney (FPOA)
- Durable Power of Attorney (DPOA)
- Advance Healthcare Directive (AHCD)
- HIPAA Authorization
You have to keep in mind that much of your estate planning is done primarily with taxes in mind.
It is also a form of protection for your beneficiaries, although it is almost impossible to fully protect your assets from being lost, due to the limited technical capabilities of traditional estate planning to provide a contemporary solution for access to your digital assets.
Having clarified the differences between a last will and testament and estate planning, we can start exploring how to make a choice between them.
How to choose between a last will and testament and estate planning
Let’s follow the sequence of steps you took when planning to go out and watch that movie.
Step 1 – Consider: to whom do you want to designate your assets?
Whether you choose estate planning or a last will and testament, there is little difference as the will is part of the estate planning.
Step 2 – Consider: what type of assets do you want to designate?
Before considering whether you need a last will and testament or an estate plan, sit and think about the type of estate you possess.
Many people think mostly about their physical assets and forget about their digital assets, which sometimes greatly exceed the value of their tangible assets. These assets may include stocks, shares in companies, cryptocurrency, ETFs, and intellectual property.
Step 3 – Consider: do a last will and testament or estate planning suit your needs?
In the past, when people had primarily real estate and savings, it was very convenient, though expensive, to do estate planning. It was a workable solution for high net worth individuals because they didn’t have such varied and dynamic assets as today.
Even in the past, estate planning wasn’t for everyone; it was predominantly for wealthy people.
Nowadays, people have increasingly diverse, complex, and dynamic assets. Even middle-class people own shares, trade cryptocurrencies, and even become angel investors in small startups. Is it reasonable for them to invest a large amount of money in estate planning, given that after even a few months, the prepared document will be obsolete?
On the other hand, the traditional will can be written up by anyone, and it is easy to draft. (However, it’s advisable to have a trusts and estates lawyer prepare it for you.)
There are even online solutions, allowing you to make an online will, which is convenient and, for sure, the future of wills.
Step 4 – Make a list of the best solution providers in the legal market and choose from among them
Once you have decided which of the two options to choose, take time and consider the following aspects:
- Industry Experience:
does the company providing legal services have the expertise to suit your needs?
- Customer Reviews:
is the company providing quality services? Look at the number of reviews from clients.
is the company reliable enough to be entrusted with the responsibility of your inheritance?
time, another key factor. Can you rely on your chosen solution provider in the long run?
- Expert Guidance:
choose a service provider that can supply the expertise that you need.
Step 5 – Check whether the price suits your budget
Sometimes, the best solution providers are the most expensive ones. But not necessarily. Price itself doesn’t guarantee the quality and the outcome.
Check your budget and find the solution provider that will best meet your needs for the price that you are prepared to pay.
Step 6 – Decide on a solution provider to prepare your will or estate plan
Considering industry experience, customer reviews, reliability, continuance, expert guidance and the price, make a choice, being honest with yourself about what is important to you, what you can compromise on, and what you can’t.
Step 7 – Be happy with the choice you have just made
The best or not the best – you made a conscious choice, and it is entirely tailored to your will, budget, and needs.
In any case, no one can guarantee what the end result will be. Legislation changes, the world is changing, but the important thing here is the thought process you followed while deciding between a last will and testament and estate planning.
No matter what choice you make, it is always advisable to plan for the future.
Too many people do not, and even more people avoid thinking about unforeseen circumstances and events.
But wise people say – prepare for the worst and hope for the best. Or, in this context: prepare your digital will or estate planning now, and benefit from peace of mind in the future.