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What Is The Difference Between Estate Planning And Financial Planning

What Is The Difference Between Estate Planning And Financial Planning

November 30, 2022

A professional background in these sub-niches might make understanding the difference between estate and financial planning easier. Understanding the core differences is critical as it will help you make the right decision when necessary.

One obvious fact everyone agrees on is that proper planning is necessary if your future life outcomes and experiences are to match your desires. Hence, it is important to start the planning process now instead of later.

Even though it is possible to do almost everything on your own with the free tools available today, hiring a professional financial planner could make a big difference.

What Is Financial Planning?

Financial planning is creating a documented plan to accomplish your future goals while maintaining the desired standard of living. It is also a professional service delivered by trained and certified professionals to interested individuals, families, businesses, and other organizations. Depending on your current needs, you can find experienced financial planning experts with specialties based on specific industries, sub-niche markets, and asset classes.

Just like a professional mechanic can help put your faulty or underperforming car in order, a certified and experienced financial planner can help put your finances on the right track and accelerate your progress toward accomplishing specific goals.

What Does A Financial Planner Do?

A financial planner carries out the following tasks:

Risk Management And Mitigation: Regardless of your asset type or financial status, you are bound to be facing some risks from time to time. Beyond what an average working adult can do, a professional planner can help you identify, analyze and mitigate financial risks of all types.

Cash Flow Analysis: Financial advisors and planners have special tools for useful cash flow analysis. Hiring a financial planner allows you to access these tools for better cash flow management.

Debt Reduction Planning: A certified financial planner can help clients create the best debt reduction strategies to fit their current situation. As we all know, having piles of debt makes it harder to reach your financial goals. If you want to explore the best ways to pay down your debt faster, hiring a professional financial advisor or planner will help you.

Investment Portfolio Management: What is the best way to manage my portfolio for maximum profitability and asset security? Experienced planners and advisors will provide individually relevant answers and solutions in this context.

Retirement Planning: Like every working adult, you want to retire to a life full of joy, freedom, and peace of mind. With all the experiences gained in different professional contexts, a financial planner can help you create the best retirement plan, which is something you want to start now, not later.

Estate Planning: These experts provide professional guidance for estate planning, asset management, and wealth transfer.

Tax Planning: Your financial status and how much tax you pay will always affect the profitability of your assets. Hiring a financial planner is your best bet if you want to leverage the deep professional experience for personal, business, and investment tax management.

How Estate Planning Works

Estate planning will help you preserve your assets, managed and distributed in the event of death. Instead of having your wealth distributed in a way you don’t like, professional estate planning services will help you determine how your wealth will be shared, whether you are dead or incapacitated. It ensures your heirs won’t pay too many taxes when you no longer control your financial wealth.

Some key assets in estate planning include houses, stocks, pensions, life insurance, business assets, artwork, cars, and other material possessions. However, it is also important to consider your debts and liabilities when looking for estate planning services.


What Does An Estate Planner Do?

An estate planner will carry out the following functions:

  • Choosing and naming an executor
  • Writing a complete will
  • Stating beneficiaries of your life insurance
  • Limiting and reducing taxes
  • Making funeral arrangements
  • Designate medical and financial power of attorney
  • Establish the gifting process for charitable organizations
  • Defining life legacy

The Core Differences Between Financial Planning And Estate Planning

Drafting Legal Documents: Even though financial planners provide a host of services related to asset management, only estate attorneys can draft legal documents. In most places, financial advisors and planners are not authorized to draft legally binding documents. That’s one of the key differences between estate planning and financial planning.

Execution of Will: A standard will often contain the stipulated beneficiaries of a deceased individual. However, the execution of the will is the sole responsibility of an estate planning attorney. In and outside a court of law, financial planners do not execute a person’s will in the event of demise.

Investment Tax Management: If you need the best investment tax management advice, you’ll be better off hiring a financial planner or advisor. Here is one of the sole responsibilities of financial planners. Interestingly, most attorneys who provide estate planning services have limited knowledge of investment tax management. Sometimes, a law firm may have financial advisors who serve their registered clients.

Retirement Planning: Financial planners often have the best tools, experience and track record of providing retirement planning services. Again, this is another area where an estate planning attorney cannot deliver the best results. Don’t leave your retirement planning to chance. Consider hiring a professional financial advisor, not an estate planning attorney.

Benefits of Hiring A Professional Financial Advisor

Hiring a professional financial advisor has several benefits. Here are a few of them:

  • Leverage deep professional experience
  • You can find specialists in different industries, niche markets, and asset classes
  • Uncover the best debt reduction strategies
  • Minimize and mitigate tax liabilities
  • Maximize investment profitability and long-term security
  • Discover profitable investment opportunities without investing time in research
  • Accelerate progress toward your financial goals
  • Create a concrete plan to maintain the desired standard of living after retirement
  • Increase your peace of before and after retirement


As we have established in this post, financial and estate planning differs. Even though there are similarities in the core responsibilities, these professionals are usually authorized to do different things. Hiring one instead of the other without proper guidance might create problems for you down the line. Regardless of your financial status, the main thing is to clarify what you need now and determine who will be more suitable to help along your journey.

Knowing the differences between estate planning and financial planning in view will help you make the best decision when you have your priorities clarified. Most importantly, starting your financial or estate planning now might be better than waiting for a perfect condition. It would be best if you considered engaging Diddel & Diddel financial services professional or advisor to get there faster.