Difference Between Life Planning and Estate Planning
Retirement planning, also known as life planning, is a completely different beast from estate planning. Estate planning is sometimes called the end of life planning. With retirement planning, you are trying to set and meet income goals during your retirement. With estate planning, you’re planning for the transfer of wealth after your life ends. Many people don’t think about either, but those who do tend to prefer retirement planning. It’s understandable; people who have just retired are looking forward to a comfortable retirement.
By comparison, estate planning can seem unpleasant. After all, who wants to think about their death? In truth, both of these plans are very important. This article will provide the most basic introduction to both of these plans. As they are closely related, it’s important to understand how both can help you.
A Basic Introduction to Retirement Planning
The main focus of retirement planning is you – The retiree. One of the most important parts of this plan is to remain financially independent after retiring. After all, if you can’t support yourself after your retirement, your loved ones will have to care for you. Unfortunately, that’s not what most people have in mind for retirement.
A good retirement plan will prepare you for years where you receive no money at all. Consider that you will likely pay more for healthcare as you age—plan for these added expenses to avoid placing an undue burden on your family. You will also want to consider what kind of lifestyle you want during your retirement. Who will you be staying with? Are you looking for a new home? Will you be relocating? Because of the harsh winters up north, many choose to retire down south. When do you want to retire? These are all very important questions to consider, and a thorough retirement plan will answer them.
A Basic Introduction to Estate Planning
But now… What is estate planning? In a way, it is the opposite of retirement planning. The focus of estate planning is on your family. Your “estate” is everything you control and own. This means real estate, stocks, bonds, business interests, and sometimes even debts. Estate plans contain a Will with instructions on how to distribute these assets. In addition, estate plans often include living trusts to avoid probate and simplify the process.
No matter how positive your outlook is, chances are you will pass away. Everyone does. If you do so without any estate planning, your family will have to deal with courts as they grieve. As you set up your estate plan, you should also prepare for incapacitance. In other words, what happens if you can no longer make decisions for yourself. It would help if you also considered setting up a trust. Your family will have questions about certain properties or assets, and trusts lay out your wishes in a clear way.
A good retirement plan will make estate planning that much easier. Consolidating assets will make them easier to manage and write into your end-of-life plans. In addition, a good estate plan will protect your family from lengthy, potentially traumatic legal battles after your passing. Both are essential to living a life free of worry after retirement. For help with estate planning, call Dowd Law and get in touch today.