Estate planning and will planning are terms that are often used interchangeably, but they are not the same thing. As a small business owner, it is important that you have both a will and an estate plan in place to protect you, your business and your family.
What does will planning entail?
Will planning is a simple process that involves creating a last will and testament. It’s a legal document that states how you want your estate to be divided once you die. If you do not have a will, your final wishes may not be carried out and your heirs may be forced to spend additional time and money sorting out your affairs after you pass.
If you pass away without any written estate instructions, you’ll become what’s known as an intestate. Under these circumstances, your estate will be divided up according to the laws of the province you lived in.
What does estate planning entail?
An estate plan is a more comprehensive process with multiple documents, including your last will and testament. It helps you more precisely designate who will inherit each part of your estate, which includes both what you own and what you owe. A good estate plan can also take advantage of various tax-saving strategies.
An estate plan is beneficial if you are concerned that your requests might be ignored or your assets will not be given to the correct people, or if you have a significant amount of assets. It can also simplify the process of transferring your assets to your heirs by way of a trust.
A trust is a legal entity that owns your assets, like bank accounts, stocks, bonds, real estate and private businesses. Any assets that are transferred to the trust will be distributed by the trust and will not be governed by the directions of a will. However, a trust cannot deal with issues such as guardianship of children, so it is common that both documents will be needed.
Estate plans can include:
- Last will and testament
- Living will
- Business succession plan
- Power of attorney
- Retirement compensation agreements
- Testamentary, disability trust, revocable living trusts
- Probate fee plans
What is the main difference between will planning and estate planning?
A will is a document that outlines how you would like your assets to be distributed on your death. An estate plan contains multiple documents, including a will, to help you more precisely designate heirs of your estate and business.
As a small business owner, it’s important to plan appropriately for the future of your business and your family’s future. If you don’t have a legal plan in place, you could be leaving your family and business vulnerable.
At Benchmark Law, we can facilitate professional will and estate planning to ensure your business and estate are protected.