I think the question that I am asked most often in my estate planning practice is how much does it cost to do a will?  Or a trust?  Or an estate plan?  Or a Power of Attorney?  Or a Living Will? Or any other number of estate planning documents or preparation.  The questions assume that all estate planning is the same, or that all estate planning documents and all estate plans will cost the same.  I can tell you, that just isn’t true.  While many estate plans are similar, and many of the documents involved are called the same thing, not all estate plans are the same, and cost varies based on a variety of factors.

First, the structure of the plan matters.  Are we working on a will or a trust?  Each type of estate plan takes a different amount of work and thus has a different cost.  Even within a certain type of estate plan, complexity can vary.  A will may have a simple distribution pattern, or a complex one, and the more complex distribution patterns get, the more expensive an estate plan may become.  In addition, within the planning set up, certain attributes of the plan can take more time and effort, and the more time and effort that goes into setting up all of the provisions of an estate plan, the more cost that might be involved.

 

Determining If You Need A Will Or A Trust Matters (Hint: You Probably Need Both)

The amount of work involved in a Will or a trust varies. One of the factors involved in the cost of an estate plan involves the choice to use a will or a trust as the main estate planning tool.  Both a will and a trust will describe how assets are to be distributed after a person passes away, but they do so in different manners.

A will is set up and describes what happens to assets after a person passes away.  The will must be submitted to the court and go through the probate process after someone passes away.  The probate process is in place to ensure the will is properly carried out and the assets are properly distributed.  When a will is submitted to probate, the personal representative receives legal authority to access the deceased person’s property and assets, in the form of a letter testamentary or a letter of administration.

These documents, which are issued by the probate court, allow the personal representative to access the bank accounts, investment accounts, retirement accounts, and real property of the deceased person.  The personal representative is then responsible for gathering all of the assets, paying off debts, selling real estate, and distributing assets to the beneficiaries.  All of the work of gathering assets and getting everything in place to settle the estate is done through the probate process.  A will gives directions on what needs to be done, but the work of carrying out all of the will’s instructions is done after a person passes away.

In contrast, once a trust is set up, the work of getting assets into the trust needs to take place.  The work of re-titling assets into the name of the trust, so that the assets are controlled by the trust, is all done on the front end, instead of putting the work off until after a person has passed away.  Thus, with a trust the work is done on the front end, by the person creating the trust, instead of pushing all of that work off to the back end, like is done with probate in a will.  The amount of work and effort that goes into getting a trust set up certainly saves time and effort from needing to be done on the back end, like with a will and probate, but the extra effort on the front end does mean that trusts tend to be more expensive on the front end due to the increased work done on the front end.  If you add up all of the work that needs to be done and the cost involved, a trust may be less expensive in the long run, but a will is likely to be less expensive on the front end – the planning side of things instead of the administrative side of things.

 

Different Distribution Patterns Require Different Amounts of Work and Affect Cost

At the risk of stating the obvious, not all distribution patterns are the same.  For someone who has lived a “traditional” life and married once with a couple of children, the distribution pattern may be fairly simple: give everything to a surviving spouse, or when both spouses have passed away, give the assets to the children, in equal portions.  Of course, not everyone has lived a “traditional” life.  Many of my clients are on their second marriage, and not all of their children are mutual.  In this case, children from different relationships may need to be treated differently, and that creates more complexity than a simple distribution to surviving family members.

Many of my clients have children who are not yet adults, so the assets to be distributed to minor children need to be preserved and passed on to those children at the appropriate time.  Accounting for minor children usually involves setting up some sort of trust to keep the assets for the use of the children and for the children to receive at a later time, when the children are old enough to handle assets on their own.  The extended time frame involved means that the work stretches out over time, and the estate plan needs to account for the children’s age and life circumstances.

And for those who do not have children, passing assets along to other family members, charities, other organizations, or anywhere else can take different planning, and perhaps more planning than just to immediate family members or descendants.  The more complex and involved a distribution pattern is, the more expensive an estate plan can become.

 

Certain Attributes and Provisions of An Estate Plan Affect the Cost

Even within distribution patterns, certain restrictions and conditions can affect the necessary terms and conditions of an estate plan.  For instance, many people want to prevent a spouse or ex-spouse of a child / beneficiary of a will or a trust from inheriting assets or being able to claim those assets.  For those who are concerned about protecting assets for their children from a spouse or ex-spouse, this is a good thing to do, but it does add more work to the preparation of an estate plan.

Similarly, if a parent is concerned with protecting assets from a child’s creditors or debts, then that takes certain provisions in a will or trust, and those provisions can add to the time and work involved in setting up a will or trust.  The same is true for some aspects of planning to minimize taxes in a trust and for provisions designed to avoid conflict between beneficiaries, or between beneficiaries and a personal representative of a will or a trustee of a trust.  If someone expects there to be conflict, then it might be prudent to build in provisions to resolve the conflict or prevent the conflict in the first place.  Without such provisions, conflict can arise and need to be resolved in court, likely in the probate court.  Fighting things out in court can be expensive, and setting up resolution methods to avoid court fights can be less expensive, but setting up such resolution can certainly add to the work involved in setting up an estate plan and therefore drive up the cost.

 

Estate Planning Costs Vary, but Aren’t Completely Unpredictable

Just because estate planning costs vary doesn’t mean there is no predictability in costs connected to estate planning.  Most wills are similar in price (mine start at $500 for a will) and most trusts fall within a predictable range (mine are typically $2,000 – $3,000 for a revocable trust) of cost.  The variation is determined by the factors shown above, as well as some other factors, like my lack of a yearly maintenance fee, but if someone wants an exact cost without considering the factors involved, it is almost impossible to give an exact answer.  I am able to give a more exact price quote to those who meet with me for an initial consultation, as we can discuss the person’s individual situation and understand more completely the work involved in a given estate plan.  If you would like to discuss your situation and how to set up your own estate plan, please click the button below to make an appointment.