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Last Updated on March 9, 2023 by Carlos Lopez
Although it may seem that the two terms are similar, it is important that you learn to notice their differences and know which of these processes is the one you should perform with your trusted attorney.
Each of these processes consists of instructions to your family members and other beneficiaries on how your assets should be handled after your death, however, estate planning adds other aspects such as handling issues related to your health (if you are not in a position to make important decisions about it), finances and others, all while you are still alive.
An estate planning attorney will help you create an estate plan that meets your needs (and those of your beneficiaries) and prepare the necessary documents so that your estate plan can distribute your property the way you want it to be distributed after you are gone.
What makes up an estate plan?
An estate plan is not a single process or document but is made up of several parts that respond to different activities, some of which can be carried out while you are alive and some of which can be carried out after you die.
These may be the basic documents you should consider:
A living will
Basically, there you keep all the activities that can be carried out while you are alive, for example:
- What kind of medical care you will receive if you are unable to express yourself (because of the seriousness of your illness or accident), the instructions are given by yourself and must be abided by as expressed.
- Creation of a trust for your family (or family members), which can guarantee them a better financial future and fewer problems.
Financial Power of Attorney
With a financial power of attorney, you are leaving specific instructions to the designated person to handle your finances if you are unable to do so (in a way it is similar to a living will).
What can the designated person do for you?
- Conduct financial transactions.
- Make business decisions according to your wishes (there may be restrictions so that your beneficiaries and/or assets are not put in jeopardy)
Designation of beneficiaries (family members or others)
Unlike a living trust, making a beneficiary designation details who should receive money from:You should also read:Choosing your estate planning lawyer in DC: 7 best tips
- Retirement accounts
- Life insurance policies
- Other savings.
Data access to your digital assets
It is 2022, so surely much of your estate and assets can be administered online, it is very important that you leave precise instructions to the executor of your will and your family members about:
- Access to your social media accounts
- Access to photo libraries
- Access to your email address
- Access data to virtual galleries where you may have NFT’s
To leave everything organized, create a list of your accounts and passwords (and login URL’s) -you can use an excel file for this-, it is also important that you print a copy of the documents that make up your estate planning.
Important! Don’t forget to include the person with authority to access your accounts and lastly, update this file every time passwords are changed or new digital assets are added to other sites.
Letter of intent
Although not a legally binding document, this gives the person who will execute your estate insight into what you think about many aspects related to your death, for example, it may contain guidelines on how you will want your funeral and burial and also whether there are final messages for one or all of your family members.
When used together, all of these documents can create a solid estate plan that will support your family after your death.
What is a will?
Here comes the main difference from estate planning, a will is intended to specify who will have access to your estate (or part of it) after your death.
Executors and personal representatives can also be declared in wills.
What is protected by a will?
- Your real property
- Personal property
- Family heirlooms
- Digital assets
In a will, you may leave a guardian appointed for minors.
Your last will and testament will not go into effect until you pass away, unlike in a living will.
Whether you have a modest estate or a large fortune, it is important that you have a will so that you can control what will happen to your assets after your death. However, my advice is to do proper estate planning now so that you have everything covered.You should also read:What documents are essential for your Estate Planning in DC? A checklist
Estate Planning Attorney in Washington, D.C.