How Much Does Estate Planning Cost?
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If you don't have a will, or it's been some time since the drafting of yours, you're probably wondering what estate planning costs today.
Looking for legal help isn't like shopping for new shoes; it's not easy to compare legal fees online.
Estate planning doesn't have to be expensive.
Michigan, for instance, provides a free will planning tool you can do yourself online. There are also many reputable do-it-yourself (DIY) estate planning books and online services you can use for a basic estate plan.
Yet, keep in mind the legal system contains a sophisticated web of estate planning laws that can be challenging to understand.
DIY providers are helping many people today avoid becoming “intestate” – a deceased person without a will.
Still, these same DIY services can give a false sense of security, which may cost you and your family way more in the end.
An attorney can make sure there are no loopholes in your legal documents.
Hiring a lawyer might cost you a little upfront, but it can save you and your heirs a lot of money – and a lot of heartaches – down the road through the probate process.
How much does estate planning cost? Below you'll find the services and potential costs for planning your estate with an attorney or DIY service, but first, a quick look at the documents involved.
What is Estate Planning?
Estate planning isn't reserved for the rich and famous. Creating a plan is necessary even if you don't have a six-figure net worth, have your own home, or have kids dependent on you.
At its most basic, estate planning is a set of legal documents that spell out precisely what happens if you become incapacitated and eventually when you pass away.
It's best to prepare ahead of time in case something terrible happens to you. You can't assume your belongings will automatically go to your spouse, partner, or kids when you're gone.
Laws vary by state, and the probate court will decide who gets your stuff if you die without a will.
Essential Documents in Estate Planning
You've likely heard of a will. When they think about estate planning, most people think of a will, aka last will and testament.
While it is the most common legal document in an estate plan, a will might not be enough to ensure all your financial assets, real estate holdings, and personal possessions get into the right hands when you can't manage them yourself.
Here are the essential estate planning documents you might need:
- Last Will and Testament – A will is a written document that lists how you'd like your belongings distributed after you're gone. If you want your cousin to have your antique lamp, you can put that in your will.
- Durable Power of Attorney (POA) – If you become incapacitated and can't make decisions for yourself, a durable power of attorney can appoint someone to make decisions for you.
- Healthcare Power of Attorney (POA) – Commonly referred to as a healthcare proxy, a healthcare POA gives someone else the authority to make general healthcare and medical decisions when you’re deemed legally incapacitated. Along with a living will, it makes up your advance care directive.
- Living Will – A living will details the care and procedures you want if you’re dying or permanently unconscious. If you don’t have a medical proxy (POA) established, you’ll need to make sure your living will is very detailed.
- Beneficiary Designations – Some assets, such as a life insurance policy and accounts held at a financial institution, i.e., bank, checking, and 401(k) plan accounts, can bypass a will or trust altogether if you don't designate a beneficiary. Otherwise, the court may decide who inherits all those funds.
- Trust – You can put your assets into a living trust for your benefit while you're still alive. Upon your death, your belongings go to the person you designate in the trust documents without the need for the probate court's involvement.
Related Reading: Our Estate Planning Experience [Why we set up a Trust]
Services and Cost of a DIY Provider
DIY estate planning can cost you nothing more than your time and the printing of documents to several hundred dollars, depending on your needs.
Many online providers offer legal documents such as a will, general power of attorney, health care power of attorney, and a living will or health proxy. Some may provide trust documents and legal services as well.
You might have the option to purchase individual documents, a package of services, or become a member for additional benefits.
Here are a few popular providers:
Trust & Will: Wills – $159 for individuals / $259 for married couple; Living Trust – $599 for individuals / $699 for married couple
Gentreo: Provides Will, Power of Attorney, Health Care Proxy, Living Trust, and more, with digital storage – $99 Plan
LegalZoom: Wills – starting at $89; Living Trust – starting at $279
USLegalWills: Wills – starting at $39; Living Trust – not available
For simple planning needs, going the DIY route can be better than no estate plan at all, but it does have its risks.
