Estate planning costs can vary widely, adding another layer of complexity to an already emotional process. Managing end-of-life matters is challenging enough without the added stress of unclear fees and confusion. To help you navigate the basics of estate planning expenses, we’ve outlined some of the key concepts to consider. If you need guidance in creating an estate plan or managing an inheritance, consulting with a financial advisor can provide you with valuable support.
Hiring an Attorney vs. DIY Estate Planning
The internet is useful for small fixes and tips, but you shouldn’t rely on the internet for everything. When it comes to something as important as estate planning, you’re better off hiring a professional. Do-it-yourself kits are advertised online, but their main draws are their simplicity and low costs. That might appeal to someone with no heirs or substantial property, but not if you have any specialized needs.
Sites may only help you create a will. A will cannot help any of your heirs avoid probate, which could incur estate taxes on the whole. The chances of issues like these only increase the more complex your situation is without a plan to match.
While internet legal sites can be alright starting points for some basic estate plans, they will not be able to address the collection of concerns you may have. However, research can be a great advantage in a legitimate consultation with an attorney. So, bring any questions you have to your first meeting with your estate planner.
Types of Estate Planning Fees
Not all estate attorneys use the same pricing system, so you may receive a variety of estimates depending on the individual. When trying to budget for the cost of an attorney estate plan, it’s important to know who is doing the work, what type of plan you need and the legal fees your estate planning attorney prefers.
Hourly Rate
If your attorney can’t pinpoint a fixed fee to charge you, he or she will likely use an hourly rate. This would encompass any time your lawyer was working on your case. If your attorney asks for an hourly fee, they may also request a retainer upfront before they begin. This could be the total amount or a portion of it. If it’s the latter, they’ll bill you the rest at a later point in the process.
An hourly rate may come into play if your attorney believes that your estate plan will require extra time or effort due to its specifications. They may also have an hourly rate they consistently use based on their knowledge and experience.
Flat Fee
A flat fee is a fixed price your attorney may offer to accommodate their estate planning work and experience. This pricing will typically cover preparing necessary documents, such as a will or a power of attorney. If your lawyer asks you for a flat fee, you should clarify what’s included in that plan. That is because it can change depending on the estate planner’s discretion. For example, some attorneys might not include a notary or help with trusts.
Your attorney may also require you to pay a partial or total amount of a flat fee before they begin working. So, it’s best to ask about the payment expectations for a flat fee and what it covers ahead of time.
Contingency Fee
A contingency fee is used in situations where you will receive monetary compensation. For example, when you win a court case and accept awarded money, you pay your attorney a percentage. Because of this, estate planners don’t typically use contingency fees. They don’t make sense without an opposing side. However, if you need to settle an estate, a probate attorney might use this type of fee.
These costs don’t take into account anything that your estate may end up paying if you don’t properly plan your estate for retirement and beyond.
Factors that Can Increase Your Bill
Fees are just one variable that could affect your estate planning bill. Any special considerations or tasks could increase the total fee. You should know what to expect, so talk directly with an attorney. Ask to schedule an upfront consultation in person, usually free of cost, and supply you with an estimate. Also, there’s no harm in comparing prices. So, feel free to speak with a few potential attorneys and pick the one best suits your needs.
Why Do Costs Vary By Estate Plan?
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 to prepare after 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. Here are a few suggestions for you to consider:
- Pick the right attorney: Research firms, read reviews and compare them. Try to schedule an in-person consult with each one.
- Plan ahead: 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 everything 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.
The Importance of Estate Planning
Estate planning is essential for protecting both your interests and your family’s future. Without a solid plan in place, the assets you’ve worked hard to accumulate — such as money, property and valuables — could become entangled in legal disputes. A well-structured estate plan helps prevent family conflicts and ensures your wishes are honored after your passing.
It also allows you to take important protective measures for your children. By naming a trusted guardian, you can ensure their well-being and minimize their financial burden. Without proper planning, their inheritance could be significantly reduced by taxes and legal fees, leaving them with far less than intended.
Ultimately, an estate plan provides your family with the ability to grieve without the added stress of financial uncertainty or legal battles over your assets, including investments and property.
Bottom Line
Having substantial assets means lots of planning between retirement planning, tax planning and estate planning. When doing estate planning be aware of your options. You can do it online to save money or you can hire an estate planning attorney. Taking the latter course will involve various fees, some of which may be flat fees, contingency fees or hourly fees. And while using a lawyer is more expensive, it reduces significantly the likelihood that your digital DIY estate plan will not hold up in court.
Tips on Estate Planning
- The probate process can hold up the process of distributing your assets for as long as a year. However, with good estate planning, you can help your heirs avoid this inconvenience. A professional financial advisor can help you plan out your estate and manage your wealth on top of that. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started today.
- A revocable living trust isn’t the only trust that can help you secure your assets from probate. Look into how different trusts work to see which kind is right for you.
Photo credit: ©iStock.com/monkeybusinessimages, ©iStock.com/vaeenma, ©iStock.com/vaeenma