Living Will vs. Will: Planning for Your Financial Legacy

Only forty-six percent of adults have a will that describes how they would like their estate handled after their death. In the unfortunate case of your passing, having a plan in place protects your assets and ensures they transfer to your loved ones. Though it may be unpleasant or uncomfortable, planning for an accident or your death is an important part of financial self-care. 

When setting up a plan, one of the things you will come across is a living will. A living will is different from a traditional will and testament but is still important in protecting your future finances. 

This article outlines what a living will is and compares a living will vs. a will. We also cover why you should have a living will, how to create one, and when you should do so. By the end, you should feel more prepared to start the process of establishing your wills. 

What is a living will? 

A living will is a legal document that helps doctors and families make health care decisions in case of an accident or deterioration in health. Living wills are sometimes called advance directives or advance healthcare directives. 

If you’re unable to communicate your wishes to others — for instance, you are in a coma on life support — your living will defines your expectations moving forward. 

An example would be whether you want doctors to perform life-saving medical treatment, like inserting a feeding tube. Doctors and family members will abide by the medical directives you outline with a living will in place. A living will can take the guesswork out of your health plan. 

Based on this, there is a distinct difference between living wills vs. wills. Let's take a closer look at how the documents are different. 

A living will vs. a will: How do they compare? 

Both living wills and wills are important documents. Though they sound similar, they serve different purposes. As mentioned, a living will defines how medical professionals and health care agents should proceed in case of incapacitation or a life-threatening condition. It specifically outlines how you expect your medical care to be managed. 

On the other hand, A will describes how to divide your assets and property after your death. "Will" is generally short for "last will and testament." When you make a will, you — as the testator — name an executor of the estate. 

The executor is responsible for: 

• Gathering your estate property to avoid escheatment

• Paying any taxes or outstanding debts

• Keeping accounting records 

• Distributing your assets, property and real estate holdings to the beneficiaries you defined in the will 

It's worth noting that both living wills and wills fall under the jurisdiction of state law. If you split time between states, you may want to confirm that your wills are applicable in both areas. Contact a law firm for legal advice and for help making a will. 

Lastly, it’s important to have both because there are clear differences between a will vs. a living will. One protects you while you are alive, and the other protects your wishes after you pass away. 

Why should I have a living will?

Having a living will ensures you’re cared for as you wish in the case of an illness or accident. You likely have preferences about organ donation and whether you wish to be placed on life support. A living will makes sure that your preferences are met when you cannot communicate them. 

If you become incapacitated without a living will in place, medical decisions typically become the responsibility of your spouse or surviving family members. However, if you haven’t spoken to them about what’s important to you, they may not be familiar with your wishes — let alone understand the financial impact of their decisions.

Drafting a living will helps you take stock of your current financial situation and the estate you hope to leave to your heirs. Thinking through the kinds of care you might need to receive — as well as the expenses you might incur — can help you better understand how much you should be saving for possible medical costs in the future. 

If you don’t recover, it’s important to note that medical debt doesn’t always disappear when you pass away. Because health care providers may attempt to be reimbursed from your estate, giving clear guidance on the care you find acceptable may prevent your loved ones from inadvertently making costly decisions that aren’t aligned with your wishes.

How do I create a living will?

When it comes to creating a living will, you typically have two choices: 

1. Working with an estate planning attorney

2. Doing it yourself using an online template

A quick Google search for an example of a living will or a scan of estate planning books at your local library should turn up plenty of templates you can use as a starting point.

• Creating a living will should take place with a clear, open mind — before an emergency occurs — will help you make more thoughtful plans for your future care. Regardless of whether you work with an attorney or go the DIY route, there are several scenarios you’ll need to think through as you create your living will: Are there any conditions under which you shouldn’t be resuscitated? These limitations are often defined through “Do Not Resuscitate,” or DNR orders.

• To what extent do you want life-sustaining procedures, such as assisted breathing, tube feeding or blood transfusions, to be taken should you end up in a prolonged vegetative state?

• What conditions should be met before life-sustaining procedures are either executed or withdrawn on your behalf?

• Are there any specific procedures or medications you do or don’t consent to? This question is especially important if you have a known medical condition for which you want to accept or decline different treatments. 

• Do you have preferences regarding where you receive your care, such as in a nursing home, rehabilitation facility or home?

• How should your pain be managed, either as part of life-sustaining efforts or as palliative care in lieu of life-saving efforts?

• Who will you designate to act as a health care proxy on your behalf?

• Can your organs or body be donated or given for medical research after your passing?

No matter how you proceed with your living will, you’ll need to ensure it meets state-specific requirements to serve as a legal document on your behalf. For this reason, it’s a good idea to have a trusted lawyer review any living will you’ve created on your own. 

When do I need a living will?

Because nobody can predict the future, everybody should consider a living will. Even if your odds of becoming incapacitated seem slim, having a living will in place can give you the peace of mind that comes from knowing your wishes will be carried out.

However, there are a few situations where it makes sense to expedite the creation of your living will, including:

• If you or a family member have been diagnosed with a medical condition that’s likely to result in incapacitation in the future

• In advance of a major surgery or medical procedure

• If you anticipate potential conflict over who should assume your care if you’re incapacitated

• If you have strong feelings about your life-sustaining or end-of-life care (especially if your spouse or family members are unlikely to share your views)

Putting your living will into effect

After you’ve created your living will, take the necessary steps to ensure it’s legal. State laws vary, so check your state's regulations specifically. Then, share it with anyone who may be involved in your future care. Review your living will with your doctor, health care proxy, estate executor and close family members or friends to ensure your living will is understood before it’s needed.

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