Still, when using DIY documents, consider asking an attorney in your area to review them for a fee to give you additional peace of mind.
Services and Costs of a Professional Estate Planner
Your total costs will depend on how simple or complex your situation is. If a simple will and powers of attorney are all you need, you might pay $200 to $500.
For plans involving a trust document, you might see price tags starting around $1,000, with highly complex plans costing $5,000 or more in attorney fees.
Planner services may include:
- Preparing and drafting a will
- Creating power of attorney documents
- Strategizing ways to avoid probate and reduce estate taxes legally
- Establishing a revocable living trust or other trust documents
- Revising estate plans as necessary
- Representing heirs during the probate process
How you'll pay for these services is as important as what you'll pay. While attorney retainer and contingency fees are typical for criminal or civil cases, you won't see them for estate planning.
The cost of hiring an estate planner is usually calculated in one of three ways: consultation fee, flat fee, or an hourly rate.
Most lawyers won't ask you to fork over any cash for an initial consultation. This first meeting might be in person or over the telephone.
During a consultation, the attorney will get insight into your financial and family situation to help them determine your estate planning needs.
Don't expect much information from this phone call. Estate planning is complex and can't be handled in a single 30 to 60-minute encounter.
A flat fee is the most common type that lawyers charge for estate planning. With a flat price, you'll pay the same amount no matter how many times you call or email with a question.
The attorney can explain things to you without worrying about running out the clock, and you'll be more relaxed knowing you won't get a surprise bill in the mail.
Some attorneys will charge you by the hour to prepare a plan. Hourly rates can vary. You might find lawyers who bill anywhere from $150 an hour to $350 or more, with average rates around $250 per hour, more in some areas.
Shopping around before you hire an attorney is a smart move. You might be surprised how different lawyer fees can be, even in the same town.
How to Save Money on the Estate Planning Process
The cost of estate planning services can be all over the board. Generally, the more significant your taxable estate or the more complex your assets or situation, the higher your price tag will be.
Remember, as with anything, the cheapest option is not often the best option.
There are, however, steps you can take to understand the process and costs involved and even save yourself money.
Start with reading our book! We wrote Estate Planning 101 – From Avoiding Probate and Assessing Assets to Establishing Directives and Understanding Taxes, Your Essential Primer to Estate Planning – to help you quickly understand your estate, how to build it, and protect it, today and when you're gone.
Estate Planning 101 is a hardcover guide with instructions, checklists, and resources to help you organize, prepare and execute your planning and life decisions – from choosing an executor and guardian, achieving financial goals, planning for long-term care needs, to leaving a legacy behind.
It provides answers to frequently asked estate planning questions. Essential topics for those with particular circumstances, i.e., a blended family, a dependent with special needs, or a thriving small business, are included.
Estate Planning 101 also discusses increasing your net worth and understanding your short and long-term tax situation and includes some tax planning tips.
The effort spent reading and pre-planning will save you more time, frustration, and expenses later when you're working with an attorney or DIY'ing your plan.
2. Understand What You Need (or Don't Need)
After reading our book, you'll know what you need to consider ahead of time and what information is necessary to complete your legal documents before meeting with a lawyer or purchasing a DIY plan.
There's no such thing as a “one size fits all” estate plan. The legal documents you end up with are a personal decision based on what you need for yourself and your family.
Most adults over age 18 need a will, an advanced directive for healthcare (aka medical power of attorney and health care proxy), and a durable power of attorney at a minimum.
But not everyone wants or requires a living trust for a complete estate plan.
Consider speaking with a financial planner and accounting professional with experience in estate planning matters for financial or tax advice as well.
They can also help you determine what estate planning options are suitable or not for you depending on your entire financial situation.
