Have you been thinking of planning your estate? Are you feeling overwhelmed or unsure of where to start? Planning your estate is something everyone needs to think about. This guide covers everything you need to know to get started. Read on to learn about estate planning, why it matters, your options, and what it costs. Read on to learn more!
What is Estate Planning?
Estate planning is the process of making it known how you want your estate handled after you pass away or become incapacitated. Everyone has an estate. An estate is everything you own, including your home, vehicles, land, and personal items. Even small personal items like knick-knacks and clothing are included in your estate.
Everyone needs to have some estate plans, even if you aren’t wealthy or own a lot of property. If you haven’t gotten around to planning what happens to your things when you pass away, it’s a good idea to get started.
Why is Estate Planning Important?
Having your affairs in order is always a good idea, even if you don’t own much property. Too many people have no plan in place for their things. Many believe estate planning is only for wealthy people, but this is far from the truth. Most people want their items to go to certain loved ones when they pass away, and having a plan in place is the best way to ensure that. Everyone needs to have at least a basic estate plan.
Having an estate plan can help with many things, including but certainly not limited to:
- Name a guardian for your children
- Choosing someone to handle your financial affairs if you pass away
- Choosing someone to make medical decisions for you if you become disabled or incapacitated
- Ensuring life insurance benefits go to the correct beneficiaries
- Leaving instructions for your properties if you are incapacitated
- Transferring a business, you pass away or retire
Important Estate Planning Documents
Several important documents can be part of estate planning. The following sections detail a few of the most essential documents.
Will
According to the American Bar Association, a will is a way to leave instructions for distributing your property when you pass away. Every state has a default manner of distributing your property when you die. Unless you are okay with that, you need to have a will.
A will allows you to choose which loved ones get what pieces of property and gives you control of what happens to your assets and real estate. Wills can be simple or more complex. It all depends on how much property you own, your wishes, and how many trusts will be included.
Living Trust
A living trust is a document that lists your assets and outlines how they will be handled. Also known as a revocable living trust, this document is not just for after you pass away. A living trust is a good way to decide how your assets will be managed or distributed during life and after death.
A living trust is an excellent way to ensure the people and causes you care about are well provided for, both while you live and after you pass away.
Financial Power of Attorney
In simple terms, the financial power of attorney is a way to legally allow one person to act on behalf of the other. It is a legal document allowing you to choose a person to manage your finances and property. This helps to ensure that your finances are handled appropriately.
This allows the appointed person to deposit checks, file taxes, and sell your home or other property on your behalf. A power of attorney ends when you pass away or become incapacitated. Not everyone needs financial power of attorney, but it is a good idea to consider it.
Durable Power of Attorney for Healthcare
This medical power of attorney allows you to choose a person to make healthcare decisions for you. They would be able to consent or decline medical treatments on your behalf. A person retains the durable power of attorney even if you become disabled or incapacitated. The durable power of attorney can be revoked. A court of law can also remove it.
Estate Planning Options
Estate planning can be simple or more complicated. There are several ways to plan your estate, including the DIY method and hiring an attorney. There are pros and cons to each method.
DIY
Most people could create a simple will with a DIY approach. It is simple enough to do with clear instructions. You can use online programs, apps, and planning tools to create a will. You can also do a DIY living trust. The more complex your estate, the trickier a DIY approach will be. It can be easy to make mistakes if you don’t know what you are doing.
If your estate is simple, and you don’t own many properties, DIY may be perfect. It is the most cost-effective way to create a will. It is always best to consult an expert if you are unsure or have any questions.
Hire an Attorney
Hiring an attorney is always a great option and is usually recommended. It’s a good idea to go with a professional if you need more than a simple will. It’s also a good idea if you have multiple trusts, a large estate, or if estate taxes are likely to be an issue.
Hiring an attorney ensures that your documents will follow your state’s laws. An expert like an estate attorney can answer all your questions and address any issues. You can rest assured that their documents and services will be reliable. An attorney will also help you avoid probate. The only downside is that it is more costly.
Doing it yourself and hiring an attorney are valid approaches to estate planning. Your choice largely depends on whether you need a primary or more comprehensive estate plan.
How Much Does Estate Planning Cost?
DIY costs for estate planning are significantly cheaper. DIY plan costs range from $100 to $600, depending on the services and tools you use. If you hire an attorney, the costs are a bit different. There are a couple of different kinds of fees you may pay if you hire an attorney to prepare your estate planning package.
Flat Fees
One attorney fee you may be asked to pay is a flat fee. Flat fees are fixed prices that the attorney charges for their services and are usually the total cost. They typically cover the preparation of the documents like the will and the power of attorney. It would be best to ask what services are included with the flat fee. The attorney may require you to pay all or part of the flat fee before they begin work.
Hourly Rates
Some attorneys charge hourly rates, especially if they believe your estate will take a long time or a lot of effort to prepare. They will charge you for any time spent working on your case. Sometimes charging hourly rates includes an up-front retainer fee also.
Tips to Lower Your Estate Planning Costs
Planning your estate can be overwhelming and stressful. Unfortunately, the high costs of estate planning only make matters worse. Estate planning can be pricey, especially if hiring an attorney. Thankfully, there are a few tips to help you keep prices on the low end. Follow the advice below to lower the costs of planning your estate.
Educate Yourself
It is wise to read up on estate planning and the documents involved before hiring an attorney. Learn about the different components of an estate plan. This way, the attorney will have less to explain to you.
This can help save time and money if your attorney charges hourly rates. The more you know about your needs, the easier it is for the attorney. This helps save you money.
Shop Around
Make sure to get quotes from multiple attorneys. Ask about their fees and whether you will be paying upfront or not. This is one of the best ways to get the most bang for your buck. Choose an attorney that can meet your needs for a reasonable price.
Be Prepared
It would be best if you had certain decisions made before the initial consultation with the attorney. Go to the meeting knowing who your beneficiaries are, your power of attorney is, and what documents you want. Going into the first meeting able to answer the attorney’s questions right away saves both you and them time and makes their job easier. The more time you can save with the attorney, the more money you will save.
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