The cost of your estate plan varies with which documents you need and with the complexity of each document. These documents are the estate planner’s tools. A good estate planning attorney will recommend a combination of those tools and help you prepare a strategy to make the tools work together.
Example 1: A young couple of average wealth with small children will need an estate plan that focuses on guardianship and maximizing financial security in the event the parents pass away at a young age. This plan requires straightforward documents like a will, appointment of guardianship, and perhaps a basic living trust.
Example 2: In contrast, a wealthy individual with children from multiple relationships will need a plan that focuses on wealth management and legacy planning with careful consideration of family dynamics. This plan requires more skill in both strategic planning and document drafting, potentially involving multiple types of trusts, powers of appointment, and powers of attorney.
Keep in mind that fees for estate planning are not just a function of the time your attorney spends drafting documents. Good estate planning attorneys use their skills, knowledge, and expertise to construct a holistic plan that will help you accomplish your unique estate planning goals. You will pay more for the work of a more experienced estate planning attorney who can provide a complex plan. If you do not need a complex plan, consider finding an attorney who focuses on plans for simpler estates.
Types of Fees for Estate Planning
Lawyers use different types of fees for different services, and the way you pay your attorney has a big impact on how much you will end up paying for your estate plan. Lawyers typically use one of three common rate structures –flat fees, the billable hour, or contingency fees.
Flat fees are used when your attorney can quickly assess your needs and know what type of estate plan you require. Your estate planning attorney can look at your financial status, family situation, and any special considerations and know what planning tools you will need. For these common cases, your attorney may offer a flat fee arrangement that is, a firm price to complete all of your estate planning work. You may be asked to pay this amount, or part of this amount, before work begins.
A typical flat fee estate plan includes the most common estate planning tools such as:
• a simple will
• a powers of attorney for finances and property
• a power of attorney for healthcare decisions
• a living will outlining end of life decisions, and
• an appointment of guardianship for parents.
While this typical estate planning bundle, not all flat fee arrangements are identical. When agreeing to a flat fee, be sure you understand what documents and services are included in your estate plan.
The Billable Hour
For plans that don’t fit into one of those common flat fee categories, your estate planning attorney will likely charge an hourly rate for the time they spend thinking about, working on, and meeting with you about your case. When charging an hourly fee, your attorney may ask you to provide a retainer before starting work on your case. A retainer is a prepayment of fees that the attorney will draw from as they work on your case. Retainer policies vary among attorneys and law firms. Your attorney may ask for a retainer of the entire expected cost of creating your estate plan. Or, your attorney may ask for just a portion of that amount (maybe one-half) and then bill you for the rest later. Estate planning attorneys often use a billable hour if they anticipate your estate plan will require extra sophistication in planning or time coordinating with other professionals (for example, your financial planner). If your attorney cannot confidently predict the cost of your estate plan, they will charge an hourly rate that reflects their knowledge and expertise in the estate planning field. Location also factors into your attorney’s hourly rate. Generally, attorneys in metropolitan areas charge higher hourly rates than attorneys in less populated areas. Hourly rates also vary from state to state.
Estate planning attorneys typically do not use contingency fees. Contingency fee arrangements work best in cases where your attorney is trying to win you money in a lawsuit or settlement. For example, you agree to pay the attorney a portion (typically one-third) of whatever the attorney can get for you. If you get $15,000 in a settlement negotiated by your attorney, you would pay $5,000. Because estate planning isn’t adversarial you’re not fighting another person contingency fees don’t make sense. However, probate attorneys might use a form of contingency fee for helping you settle an estate.
Get It In Writing
No matter which type of fee arrangement your attorney uses, make sure you get it in writing! Your attorney should offer you an engagement letter that details:
• fees and payment terms
• the scope of work your attorney will do (i.e., what estate planning documents are included in your plan)
• confidentiality requirements, and
• any agreements about conflict resolution.
This is the contract between you and your attorney. If your attorney does not provide an engagement letter like this, ask for one. You and your attorney should sign the agreement before work begins. A final factor that contributes to the cost of your estate plan is who actually performs the work. This can vary depending upon the type of lawyer or law firm you hire. If you hire a solo attorney or a small firm, your attorney typically handles much of the work on your case and will charge you their hourly rate for all the work. If you hire an attorney from a larger law firm, your attorney will typically delegate some tasks to junior attorneys, paralegals, or other staff. This is particularly true if common, formulaic documents fit your estate plan’s needs. This division of labor isn’t necessarily a bad thing for you. Junior attorneys, paralegals, and staff have hourly rates much lower than the experienced senior attorney who conducted your first meeting. Having staff complete tasks under the supervision of that senior attorney saves you money while also allowing you to take advantage of that senior attorney’s experience and knowledge. Knowing what goes into the cost of an estate plan, the question remains “So, how much?” As the above paragraphs reflect, the costs can vary widely. Some attorneys may prepare a simple will or power of attorney for as little as $150 or $200. On average, experienced attorneys may charge $250 or $350 per hour to prepare more sophisticated estate plans. You could spend several thousand dollars to work with such an attorney.
Local and statewide business practices can influence what an estate planning attorney will charge for handling a particular matter, but her level of experience factors in as well. So how do you gauge that experience, and how do you know if you’re being asked to pay too much? It can help to understand the general rules and fee-setting process.
