What Moms Need to Know about Costs of Estate Planning6:44:00 AM
There are some hard realities you face as a mom. One of them is that you are not immortal. I know, nobody wants to think about how they will die someday leaving their loved ones behind.
But unwanted circumstances usually happen in the most unexpected time. That is why it is important to have everything prepared. Estate planning is one of the ways you can perform as the last loving act for the people you love. Do note that it is not too early to start getting ready, and you don’t need to be a billionaire to have an estate plan.
Why You Need Estate Planning?
There are multiple reasons why parents decide to meet with an estate planning attorney and create an estate plan. The most obvious reason is, of course, to protect their beneficiaries, their children and/or their spouses, from bad decisions, outside influences, or unforeseen creditor problems.
The second reason is to avoid probate. Avoiding probate is by far one of the most common reasons why people create an estate plan. You want to make sure your family isn’t left with a mountain of problems after your death.
The last reason is reducing estate taxes. With the most basic planning process, parents can reduce or even eliminate estate taxes.
Now, here we come to the question ‘how to do it’ and ‘how to save on costs of estate planning’. As we all know, the cost of estate planning can easily climb into the thousands of dollars or higher depending on how sophisticated a plan that you need. But there are many ways that you can keep costs manageable without sacrificing any of the benefits of a sound estate plan. What are some strategies that you can use to make sure your family and your children are taken care of after you pass?
1. Reduce the Average Cost of Estate Planning With Beneficiary Designations
The average cost of a trust can range from less than $1,000 if you do most of the work yourself to over $3,000 if you have a lawyer draft the forms for you. Wills generally cost less than $1,000 to create with the assistance of a lawyer. However, going through the probate process can be costly especially if there are legal challenges.
If you don't want to create a trust, it may be possible for assets to bypass probate by designating a beneficiary if applicable. Examples of assets that are transferable on demand include the cash value of retirement accounts or life insurance policies.
2. Learn How to Create an Estate Plan on Your Own
It may be easier to create a will or trust through an online program or a boilerplate form that you can get online. In general, these resources are free to use or come at a minimal cost. To be considered valid, these documents typically need to be signed by two adults signifying that you were of sound mind when it was created. Assuming that you are comfortable with what the document says, there is no need to see a lawyer to complete it.
3. Consult With an Attorney After Creating a Will or Trust
In some cases, it may be a good idea to consult with wills and estates lawyers after you have completed a will or trust. This may ensure that you have created the document in a legal manner and used language that best communicates your wishes and desires. Estate planning lawyers may also be able to advise you on how to go about making changes to a will, trust or any other estate planning document if you need to edit an existing document. Since you have done most of the work yourself, there are fewer billable hours to worry about.
4. Do You Have Less Than $5.45 Million in Assets?
If you have less than $5.45 million in assets, you don't need to worry about paying estate taxes. Therefore, there is no need for anything more than a revocable living trust or a pour-over will where your assets can be held until you die. For those within the exemption amount, the benefits of estate planning are the ability to name a guardian for a minor child or the ability to grant powers of attorney in the event an individual becomes incapacitated.
5. Act As Your Own Trustee
The trustee of your estate may be entitled to compensation while you are still alive depending on the nature of your estate plan. If possible, name yourself the trustee or executor or find someone who will fulfill that role at a discounted rate. This ensures that more of your estate stays in your family or is free to be distributed to beneficiaries.
Estate planning can be a costly endeavor if you rely on others to create and execute your plan for you. While it is certainly within your rights to choose that course of action, it may be less expensive to take control of your estate and how you wish to see assets allocated to others after you die.