The number of adult Americans with an estate planning document has dropped by 25% since 2017. Estate planning costs and disparities in knowledge are some of the factors contributing to this decline.
So you may wonder, how much does estate planning cost? In this guide, we’ll look at the costs you’re likely to incur in setting up an estate plan.
What Influences Estate Planning Cost?
The cost of estate planning is unique to every situation. Not everyone will require the same estate plan. Some people only desire or need a simple estate plan, and so they end up with minimal costs.
Simple estate plans include a will, a financial and medical power of attorney, a HIPAA directive, and a living will. However, if you are among the families that desire your estate to be a private affair that’s free from interference, either from family members or outsiders, you can also get trust planning.
If you’re worried about the beneficiaries wasting the inheritance, losing it in marriages, or losing it to creditors, trust planning may be necessary. This goes for people who want to avoid probate proceedings and taxes. Trust planning may increase the costs of the estate plan, but once your attorney identifies all your needs, you can come to a reasonable agreement.
How Much Does Estate Planning Cost?
If an estate attorney can give you an exact price on your estate plan without a comprehensive discovery process, you shouldn’t put your trust in them at all. You see, this is the major reason why most estate plans fail, and most families still find themselves in probate court.
Most people shop around for an estate planner based on price, then hire the cheapest services they can find. What they end up with is a traditional estate plan, which only includes a set of documents that will not help the beneficiaries when the time comes.
The most important aspect of getting an estate plan is ensuring you get value. It’s vital that you discuss your estate plan before the attorney gives you a price quotation so they can offer you a reasonable price based on how much they charge similar estate plans. Don’t go for the cheapest plan you can find, because all things considered, you’ll get exactly what you pay for.
Why Estate Plans Are Not Created Equal
The costs of an estate plan varies according to documents needed and the complexity of each document. For instance, a young family with an average income and small children will have a simple estate plan. Their main focus will be guardianship of their children, a will, and maybe a basic living trust.
On the other hand, a wealthy person with many businesses, possibly children from multiple relationships, and vast lands will require more documents that are highly complex. They will need legacy planning, wealth management, multiple trusts, powers of attorneys, and powers of appointment. Both of these scenarios will have very different costs for their estate plan.
How Much Is an Estate Planning Attorney?
Having a professional estate planning attorney is a vital aspect of planning your estate. However, keep in mind that the attorney you hire will have a significant impact on the estate planning fees you end up paying. Some attorneys charge a flat rate, while others charge billable hours, which also has a major impact on the overall estate planning cost.
You may also find that estate planning attorneys in large metropolitan areas charge a higher fee and that costs may vary from state to state. Some attorneys will charge more for their experience.
Expert estate planners will not just charge you for the hours they spend drafting documents. They will charge you for the expertise of drafting a holistic plan that will help you meet all your goals in the long run.
Different Types of Estate Planning Fees
Most estate planning lawyers charge different estate planning fees for different services. There are three common rate structures most of them use, which are flat fees, billable hours, and contingency fees.
Flat Estate Planning Fees
If an attorney can assess your needs quickly and determine the kind of estate plan you require, they may charge you a flat rate. They will look at your family situation, your financial status, and special consideration if you have any to know which estate planning tools they need to use.
They will give you one set price to complete the entire process, and you may be required to make partial payments before they start. Most of the time, you’ll find that a flat fee estate plan includes a will, a financial, healthcare, and property power of attorney, and an appointment of guardianship if children are involved. When you agree to a flat fee, ensure you understand everything included and ensure that’s exactly what you need.
Billable Estate Planning Fees
If you need a more complex plan where you have to meet multiple times to discuss it, the attorney is likely to charge you by the hour. If they anticipate that you need a sophisticated plan that may require coordinating with other professionals such as your financial planner, they may not be able to predict how much planning will cost.
Hence will need to charge you an hourly rate. You may have to provide retainer fees for your attorney before they start on your plan. Retainer policies vary among law firms.
Contingency Estate Planning Fees
Contingency fees are not that common, and it mostly happens when clients have a lawsuit or settlement that the lawyer needs to win. This is very rare because estate planning is usually adversarial. Unless a private attorney is helping you settle an estate, you may not encounter these fees.
Planning Your Estate the Right Way
So, how much does estate planning cost? This question does not warrant a straightforward answer. The best course of action is to talk to a professional estate planning attorney so they can evaluate your plan and charge you accordingly.
The lawyer you hire, the estate plan you require, and your location will all determine how much you end up paying. Whatever the costs, however, estate planning is a worthy investment because you’ll leave your family with the help you can’t give them once you pass away.
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