When questioned about their future and whether they have an estate plan in place, many people will tell you that they cannot create a plan because it will be too expensive. Often, the perceived time commitment, cost, and unpleasant nature of creating an estate plan will deter someone from even considering the process or speaking with an attorney. But what is the true cost of creating an estate plan, versus the consequential costs of dealing with probate?
Most importantly, everyone should understand that “probate” is not just a situation after you die. It can arise beforehand, if you should become incapacitated and incapable of making decisions for yourself but you do not have a Power of Attorney (medical or financial). The function of a Power of Attorney is to authorize another individual to step into your shoes and make decisions about your health or financial well-being, and to maintain the status quo of your life. Without such a document in place, a person cannot make a decision for you financially unless their name is on the account with you (this includes if your spouse does not have their name on a bank account, retirement account, credit card, etc.), or medically unless it is a major emergency decision. As a result, if you become incapacitated, a family member or friend is likely to spend thousands of dollars to file for protective proceedings in probate court, as a Conservatorship and/or Guardianship. The proceedings may take months or years, depending on whether they become contested, and the person appointed is then supervised by the probate court until you regain capacity or otherwise pass away.
When you ultimately pass away, a proper estate plan would cause your assets to pass outside of probate directly to your heirs and beneficiaries, and any final affairs will be minimal. Without a plan, though, your estate may well end up in probate administration, which can cost another several thousand dollars, will freeze your assets for months or years, will delay receipt by your heirs, and will subject all of the probated assets to attacks by creditors. Even worse, if an estate is contested for any reason, the case can remain open for years and cost parties tens of thousands of dollars in attorney fees.
In comparison, the estate planning process is a single, flat fee to create all of your documents, and while every case is different and we would need to agree upon yours, many plans range from $1,000 to $5,000 on average. The process often only takes two to three meetings with an attorney, and when completed, you should have in place a plan that will last you decades. It is important to work with an attorney you trust to create your plan, and one whom you are comfortable turning to when major life events might impact the plan. But most importantly, every adult should have a plan in the first place, to avoid the need for protective proceedings and/or probate, as those costs (time, money, energy, and stress) will undoubtedly exceed that of your plan.