3. Use the Right Service
Deciding to DIY or use an experienced attorney comes down to evaluating:
- your estate planning goals and the complexity of your estate
- your comfort level in handling legal matters without personal advice from a trained professional
- pros and cons of using DIY services vs. a legal firm
Estate planning doesn't stop with drafting a will and the financial power of attorney and health care proxy.
Decisions you make today may change as you age and experience different life events and build assets. You want all those decisions to hold up in probate court if you suffer an incapacitating illness or through the probate process when you die.
Unless you're single without children and have very few assets, the DIY route is risky.
When you have substantial assets and/or have children or complex family situations, we don’t recommend that you DIY. You need a more comprehensive estate plan.
Trying to save money that results in setting up an improper estate plan that doesn't protect you or your loved ones could end up being a devastating financial decision.
If you opt to assume the risk and go the DIY route, thoroughly research providers and go the extra mile to evaluate the service you intend to use.
Check with the Better Business Bureau BBB, and read reviews from previous customers.
A good rule of thumb is to interview three different law firms to ensure you're hiring an experienced estate planning attorney to do your plan.
Get recommendations from people you know. But don't just take your family member, friend, or financial advisor's advice and hire one of the estate attorneys they recommend without doing your homework.
Take advantage of free consultations to get a feel for a lawyer's personality, and don’t forget that your EAP plan at work may offer estate planning consultations.
Find out how much they might charge to set up your legal documents, whether you need just the basics or additional advice and services such as limiting estate taxes or establishing a revocable living trust.
4. Determine the Costs
Don't be shy about asking how much an estate planning lawyer in your area charges to create legal documents.
Call around to potential law firms to get a sense of what type of fees they charge before you make an appointment for an initial consultation.
If an attorney charges by the hour, ask how long estate planning usually takes to get an idea of what your total bill might be. For flat fees, make sure you understand what the price includes and what isn't covered.
For instance, a flat fee might only apply if the estate plan is completed within a specific amount of time or might include a limited number of meetings or changes to the documents once they're drafted.
Also, ask if there are any notable additional costs for making changes later or if a limited number of revisions are included for some time.
Some legal firms and online providers offer a bundled package that covers modifications for one year or more.
5. Know What You Agree To Before Buying
After you've checked out DIY options, interviewed attorneys, decided which legal documents are necessary for your unique family circumstances, and talked about costs, you're ready to move ahead with getting your estate plan in order.
Read the fine print before entering your credit card info and hitting the submit button on an online service website.
Make sure you have a written fee agreement that outlines the work a lawyer will do for you and how much they'll charge.
The contract should include any extra costs you may encounter, such as filing fees, and be signed by you and your attorney.
Don’t Wait to Start
The worst can happen when you least expect it. You're putting yourself and your family at risk every day you wait to create your estate plan.
Begin by making a few phone calls to local firms and asking your friends and family to recommend a good estate planning attorney.
Don't hire the first lawyer you meet. Instead, interview several attorneys to compare prices and personalities.
You'll be discussing your family and personal circumstances, financial matters, and other intimate details about your life, so you should be comfortable with the lawyer you hire.
Remember that you're in charge of proper planning for your estate. Your future financial security and health care decisions, as well as the future security of your loved ones, depend on your plan.
A lawyer can give you legal advice and suggest the documents you might need to protect them, but no rule says you must take their professional advice.
If you don't want a trust or power of attorney, you can say no.
Just remember, lawyers – especially those specializing in creating a proper estate plan – have seen their fair share of family conflicts during a loved one's incapacitation or after their passing.
Taking the lawyer's advice can save you and your family a lot of trouble by ensuring you have the proper legal documents in place.
The price you pay for estate planning depends on your situation.
While it can seem expensive, planning your estate now can help your loved ones more easily navigate the legal process of probate and avoid family conflicts, including legal battles in the future.
Article written by contributor Amy Beardsley and Women Who Money Cofounders Amy Blacklock and Vicki Cook.