Estate planning involves deciding how to pass on your assets and property after your death. It also involves choosing someone to handle your affairs if you become incapacitated. Estate planning is important for minimizing taxes and legal woes for your heirs. However, there are some costs to consider when creating or updating your estate plan.
Attorney Fees
The biggest expense is usually attorney fees. Hiring an estate planning lawyer to draft documents like a will, trust, power of attorney, and healthcare directives typically costs $1,500-$5,000 on average. The exact price can vary based on your location, the complexity of your estate, and your attorney’s experience level. Expect to pay more if you have a large estate or complicated assets like multiple properties or a business.
You may also incur additional legal fees over time if you need to make updates or changes to your documents. For example, getting married, having children, buying property in another state, or other major life events may require you to revise your will and other estate planning documents.
Probate Fees
Probate is the court-supervised process of distributing someone’s estate after their death according to their will. Probate fees vary by state but often depend on the size of the estate. Typical probate fees range from 1% to 5% of the estate’s value. So for an estate worth $500,000, probate costs could range from $5,000-$25,000.
An experienced estate planning attorney can help you take steps to avoid probate, such as using a living trust. This can minimize probate costs for your heirs after you pass away.
Trust Fees
If you create a living trust as part of your estate plan, there are some costs involved. First, as mentioned above, attorney fees for drafting the trust documents can range from $1,500-$5,000 on average. If you transfer property like your home into the trust, you may also have to pay recording fees to the county for changing the deed.
Once the trust is established, you may choose to hire a corporate trustee like a bank or trust company to manage the assets. The trustee may charge an annual fee based on the value of assets in the trust. Typical fees range from 0.50% to 1.50%. So for example, a $500,000 trust would incur $2,500 to $7,500 in annual trustee fees.
Asset Appraisal/Accounting Fees
For larger or more complex estates, an attorney or trustee may need to hire an accountant or appraiser to properly value assets like real estate, art, jewelry, collectibles, or a business. These professional valuations help ensure assets are distributed properly. Appraisal fees can range from a few hundred dollars for simple valuations up to several thousand for complex assets.
In Closing
The costs involved in estate planning depend on the size of your estate and the complexity of your assets and desired legacy. But working with an experienced estate planning attorney is worth the investment to ensure your wishes are carried out properly and your heirs avoid expensive probate issues. Taking the time to put a thoughtful estate plan in place can provide you and your loved ones with invaluable peace of mind.
