Estate planning is the process of looking at all you have and deciding what you want to do with it during your working and retirement years, as well as how you want it distributed after you die in order to minimize taxes and other fees paid by your survivors.
Typical costs:
• Having a lawyer evaluate your financial and family circumstances and prepare appropriate legal documents starts around $800-$1,800 and can run $2,000-$3,500 or more, depending on complexity, location and other circumstances.
• Books covering the basics of estate planning run $10-$100. Do-it-yourself estate planning kits run $10-$60 and estate planning computer software is $20-$250. Be sure the information provided includes up-to-date details specific to your state of residence; many estate planning experts recommend against using one-size-fits-all documents unless they’re reviewed by an attorney.
What should be included:
• The four basic estate planning tools are a will, durable power of attorney, a living will and a medical durable power of attorney (health care proxy), according to the Financial Planning Association. Other tools that might be used in planning your estate include trusts, how assets are owned, insurance and gifting. Your attorney will review your current situation and your long-term goals and needs, to help you create a plan using these tools. The goal is to maximize your financial security during your working and retirement years while setting things up so that when you die your money, property and other items will be distributed according to your wishes, and with a minimum amount of taxes and probate costs.
• The planning process should include time for you to consider and reflect on any decisions you need to make. The Utah Law warns against promoters of financial and estate planning services who pressure you into buying specific financial products or one-size-fits-all living trust kits.
• Although people prefer not to think so far ahead as their death, estate planning is a good idea for almost everyone.
Additional costs:
• If you own a small business or extensive property, you might want to consult with your accountant or other financial professionals as part of the estate planning process. There could be additional charges for these services.
• Attorneys working on an hourly basis charge for any time spent answering your questions on the phone or by e-mail, as well as case related expenses such as interviews, research or photocopies. Charges are usually done in quarters or tenths of an hour; a six-minute phone conversation may be billed as 15 minutes.
• Cost: Most average Estate Plans costs approximately in the range of $500 – $3,000. However, they can range anywhere from a few hundred dollars to even tens of thousands depending on the quality or number of assets. For example, a person with millions of dollars to distribute may be willing to pay for hundreds of hours of legal help to make sure that money transfers properly, which is important to remember when discussing estate planning cost.
Most people have an estate because most people own something. Planning for someone’s estate consists of the ideas, goals, and plans for what he/she owns now or after they die. An estate doesn’t stay with someone when they die it has to go somewhere. If someone has a plan for their estate, those assets will benefit those whom they choose in a timely manner. While someone is living, they might need a power of attorney or medical power of attorney. The power of attorney is chosen by the estate planner and acts on the estate planner’s behalf if that person ever becomes incapacitated. A will is the estate planner’s last wishes for them and their assets. The estate planning cost can vary. If someone dies without an estate plan let alone an estimated estate planning cost, there are a few things that can happen:
Probate is a process where a state court will determine the distribution of assets; this typically happens if a deceased person does not have a will. This is a time consuming and costly process; it can take months, even years for the assets to be transferred to specific persons and typically costs your loved ones between $5,000 and $10,000 dollars to complete, which can be considered part of the estate planning cost. Joint Tenancy is the possession of assets held by more than one person. For example, if a couple have joint tenancy and a spouse dies, all of the deceased spouse’s assets would be transferred to the living spouse.
Intestate consists of rules designated to the assets that do not immediately transfer to the spouse in a joint tenancy. If someone dies without an estate plan and the living spouse still has jurisdiction over the children, then all of the assets will be transferred to the living spouse. If someone dies without an estate plan and he/she has children not legally guarded by the other spouse, the living spouse receives a fund from the deceased estate, topped off at $75,000, plus ½ of the spouse’s property; the remaining property goes to the children. If the person who dies is not married, their estate is transferred to his/her children. If the average estate planning cost $1,500, and the average probate fees cost around $8,500, then one reason for having an estate plan is obvious to save money. If someone has an estate plan, they can typically avoid probate altogether, saving thousands because they have a plan for their estate. It seems obvious: get an estate plan that includes a will and save thousands by avoiding probate, however, 63% of Americans die without a will (U.S. Legal Wills, 2017). The biggest problems are frustration, confusion, and irritation of probate. These are put upon the family and friends of the deceased person.
• Saving money and feeling confident: The difference between the averages of probate and an estate plan is obvious. However, it may not be that simple, because some people own many assets and it can be intimidating to go through the process of planning and accounting for everything someone owns. Knowing one’s assets will end up with the right people is one of the most important reasons for getting an estate plan.
• Estate Planning Components: The important components of an estate plan are the will and power of attorney.
• Will: Someone’s last wishes for what is going to happen to them and their assets after they die. This is a very important component for the planning of one’s estate because assets do not stay with them they die. The direct and clear plan for what is going to happen to them and their assets are included in their will.
• Trust: A pool of assets that are available to chosen beneficiaries while the creator of the trust is still living, or after they die. A trust is similar to a will in the fact that assets become available to beneficiaries at a specific time, the difference is when.
• Power of Attorney: A power of attorney is someone is who is chosen to act on behalf of the estate planner if they ever become incapacitated. This is especially important because anything can happen at any time; being prepared will prevent much frustration, confusion, and irritation.
