Estate planning costs will not only vary, but the increase in fees can easily add to the emotional challenges that come with this expense. Even without adding extra confusion, dealing with matters of death will always be a difficult and sensitive issue. And when there is also a lack of understanding or confusion, these issues can become rather stressful. So, if you’re currently navigating through the basic terms and knowledge related to estate planning and its costs, here’s a basic idea of what to expect. You can always consider the help of a financial advisor when needing to manage inherited money or set up an estate plan.
Why is Estate Planning Important?
Let’s get a better understanding of the estate plan and why it is so important before actually getting deep into its costs. Estate planning is used as a measure of protecting the interests of your family as a whole, and yours as an individual. If you fail to get one, then all of your assets and things you worked hard for, including any valuables, collectibles, property, and money, could become free game. After your passing, a comprehensive estate plan is designed to stop any in-family strife for your belongings.
So it is mainly made to act as a protective measure for your children. You’ll want them to be taken care of by a guardian when you pass away so that you minimize their financial burden to the max. If you fail to do this, you might live them with very little, as taxes and fees might swallow most of their inheritance.
So an estate plan can be seen as a way for your family to be enabled to grieve your loss instead of fearing the financial repercussions caused by fighting over your assets and the future ownership of property and investments.
How Much Does Estate Planning Cost?
Estate plan costs will depend on your requirements as each estate plan is unique in its own way. A basic estate plan will be on the lower end of the range, with a price to have written between $200 and $250. As it gets more complex, this plan can easily get into the thousands, as you’ll likely spend $300 or more per hour for professional help.
If you want a personalized plan designed to perfectly reflect your individual situation and all the measures that will be necessary to protect your belongings and your heirs, it will cost considerably more. The number of documents that you will have to prepare after the will is done, like the circumstances of your heirs and a power of attorney, will also affect the final cost.
No plan for an estate can fit all situations. So for example when underage children are involved, the plan should be focused on financial security, but also on guardianship and long-term care.
But what happens when we’re also talking about multiple trust funds or previous marriages? These situations are more complex and will usually require more work and a spread of distributions. Although getting this plan for as low as possible should be important for you, don’t let it be the only deciding factor. A mishap when creating it could leave your heirs without money, as the estate won’t be properly managed.
|Document type||Average cost|
|Revocable Living Trust||$2,500 retainer|
|Power of Attorney||$400 flat fee|
|Advance Directive||$250-$350 hourly rate|
|Last Will and Testament||$550 flat fee|
Types of Estate Planning Fees
Depending on the estate attorney you work with, the estimate you get might differ, as not all of them will work based on the same pricing system. It’s always better to know who will be doing the work, the type of legal fee they will prefer, and what type of plan they will build when trying to figure out the budget of an attorney estate plan.
Some attorneys may offer to accommodate their estate planning work for a fixed price in the form of a flat fee. This amount will usually be enough to cover any necessary preparing documents, like a power of attorney or will. If your lawyer is OK with working for a flat fee, you should talk about what you will get for the money. This is because this will usually vary and will be at the estate planner’s discretion. One example is when attorneys choose not to include services related to trusts or a notary.
Most attorneys will also require that you pay at least part if not all of the flat fee before they start working for you. So, before signing with an attorney for a flat fee, ask about what you will get for the money.
Most attorneys won’t be able to give an exact fee for the estate planning services before actually getting their hands dirty, so they will use an hourly rate. This rate should cover all of the work done by your lawyer on your case. Even though an attorney may choose to work on an hourly fee, they might also ask for a retainer upfront, even before doing any work. This could encompass what they believe will be the total amount or a portion of the fee. When the retainer will only be a certain percent of the expected costs, you will be charged for the rest later down the line.
Usually, an attorney will go for an hourly rate when they believe that the estate plan has certain specifications that will require extra time and effort. Based on their experience and knowledge, they might also choose to have a basic hourly rate they use consistently.
When receiving monetary compensation, your attorney might choose to work for a contingency fee. One example is cases that come with awarded money, where your attorney might charge you a percentage of the win. This is why most of the time, estate planners won’t go for contingency fees. As you won’t face an opposing side, this doesn’t make a lot of sense. But when needing to settle an estate comes into play, a probable attorney might choose to work for this type of fee.
Of course, these costs will not include anything that your estate will pay if you don’t plan it properly for retirement.
Factors that Will Increase These Costs
As with other types of attorney-related services, fees are just one part of the cost that you will have to prepare for. This cost can increase with any special tasks or other considerations needed. You should know what your money will go towards, so make sure you talk about all this with your attorney. You can opt for an upfront consultation that is most likely free of cost, where you can get an estimate. You should also compare the prices of different attorneys. So don’t just hire the first lawyer you find. Talk with a few of them and go for the one that best suits your needs and is within your set budget or expectations.
Hiring an Attorney vs. DIY Estate Planning
The internet will likely guide you towards smaller expenses and easy tips and fixes, but you shouldn’t trust everything you read online. When having to deal with legal issues like estate planning, it is always better to just hire a professional. Although there are some Do-it-yourself kits available on different websites, although they come at low costs, they are also very simple. This means that they will probably work for people with no substantial property and no heirs, but will be very underwhelming if you have specialized needs.
Some sites might only be able to help you create your will. Will aren’t designed to help your heirs avoid probate, so they will most likely incur estate taxes on the whole. As your situation gets more complex, these types of issues will increase if you don’t have a plan to match your needs.
So take legal sites as starting points for basic estate plans, but don’t use them as a way to address all of the concerns you have. Research can still be a great way to get the best deal with your attorney as you will be able to ask all of the legitimate questions you will have within your first meeting with an estate planner.
How to Minimize Your Estate Planning Costs
Estate planning can easily get very unpredictable and expensive. The fee might get incredibly high depending on your individual case. You will still be able to minimize these costs if you know how to. Below are some suggestions to consider:
- Put everything in writing: After you’ve found the perfect attorney for your case, get on to drafting a written agreement that both of you sign. This should include everything your lawyer will have to do as well as detailed pricing for measurable each task.
- Discuss money upfront: Don’t be shy about talking about the rates and expected timespan of the process within the first free consultation regardless of whether you’re talking with someone in person or on the phone.
- Plan ahead: Prepare as well as possible for your first meeting. Know most of the documents you will need and what a basic estate plan will usually include.
- Pick the right attorney: Compare attorneys and law firms after you’ve done your research and read their online reviews. Before signing with the one that looks better for your needs, schedule an in-person consultation.
Tips on Estate Planning
You might experience a hold on the process of asset distribution of even a year due to the probate process. This inconvenience can still be avoided for your heirs as long as you have good estate planning. A professional financial advisor can help you plan out your estate and manage your wealth on top of that.
There are different trusts that can help you secure assets from probable, out of which the most popular is the revocable living trust. You will know which kind of trust works best for you if you look into how each of them works.
When you have important assets to protect, you will also have a lot of planning to do, like tax planning, retirement planning, and then estate planning. Always know your options when it comes to estate planning. Although you will save money when you do it online, hiring an estate planning attorney will be a lot safer.