Estate Planning and Financial Planning-What is the Difference?

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Estate Planning and Financial Planning Learning the Difference

So many terms about planning, Let’s look at the difference between estate planning and financial planning. This should help clear up confusion on the subject. When it comes to planning out your finances, people are confused about the difference between an estate attorney vs. financial planner. Oftentimes, people use these terms interchangeably, but these professions serve different interests and goals.

Financial planning tends to focus on the accumulation and preservation of wealth. It often encompasses such things as:

• Clarifying Financial Objectives,
• Education Funding,
• Retirement Funding,
• Cash Flow Budgeting,
• Risk Management,
• Asset Protection, and
• Balance Sheet, Income Statements, and other financial measures.

Estate planning, on the other hand tends to focus less on accumulation and more on the protection and ultimate distribution of your assets, accompanied by specific instructions. Both financial and estate planning are ongoing processes—not events. It is inaccurate to say, “I did my financial plan” or “I did my estate plan.” Nothing in life is more certain than change.

Estate Planning or Financial Planning – Which Do I Need?

When it comes to estate planning or financial planning, the two areas are quite different and serve different goals. While the goal of a financial planner is to help you accumulate wealth, the goal of an estate planning attorney is to utilize various estate planning tools to help you preserve and distribute your wealth after your death.

Estate planning may touch on some of the same areas as financial planning (Ex: asset protection or tax planning), but estate planning also includes planning for the distribution of assets upon your death, minimizing estate taxes, protecting your heirs, and documenting your healthcare decisions. Typically, a financial planner cannot give you legal advice or draft the required legal documents necessary for an effective estate plan, which is why it’s important to also consult with an estate planning attorney. Depending on what type of professional you’re talking to, you may hear financial planning described as part of estate planning, or you may hear that estate planning is a sub-set of financial planning. Nevertheless, both types of planning are crucial, and must be integrated to achieve the best results for you and your family.