• Medical Directives: A durable power of attorney is selected to make medical decisions for you if you are unable or incapacitated. If someone becomes seriously ill or is in a vegetative state, a living will has instructions to stay on or withdraw from life support.
• Beneficiary Designations: The whole of one’s assets included in the estate need to be transferred after the death of the estate planner. Beneficiary designations are the locations where the assets will be transferred. Many people choose their children, spouse, or parents as the beneficiaries.
By establishing a will, you can ensure that your loved ones are cared for after your death, that your assets are distributed to your chosen beneficiaries, and that your final wishes are carried out exactly as you intend. Unfortunately, the anticipatory cost of hiring an attorney to draft a will often intimidates testators from establishing a will at all. In fact, there are many cost-effective solutions for writing a will yourself that allow you to plan for your family after your passing without forcing you to spend thousands of dollars.
Writing a Will Yourself
The least expensive way to prepare a will is to write it yourself. Using free samples you find online or following others relatives’ wills as a guide can help you for your own without forcing you to spend any money. If you are unfamiliar with your state probate laws, however, writing your own will without assistance could end up being the most costly decision of all. If your will is ruled invalid during probate, for example, the court will divide your assets following governing succession laws and your intended beneficiaries could be left with nothing.
Using Pre-Made Forms
Pre-made forms for do-it-yourself wills are now widely available both online and off; in fact, some of these resources are available at no cost. While it isn’t quite the same as hiring a professional, a pre-made form can help you create a no-frills will that meets your state probate guidelines without exceeding your budget. Sample forms can cost as little as $10 to $20 for a basic will, while complete fill-in-the-blank templates average around $100 to $500, depending on the complexity of your personal circumstances.
Ways to Save on Estate Planning Costs
Estate plans aren’t cheap. But exactly how much you’ll spend depends on a multitude of factors, the complexity of your overall needs, the experience of the attorney involved, and your geographic location, since costs can vary greatly across various regions. Fortunately, however, there are steps that consumers can take to better understand, and consequently reduce, potential estate planning costs.
• Understand What You Need: Before you begin the estate planning process, has a sense of what you need. It can be helpful to talk to your financial advisor or to do some reading on estate planning so you understand the basics before you move forward. At minimum, you’ll want an advance directive for health care, a durable power of attorney, and a will. Many people also want or need trusts. For most of these documents, you’ll need an attorney to make sure they are properly prepared and implemented.
• Talk Money Up Front: Even before an initial meeting, contact any potential estate planning attorney to determine how he or she charges. Attorneys may charge by the hour or offer a flat-fee service. If the attorney charges by the hour, ask what the applicable hourly rate is, and get a sense of how long it will take; a lawyer should be able to give a general range for estate plans that cover what you and your family need. Ask attorneys whether they offer a free consultation. Some will, others won’t. And some attorneys may charge for a consultation, but then apply that amount to the ultimate fee if you decide to go forward.
• Understand Flat Fees: Flat fees can be advantageous because they provide certainty and let you understand how much the estate planning process will cost you. Make sure you understand what is included in the fee, however, and what is not. For example, a flat fee may only apply if the estate plan is completed within a certain period of time (say, six months); typically it includes only a certain number of meetings or a certain number of changes to critical documents once they are prepared. Flat fees also usually depend upon the type and number of documents that make up your estate plan. As you can imagine, the greater the number of documents you need, the more complex the estate plan becomes and the higher flat fee you’ll pay.
• Choose the Right Attorney: The qualities that matter most here are experience and rapport. Generally speaking, you want an attorney who has experience dealing with situations similar to your own, so don’t be afraid to ask specific questions in this regard.
As for rapport: Because estate planning involves discussions of family relationships, finances, and mortality, it’s important to choose someone with whom you feel comfortable disclosing these details. If you don’t communicate all pertinent information to your attorney, you could wind up with a flawed estate plan, leaving beneficiaries either too much or too little access to assets. Remember that you don’t always want the cheapest option. A skilled estate planning attorney may charge a higher price, but end up saving you money in the long run. If you become ill at some point and need help managing your finances, a good estate plan can ensure this happens in a cost-efficient manner, obviating the need for a court-appointed guardianship or conservatorship. (These can cost thousands of dollars to implement and maintain, easily outweighing the cost of an estate plan.) A proper estate plan may also end up saving thousands of dollars for your family in probate costs.
• Come Prepared and Decisive: Before your first meeting, ask your attorney what documents and information you need to bring to your meeting. The less time your attorney needs to spend gathering information, the less money you’ll ultimately end up spending. Changing your mind once the documents are drafted can increase fees, so be prepared from the outset to answer pointed questions. Who will make your health care decision if you’re incapacitated? Who should be the guardian of your children? Who should manage the assets for your children? How do you want to leave assets to your children? As a general rule, the more time that passes from the beginning to the end of the estate planning process, the higher the fees tend to be. So the more quickly you can make decisions and have your documents finalized, the less time the attorney will need to spend refreshing his or her recollection of your specific situation because too much time has passed between meetings. The cost of estate planning may seem intimidating, but don’t let it deter you. Remember that estate plans are critical to your assets and your family. Practicing these recommendations will not only make your estate plan more attainable, but can secure the future of your family and property.
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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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