How to Save Money on Estate Planning
Estate planning doesn’t have to drain your savings. With the right strategies, you can protect both your assets and loved ones without spending a fortune.
It's easy to assume that estate planning is just for the wealthy. While it's true that estate planning for millionaires is vital, everyone needs an estate plan — no matter how much or how little money you might have. The good news is that you don't have to spend a lot to put an estate plan in place.
Here are the basics of what's in an estate plan and how to save money on each step.
What's in an estate plan?
An estate plan sets out your wishes, both financial and healthcare-related, for those left behind or those making decisions on your behalf. Moreover, estate plans can save your heirs time and money by avoiding probate (the formal legal process that validates a will and allows a deceased person's assets to be distributed). In general, here are the most important documents you should have in your estate plan:
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- Will. This document designates your heirs and states who will receive what among your assets and possessions.
- Durable powers of attorney. These documents include a durable healthcare power of attorney (POA) and a durable financial power of attorney, both of which kick in when you can no longer make decisions for yourself. These documents become invalid after your death.
- Advance Healthcare Directive (often with a Living Will). This document gives orders regarding what kind of medical treatment you want if you are incapacitated or for your end-of-life care. It may include other documents, such as a do-not-resuscitate (DNR) order. You decide how much or how little intervention you want to receive, including whether you want to remain on life support. Every adult should have an advance directive.
- Executor's Certificate or letters testamentary. This document designates the person with the legal authority to act on behalf of your estate after you die. If you don't choose someone to act on behalf of your estate, the probate court will. Many people choose a family member, close friend, or a professional, such as an attorney or accountant.
- Trust. Setting up a trust makes it easy to pass your assets directly onto your heirs, bypassing the probate court.
Estate planning costs
The average cost of an estate plan in the U.S. varies widely. A basic will typically runs $300 to $600, a living trust runs about $1,500 to $3,500, and a bundled package of a will, powers of attorney and a healthcare directive usually costs $1,500 to $2,000, according to Jacob's Legacy Counsel.
Broadly, you can expect to pay $15 for a basic will to over $5,000 for a comprehensive plan with an attorney. Businesses could pay $4,000, $5,000, or more, depending on the complexity and extent of their business.
When estimating the cost of an estate plan, consider whether a prospective attorney offers a flat rate or requires an hourly rate. Flat-fee plans typically include the most common documents such as a basic will, financial, property, and healthcare powers of attorney, a living will, and guardianship appointments for those with minor children.
If your estate plan doesn’t fit into a simple category in which you can pay a flat fee, you will likely need to pay an hourly rate. Hourly rates are generally $200 to $500, depending on where you live. Fees tend to be higher in large metropolitan areas. Hourly rates also typically require a retainer; usually the hourly rate they charge times the number of hours they expect to work.
Saving money on an estate lawyer
Do some legal legwork. Having a list is an excellent way to start the estate-planning process, especially for those on a budget. However, you don't need to be wealthy to afford all of these documents. You just need to know where to trim the time your estate lawyer is billing for.
Piggyback on other professionals. If you're already receiving other services from an accountant or financial advisor, you can also ask them questions about estate plans. They should be able to help you establish a foundation for an estate plan so that you can go to an attorney with your documents prepared in advance.
Understand attorney fees and qualifications. Make sure you're getting your money's worth. You don't want just any lawyer to draft or review your documents, but someone with special training and certification. You can find a local estate attorney using an online directory, such as the American College of Trust and Estate Counsel (ACTEC), Justia, or Legal Match. Ensure you understand how you will be charged, and try to negotiate a free, first-time consultation.
Use templates (carefully). If you feel comfortable doing so, you may draw up your own documents. Sites like LegalZoom and RocketLawyer provide templates you can fill in. While using online guides might be a good option for those with a basic understanding of their needs and wants (and the ability to write), it's still an excellent idea to have an estate lawyer review them to ensure everything is in order, legal, and binding.
Using a DYI online service to save
Do-it-yourself (DIY) websites can help save money on estate planning, but proceed with caution. You want to avoid paying more by failing to have the documents properly executed or seeing the will be contested.
Estate-planning software like Nolo’s WillMaker & Trust will typically cost between $100 and $220, depending on the number of documents included. However, you may pay nothing for a basic will or as little as $70–$100, while a more complete plan that includes a living trust and other documents can cost $200–$600. Online services like Trust&Will also offer flat rates depending on the number of documents in your package.
Services like these can save you hundreds or even thousands of dollars. However, you need to know which documents you require. Buying a package that doesn’t include everything you need will result in an added expense that could approach the cost of an attorney’s basic flat fee as listed above.
You should always consult a lawyer for complex family situations involving children from a previous marriage, children with special needs, family businesses or other such cases.
Review your plan regularly
Once your plan is in place and executed, you may be tempted to think of it as done and dusted. Instead, it's a good idea to review your estate plan every three to five years, updating your beneficiaries and heirs so that your wishes will be honored at the end of your life. Keep passwords and account information in a place where family members can access them, and make sure they have copies of the pertinent paperwork, especially anything that applies to them.
No matter how much money you have, you must have an estate plan. You probably have more assets than you realize, but you do not have to spend a month's worth of wages to establish your estate plan.
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