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How Much Does Estate Planning Cost? (Tips + Examples)

How Much Does Estate Planning Cost? (Tips + Examples)

Let’s be honest. If you’re here to learn about estate planning costs, we’re about to walk into a conversation that no one really wants to have. It doesn’t matter whether you’re asking for yourself, or you’ve been tasked with estate planning for another individual — this is a conversation about mortality.

How much does estate planning cost

This is kind of like talking about life insurance, right? At some point, you need to consider what the lives of your loved ones may look like when you're not there. The emotional nature of this topic is precisely why some folks take shortcuts with estate planning (which can directly influence cost).

🔑 Free resource: Financial planning template for individuals and families

But I would encourage you to shift your thinking. This is one of the most important investments you will make as you assess your financial future. Estate planning, when done thoughtfully and purposefully, is the ultimate act of care and love you can bestow upon your loved ones. 

I’ve witnessed first-hand the consequences of cutting corners with estate planning — the chaos, pain, and conflict that can occur when it’s not handled with appropriate focus, investment, and care. 

Yes, I am going to share with you in this article what variables drive the cost of estate planning up and down. However, I want you to stick with me beyond those basics because the real “cost” you must keep in mind is the one of inaction or not doing it with the care it deserves. 

Basic estate planning cost considerations

OK, as promised, let’s start by talking about how estate planning services are priced. Of course, there is no industry standard for estate planning pricing that everyone adheres to, as nice and convenient as that would be. 

The honest answer to “How much does estate planning cost?” is “It depends.” For instance, some attorneys will charge a flat fee, and that fee is dependent on the size and complexity of the estate. 

Using us as an example, our experience in estate planning is that it typically can run you $2,500 to $3,500, on average. Often, this will include an attorney working on someone's behalf to produce critical estate documentation, including a will, power of attorney, health care directives, and so on.  

🔎 Related: How to choose a financial advisor (tips + questions to ask)

Again, that is only an average. We have seen cases that fall outside of those ranges, depending on what the circumstances may be. Then there are firms who may choose to assess a percentage fee — e.g., 1% of an estate — rather than a flat fee. 

Generally speaking, the greater your net worth, the more complex your estate planning needs will likely be. Other complexities beyond your net worth that may influence your cost include, but are certainly not limited to, blended families or multiple marriages, the states you live in and acquire your assets in, whether or not any of your assets are community property, and more.

Think about estate planning, like filing a tax return. If you’re a single person with one full-time W2 job making below $100,000 with no assets or dependents, filing your taxes can be a relatively simple, one-form process. The more variables you introduce into the equation (married, living in multiple states, dependents, multiple streams of income, self-employed, etc.), the more complex a process it will be.

🔎 Related: Tax savings strategies for high-income earners (+ examples)

The cost of not working with an estate planning professional

On the surface, one of the “easiest” ways to control costs with estate planning is to do it yourself, rather than working with a professional. 

Sticking with our tax analogy for a moment, if you’re that single person making $50,000 a year from one W2 job with no dependents or assets, sure — you can file your taxes on your own. You should be OK with that approach, assuming you’re careful and good with numbers. If you make a mistake, yes, it’ll cost you. But you can fix those mistakes; you can create payment plans with the IRS.  

Estate planning is very much a horse of a different color. If you make a mistake, often, they are not uncovered until it’s much too late. These mistakes are often not fixable, and your loved ones are left to pay the price for what was missed. 

🔎 Related: Asset vs. wealth management (What’s the difference?)

What can happen without an estate plan?

Let’s take a look at a hypothetical example. Meet Pat and Shirley, a happily married couple with two children and a home. Sadly, tragedy strikes, and Pat passes away without an estate plan in place. All of the assets move to Shirley’s name, and life goes on. 

Eventually, Shirley remarries Mark, and he has two children of his own. Now, we have a blended family. They sell Shirley’s original home and buy a new home together under Mark’s name. The years go on and, eventually, Mark passes away. Again, without an estate plan in place, all assets (property, money, etc.) passes directly to Shirley.

But let’s say Shirley doesn’t like her stepchildren. Even if Mark would have wished otherwise, she is under no legal obligation to share anything with them. Or, let's say Shirley does love her stepchildren. Depending on how the house was titled upon her passing (i.e., it was only in her name), it may pass directly to her children, no matter what her wishes may be — unintentionally disinheriting Mark's children.

This may seem like an overly simplified example, but it is real. It happens frequently. You should not make assumptions about how people will behave in the future, particularly given the emotional nature of a death in the family. People will often act differently under the cloud of grief and intense change.

Your estate plan is part of your financial plan

At the end of the day, while you can think about estate planning from more of a tax perspective or another purely transactional perspective, you should think of your estate plan as a key component of your overall financial plan.

Moreover, the decisions you make today about what happens to your assets after you pass can directly and significantly influence the financial plans of your loved ones — what taxes they pay, what assets they do or do not inherit, and so on.

🔎 Related: Asset management vs. wealth management (definitions + examples)

Yes, in the short term, an invoice from a firm or estate planning professional can feel like an expensive pinch. However, I would encourage you to think of estate planning as an investment in your family's financial future rather than an expense that should be minimized as much as possible. 

 

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