Your Initial Meeting
Most estate planning attorneys don’t charge a fee for the initial meeting, but this is by no means a universal rule. Don’t be surprised if the attorney does charge a small fee for sitting down with you for the first time. It can go either way. An estate planning attorney is in business to earn a living, and time spent with you takes time away from billable hours that he could be spending on other clients’ matters. That said, this is also his opportunity to sell you on retaining his services and to get an idea of what your matter involves. This is when he determines how many hours he and his staff will have to invest into resolving your issue…and if he wants to take your case on. Many attorneys recognize the context of a first meeting and don’t charge for it. A set dollar amount typically covers the initial meeting—if you end up retaining the attorney’s services as well as preparation of basic documents, review of documents, and signing of documents. Some attorneys will also include assistance with funding your living trust as part of their estate planning flat fees if you decide you want one, while others charge a separate funding fee based on the value of the property they’ll be helping you move into the ownership of your trust. The only reasonable alternative would be for the attorney to charge you on an hourly basis. The downside to this approach is that it leaves a great deal of uncertainty for you as to what the final total cost will be. You can avoid this by asking your attorney to come up with a flat fee to cover all the services that she’ll be providing to you. Just be prepared to move on and interview other attorneys if she declines.
Standard Hourly Rates
A flat fee is a composite of the attorney’s standard hourly rate and how many hours he thinks he’ll have to invest in your case to resolve it. Ask what that hourly rate is, and find out how much you’ll be charged for the services of other attorneys and paralegals in the firm. This will give you an idea of how many hours the attorney expects the firm to spend on your estate plan. If he quotes you a $5,000 flat fee and he bills his time at $200 an hour, he expects that he and his firm will spend about 20 to 25 hours on your case. The general rule is that the higher an attorney’s hourly rate, the more experience he has. All those hours might seem like a lot to you, but the attorney should have a pretty good idea of the time it will take to meet with you, answer your questions, design and draft your estate plan, review your plan with you, help you sign your plan, then help you fund your trust if you’ve chosen to include one.
Meet by Telephone First
It’s common these days to handle a significant amount of business by telephone. Consider setting up telephone interviews with at least two estate planning attorneys before meeting in person. This will save your time and the attorney’s time…if she’s willing. Don’t expect a great deal of decisive information in an initial phone interview. That would be like the attorney giving her advice away for free. Your goal for this phone conversation should be determining whether you want to work with her or not. Each attorney should be able to get a feel for what your needs are during this conversation and quote you a flat fee for your basic estate plan. Remember, you’re not asking what you should do, but rather how much it’s likely to cost you to do what you have in mind. This gives you the opportunity to compare the flat fees quoted by each attorney and narrow down your choice as to who you want to meet with in person.
Ask for Details
Ask an attorney who’s going to charge you more than another exactly why his fee is so much higher. Some attorneys are in the business of selling estate plans in bulk, while others are truly interested in giving you a high-quality estate plan and becoming your advisor for life.
Trust Your Gut
Your goal shouldn’t necessarily be to find the cheapest attorney. Think about how comfortable you feel with each, because you’ll have to be open and honest when discussing the most intimate details of your personal life and finances with this individual. Sometimes you have to go with your instincts. Only you’ll know for sure who you’ll be able to trust with this important part of your life.
Estate plan costs vary because each estate plan has unique needs. The lower end of the spectrum can include a basic will written for as little as $150 to $200. But a more complex plan may cost you upwards of $300 per hour. If you want something that reflects your situation and the necessary measures it will take to protect your assets and heirs, it will cost more. The cost also depends on how many documents you need prepared beyond your will, like a power of attorney and the circumstances of your heirs. There is no “one-size-fits-all” plan for an estate. For example, a couple with underage children will be focused on a plan that emphasizes guardianship, long-term care and financial security. However, add extra factors such as previous marriages and multiple trust funds. That situation calls for more accommodations while spreading out the distributions. This shouldn’t stop you from shopping for the most affordable price, but don’t let it be the deciding factor. If you’re not careful, your heirs could lose money regardless because the estate wasn’t properly managed.
How to Minimize Your Estate Planning Costs
Estate planning can be unpredictable and costly. Depending on your situation, you may be paying an unexpectedly high fee. If you plan accordingly, though, you will find there are ways to help minimize the costs.
• Pick the right attorney: Research firms, read reviews and compare them. Try to schedule an in-person consult with each one.
• Know your needs: Go into your first meeting educated. Know what a basic estate plan includes and whether you’ll need more documents.
• Discuss money upfront: Whether it is on the phone or in-person, a firm might offer the first consultation free. Use that opportunity to discuss rates and how long the process might take.
• Put it in writing: Once you choose your attorney, make sure you draft a written agreement you both sign. It should include the work your lawyer will do as well as any costs.
• Do-it-yourself kits to create and file a legally enforceable will have gained in popularity due to the minimal cost involved. If you don’t have a lot of complicated issues about your final wishes, your finances are fairly straightforward, and you don’t have any children, this may be the most suitable option for you. Kits can be purchased for as little as $10, so they give you the option of drawing your will at your convenience without having to pay an outrageous cost. There is a lot less time involved, and you can generally make updates at your leisure without much difficulty or cost.
• Before you settle with one of these kits, first read the reviews of the platforms selling the kits and hear what their customers say about this product. This is a new business and many companies are racing to take a share in it while the quality varies from the legal providers.
• Second, make sure you understand everything the kit entails including the legal language. You don’t want to sign a document you don’t fully understand. Also consider whether the document is enforceable in your state, as some documents don’t coincide with guidelines in certain areas. For the state compliance matter, contact the platform and ask them the question and get their experience with other users from your state. You may be required to have witnesses or have your document notarized. Remember that the basic will documents within may not cover every life situation that should be addressed. That’s when you move to the next step.
Free Initial Consultation with Lawyer
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!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506