This is one of the most common questions that is asked of estate planning attorneys here in Pennsylvania. Many people think that they can cover everything they need for their heirs with a basic will, foregoing the complexities that are addressed in comprehensive estate planning. However, unless you are someone who has few assets, a basic will cannot cover everything that you will need to consider for your family when you are gone. This is why we advise our clients to consider having us work with them to create a comprehensive estate plan that can address all of the issues, including taxation, asset protection, and changes in circumstances.
What is a Basic Will?
A basic will is also known as a Last Will and Testament. This deals with how your assets will be distributed upon your death. In this document, you will appoint an executor to handle your estate when you die, and also nominate a second person to step in as executor in the event that the first person you choose is unable or unwilling to serve in this capacity. The will also names the people who will inherit your property. These people are referred to as heirs.
What is Estate Planning?
A comprehensive estate plan is a holistic approach to managing your assets during your lifetime and after your death. It is a contingency plan that should address all potential life events, including incapacity, long-term care, and distribution of your assets upon your death. This is not one document like a will but a series of agreements that work together. The key components are a will that addresses how your assets are distributed upon your death, a trust to manage your assets and shield them from potential creditors, a power of attorney that will instantly grant the authority to handle your affairs to a person you designate if you become incapacitated, and possibly even a living will that will address your medical treatment under certain circumstances.
What are the Benefits of Estate Planning over a Will?
As you can see, a will cannot address all potential contingencies that may occur in your life. All that it will cover is how your assets will be handled (including paying off creditors and expenses), who will receive your net assets, and who will be in charge of making sure your wishes are addressed. It is not set up to address things like possible incapacity, asset protection and complex tax planning. In addition, if the full extent of your estate planning is a will, then your estate will be subject to probate. This is a public legal process that can be both time-consuming and costly. This can delay the distribution of your assets to your heirs. The only benefit of a basic will over estate planning is that it will generally cost less in upfront legal fees.
In contrast, comprehensive estate planning can address all of these issues. For example, you can consider placing some or all of your assets into an irrevocable trust that can help to protect them against creditors and lawsuits. You can work with an estate planning attorney to structure your estate to minimize estate and gift taxes for your heirs and beneficiaries (people who receive funds from a trust are referred to as beneficiaries and not heirs). Estate planning also can address how your legal, medical and financial affairs will be handled if you are incapacitated.
Estate planning is also fast. The person you have designated in your power of attorney can spring into action as soon as you die or are deemed to be incapacitated. This avoids the delays of probate. In fact, your estate can be set up to avoid probate altogether. This has another benefit, privacy. With the right estate plan, you can keep all of your affairs secret.
What are Some Life Events Requiring Updates?
Whether you choose to go with a simple will or comprehensive estate planning, there are a number of life events that can require you to update your documents. If you marry or divorce after you have set up your documents, you will want to address these changes in your documents. Similarly, if you have a child either through birth or adoption, or tragically if a child covered in the documents predeceases you, this will also have to be updated. Moving to a new state will also necessitate updating your estate planning documents as the laws of your new home may differ from those of Pennsylvania. Finally, changes in your assets could require you to make updates to these documents.
Contact Our Estate Planning Attorneys Today
Estate planning is a complex series of documents that will help to protect your assets in many ways. It is much more comprehensive than a basic will. The experienced estate planning attorneys at Jones Gregg Creehan & Gerace will provide you with the assistance you need to create a comprehensive estate plan that addresses all of your needs and wishes.