Knowing the difference between estate planning and having a last will and testament will be crucial for you and your family.

What is estate planning?

An estate is made up of property and assets that you own. It's an extensive process that involves structuring your financial affairs to ensure:

• Estate duty taxes are minimized
• You have enough finances to cover your financial responsibilities
• Beneficiaries or dependants will receive what you have listed for them
• Handling of life insurance policies and accounts 
• The structuring of existing trusts or wills
• Taxes that affect your estate upon dying are taken care of

It is an important aspect for anyone who has a business, family or dependents and can also prevent infighting amongst family members. Estate planning is your way of managing your assets and wealth to ensure that they are handled properly once you have died. A common misconception is that this is something that is only for the wealthy or when you are old, but it is crucial to get this started even if you are slowly building your assets. 

What is a last will and testament?

A last will and testament, also known as a will, is a legal document in which you list your last wishes. It is where you get to state who gets which asset, what happens to family heirlooms or how you would like your funeral to be carried out. A will saves your partner or loved ones having to manage the administrative, legal and tax problems that you have left, and possibly even financial losses whilst they are still grieving your loss.

Why do you need both?

Estate planning is an extensive process while a will forms a small part of your estate planning. Having both is crucial as one summarizes all that you own, making it easier for people to track down and ensure that each asset ends up in the right hands. Estate planning also prevents what you have worked so hard for going unclaimed, getting lost or ending up in the wrong hands or even adding financial strain on loved ones who have to take care of your financial obligations once you have passed. A will is a legal document whereby you state how you would like things in your estate to be handled.

Key differences to remember

The difference between the two is that estate planning means sorting and listing your assets in one place, whilst a will can be a legal binding document that states your last wishes on how you would like each item in your estate to be handled. In most cases, this will be handled by an executor of an estate, who will ensure that this is carried out as per your orders.