Estate Planning for Families: Time & Money
Common Reason #3: I do not have enough time or enough money to hire an estate planning lawyer.
Q: How much do you pay your financial planner on an annual basis?
A: You either pay by the hour, or you pay at least 1% annually based on your total assets under management. For example, if you invest $200,000, you pay $2,000 annually for your financial advisor to manage your investments.
The only difference between financial advisory services and legal services, is that you pay your lawyer out of pocket, which can sometimes feel more burdensome. However, while you may save money upfront, it is likely that expenses required to manage your intestate estate could eclipse the cost of an estate plan.
In the case of two different estates valued at slightly under $1M, including a home and retirement accounts, the cost to administer varied significantly depending on whether the decedent had an estate plan in place.
Scenario No. 1: Decedent engaged an attorney to prepare a will and other planning documents, completed beneficiary designations, kept records, and communicated their plans to the individuals responsible for managing the estate after death. The estate administration concluded within one year with legal fees of approximately $9,000.
Scenario No. 2: Decedent died intestate (without a will), did not keep records of property or accounts, and had not communicated with any loved ones regarding her assets. In this case, the administration of the estate lasted more than one year and legal fees exceeded $50,000.
Estate planning is a very important part of any well thought-out financial plan, particularly if you intend to leave assets and property to your loved ones.*
* This material is for your general educational information and is not intended as legal advice. Readers are responsible for obtaining legal advice applicable to their specific situations from their own legal counsel.