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Legal Will vs. Estate Plan: Nine Key Differences to Understand

Delwin Graham & Eric Brown - Dec 03, 2020
Both a legal will and an estate plan can give instructions about how your property will get distributed after you pass on. Estate planning, however, can provide even more detailed information about your wishes.

Do you have a family or estate? Are you wondering if it's time to create a legal will or estate plan? Believe it or not, 51% of Canadians don't have a will. And one of the main reasons is that they don't feel they have enough assets.

It can seem morbid to think about the end of your life, but it's the only way to ensure that your wishes will be carried out in the event that the unthinkable happens. You'll want to consider the feelings and needs of your loved ones if that day ever comes.

Why do you need a will, and what is the difference between a legal will vs. estate planning? Let's take a look.

1.  Complexity

Both a legal will and an estate plan can give instructions about how your property will get distributed after you pass on. Estate planning, however, can provide even more detailed information about your wishes.

Creating a will is a simple process that can involve a single document. You'll choose a guardian for any minor children, beneficiaries for your assets, and a successor for your business if you have one.

Estate planning involves creating several types of documents that dictate how your assets will be distributed after your death. Your will is often one of them. Your estate planning attorney can give you detailed instructions on the other types of legal planning you'll need to do.

2.  Power of Attorney

One thing your estate plan will include that your will doesn't need to is a Power of Attorney. This is the person responsible for making health-related or financial-related decisions on your behalf if you're unable to. They will also be able to give financial gifts and recommend a guardian for your children.

In Canada, the Power of Attorney doesn't need to be a lawyer. It's important, however, to choose someone you trust to represent you as your Power of Attorney if you decide to use comprehensive estate planning. Make sure you select someone who is responsible and can avoid allowing selfish reasons to dominate their decisions.

3.  Living Will

Some individuals who choose estate planning also create a living will. This document details the type of medical care you wish to receive in certain health-related scenarios. Your living will is going to spell out your wishes in terms of end-of-life care and the use of various measures for resuscitation.

4.  Living Trust

When you create a will, it will need to go through probate (legal proving) before your assets can be distributed to your beneficiaries. This can cost your loved ones both time and money.

Your living trust, however, is a different type of document that can allow your assets to get passed onto your loved ones without going through the time and expense of probate. It allows you more control over your assets.

5.  Pour-Over Clause

You may also choose to include a pour-over clause as part of your estate plan. This can be used to transfer any assets that are not a part of your will or living trust.

If you don't create a pour-over clause, any assets that aren't transferred directly into a living trust will be considered "intestate" (property of someone who passed away without a will). If you want these assets to get transferred according to your wishes, you'll need to create a pour‑over will.

6.  PIPEDA Authorization

A PIPEDA authorization can also be part of a comprehensive estate plan. This allows your appointed representatives to speak to your doctors on your behalf. It will also allow them to access your medical records.

7.  Privacy

A will is a public document. This means that the public is entitled to read it at the courthouse in its entirety.

An estate plan with a living trust can help create privacy because it avoids the public nature of a will. It can also save you the possible delays and expenses of probate court.

8.  Superannuation

An estate plan will also contain a plan for superannuation or the distribution of your pension plan. You'll need to inform your superannuation fund of your beneficiaries before you pass on. For many, this will be their biggest asset at any given time.

9.  Hand-in-Hand

Oftentimes, your will and other estate-planning documents go hand in hand. Together, they help your loved ones make important decisions according to your wishes when you pass on.

Your plans in terms of guardians for your child, distribution of your assets, and charitable giving can all get spelled out thoughtfully and legally by the right attorney.

The Right Estate Planning Team

Before you begin planning for the future, it's critical to assemble a team of professionals on your side who can help you make wise decisions. The right estate-planning attorney, for example, will have experience with estate law that will help you to create sound documents. They can also help you structure your charitable giving to help minimize your estate tax.

A financial planner can help you invest your assets in ways that will maximize their potential in the future. Good wealth management now can ensure that you will pass down a respectable inheritance to your loved ones.

Creating Your Legal Will and Estate Plan

A legal will is a part of a comprehensive estate plan that will reduce any stress your loved ones might be feeling in the event of your passing. With the right planning, you can be confident that their future is in good hands.

Don't stop getting smart about the future now. For more information on wealth management, contact us today.