5 tips for an estate plan that doesn’t break your budget
In the recent, critically acclaimed whodunit, Knives Out, a wealthy crime author dies under suspicious circumstances, and a renowned detective is called in to investigate who might have done it, and why.
At stake is the author’s significant wealth, and as more is revealed about the specific changes he made to his will, audiences get treated to some core concepts in estate planning – albeit with some liberties taken by the filmmakers, such as the pivotal “reading of the will” scene, something that doesn’t happen in modern life.
But it sure is dramatic. And this movie, like so many other portrayals, helps to underscore the common misconception that only wealthy people need an estate plan.
Estate planning doesn’t have to be expensive. With a personalized plan, you can find the sweet spot – covering your needs while working within your budget.
The key is to focus only on what you need, to scale back wherever you can in the short-term and to make sure that if you are using an attorney to help you prepare your estate plan, you are clear on all costs:
1. Do your research.
I know, I know. For the average person, learning about estate planning may sound about as exciting as listening to Ben Stein’s economics teacher in Ferris Bueller’s Day Off. But it’s important to have a good understanding of the basic elements used in estate planning, which typically include:
Wills: These include detailed instructions on how to distribute your assets, who will administer your estate, and who will care for any dependents. While this type of document states your preferences, wills must still be validated and approved through probate court.
Powers of attorney: These documents give someone else the authority to make decisions for you if you become incapacitated. There are several types, including ones focused on business, finances or healthcare. Powers of attorney are a key part of elder law.
Trusts: Like powers of attorney, a trust gives someone else the authority to handle your assets, until they are passed on to your loved ones who will inherit them.
[Still with me? Bueller? Bueller? Bueller?]
2. Understand your needs – now and in the future.
It can be tempting to try to do everything right now, but that may not be feasible. Especially given the fallout from COVID-19, many families need to balance specific needs with reduced funds.
For example, trusts. As soon as someone hears that assets in a trust bypass probate court, this option becomes more attractive. Because really, who wants their family to go to court? However, while this is a good solution for some families, trusts are also typically more expensive to create and manage, so this may not be something that makes sense – at least right now.
The key to keeping your initial estate planning costs lower is to zero in on the elements you need to cover the critical bases, then update your plan over time as your needs change or you are able to afford additional planning that could save you and your loved ones significant cost in the future.
Depending on your particular situation, the critical areas of your initial estate plan may include any of the following:
Funeral arrangement preferences
Guardianship for minor children or family members with special needs
Transfer instructions for your business
Insurance options
Social security planning
Health care planning and long-term care
Beneficiaries
Online passwords to access your accounts
3. Determine if you need assistance with your estate plan.
DIY: There are several options for creating your own, including online forms, software programs and books. For some people, this is enough.
DIY … with help: Have you used one of the options above to complete your plan? If so, you may still want an estate planning attorney to review your completed paperwork and make sure that all of your personal critical areas are covered, and to help you understand what exactly you’re signing.
Work with an attorney: Some people find that working with a professional from the beginning can help to minimize the hassle. In addition, when there are special circumstances that add complexity to your plans, an estate planning attorney can better help you navigate these.
4. Find the right attorney for you.
If you do decide to work with an attorney, do your research first to make sure that anyone you’re considering has experience with your particular situation. Do they offer a free consultation? If so, use it and ask questions upfront to get a better sense of how the attorney can help you – and how well you might work together. Estate planning is a very personal business, where you’ll discuss specific details about your life, health, relationships and finances, so it’s critical to work with someone who makes you feel comfortable.
5. Discuss costs upfront.
Does your attorney charge by the hour or have fixed fees for specific services? One way to help control estate planning costs is to understand exactly what each of the services will cost, so that you don’t get sticker shock when the bill arrives.
By educating yourself on the basics of estate planning, outlining your specific needs, and determining if you need assistance and who is the best fit, you’ll be better prepared to control costs in your estate plan no matter how you develop it.
Call (810) 207-6670 or complete our online form to request a free phone consultation.
Buzz Suuppi
Buzz started The Plan Firm for his family, which is everything to him. Every member of his team is committed to providing effective estate planning and related solutions for families in St. Clair County, Michigan.