Fancy as it may sound, estate planning is not just for the rich because even someone with small estate needs to plan their inheritance. After all, you would not want your property to land in wrong hands nor have your heirs pay exorbitant taxes on it. Considering these facts, you need to plan how things will work out in terms of inheritance of your property, however big or small it may be. Even though estate planning is regarded as crucial as life planning, you would still want to know how much it would cost because it extends beyond just drafting certain documents; you will need the services of an experienced lawyer too. Let us clarify the entire facts about the costs of these services and paperwork.
The most common aspect of costing relates to engaging lawyers to handle the job, right from giving estate planning advice to taking care of the entire documentation such as wills and trusts. The cost and billing method varies from lawyer to lawyer; while some charge on the hourly basis, others do it per task and there are yet others who follow a retainer basis of billing. Ensure that you discuss the billing method in the initial stages and have complete knowledge of how you will be charged.
Consultation and initial documentation
Consultations are usually billed on an hourly basis if they include only the initial discussions on your case along with the review of existing documents. Most attorneys charge flat fees for drafting initial documents. The type of billing is based on the norms that they follow and it is better to know these facts before you engage their services.
Some attorneys may offer package pricing for documentation, including the will, trust and others such as power of attorney for financial or medical purposes. This costing method is followed in most of the typical cases, where nothing extra needs to be done except the normal documentation.
Fees in special cases
On the other hand, things may differ if there are some complexities involved. These could relate to some disputes in the inheritance or in families with large estates and multiple businesses. This means that you will need documents that are different from the ones that are a part of the normal documentation.
Ideally, you should ensure that the attorney has a full set of papers ready to avoid hassles later on and this is a cost that you should not cringe at. Most attorneys use estate planning software to bring reliability and simplicity in the documentation process and improving their service quality.
Cost of ongoing reviews
Another aspect of estate planning costs is ongoing reviews of the requirements on a periodic basis. Your needs may change from time to time, in case you add to your estate. Accordingly, the inheritance plans have to be tweaked as well. This will require periodic reviews of the estate and changes are to be reflected in the documentation accordingly. This is another aspect that will form a part of the legal fees.
The best billing model for such requirements is the retainer model as you will need a lawyer to handle the case on an ongoing basis rather than just a one-time service. A retainer model ties up the lawyer with your case in lieu of a specific fee that is paid for a specific time period, such as monthly or quarterly billing.
Besides the legal costs of estate planning, there are some non-legal ones that you may have to incur. The planning process may involve certain additional tax planning as well, to protect the heirs from superfluous taxes that they may be forced to pay when they inherit the estate. Similarly, your lawyer may suggest buying insurance policies as a part of the estate planning strategy.
If this is the case with you, the cost will include the insurance premiums as well as the legal costs of getting the relevant documentation needed for the insurance. Fortunately, these expenses are not to be incurred by all and are limited to only a few exceptional cases.
Tasks with insignificant costs
In addition to the regular cost-associated tasks related to planning your estate, there are some others that have minimal costs. Although you need not to incur much expense on them, they can be as important as writing your will or completing other documents related to inheritance. Updating your beneficiaries for direct transfers from accounts is one of them.
Not much needs to be done as you may have to pay just a nominal fee and fill in a form as a formality. Although you may not have to pay much for getting the documents updated, this is as important as selecting the beneficiaries in the first place. This expense is needed if you want to change the name of the beneficiaries who will inherit the money in your key accounts such as retirement account and insurance account.
Funding a trust chosen as a beneficiary
If you want to distribute your estate gradually to the recipients, the best way is to have a trust as a beneficiary. Since this is a complex requirement, ensure that you hire an expert lawyer to handle the case. Besides the fees of the lawyer, there will be some expense related to funding your trust too. Though this will not be significant in terms of value, you should still be aware of it.
Setting up a trust involves completing the relevant formalities of placing your assets in the trust with proper documentation. Drafting a trust fund is a necessity to make it legally operational. Also, ensure that the assets you buy later are added to the trust while those sold are removed from it to prevent any complications for the beneficiaries.
Since a number of legal formalities form part and parcel of the estate planning process, it is best to leave things to the professionals. These are the costs that you should not cringe about because they will simplify inheritance and make it completely hassle-free for your beneficiaries.