Estate Planning Myth: “I can’t afford it…”

July 5, 2013 - Posted by: admin - In category:

taxes - No Responses

Finding quality, affordable estate planning help can sometimes be a challenge.  However, many people cannot afford NOT to get the right estate planning assistance.    

Lets face it, most things these days cost money and the price of such things seems to be going up every time we turn around.  Most of us are more cost-conscious than we were a few years ago.  Recent economic events have made us that way.  In this context, it is common for people we meet to recognize the need to “get their house in order” and to engage in appropriate estate planning, but they pull back, reasoning that they just cannot afford such things.  Some of the misconceptions about estate planning being only for the wealthy creeps in here again…

 

At Pharos Law Group, since we perform estate planning services, we are of course somewhat biased in this discussion, but we would suggest that most people cannot afford NOT to undertake estate planning.  Perhaps a recent example from our practice will illustrate:

Last week, I received a call from a friend looking for help with a probate matter.  My friend’s relative, a single man in his early 50’s, had just passed away quite unexpectedly while on vacation.  This man was not poor, but also certainly not wealthy.  Because he was only about 50, and without a wife or kids to support, it seems that he had not felt the need to finalize his estate plan.  Further, as a “planning” step, he and his siblings had decided to put the mother’s house into his name a while back (the mother is still alive and living in that house).  Well, to cut out lots of details, this deceased person had assets in at least 2 states, but no written will and no living trust.  His estate is bound for probate court, in two states.  The probate bill on this matter will be somewhere in the area of $27,000-$35,000, at a minimum.  I say, at a minimum because probate proceedings are sometimes like opening a can of worms (or the Pandora box).  You can never be certain just how long a probate proceeding will last or how much it will cost.

There are many unfortunate aspects to that matter, not the least of which, of course, is the premature and unfortunate passing of this man.  It is also quite unfortunate that the family decided to put mom’s house into his name (that act along will likely end up costing at least $10,000 in probate fees).  Our firm eventually referred the entire case to other well-qualified estate planning attorneys, also members of the American Academy of Estate Planning Attorneys, who are better positioned geographically to handle this matter in the most cost-efficient and time-efficient manner.  Thus, none of that large probate fee will be coming our way…

Back to the original topic of whether a person can “afford” to retain a qualified estate planning attorney–with the example above, proper estate planning would have cost a fraction of the probate fees.   Again, it would have cost a fraction of the probate fees amount to set up a living trust, which would have avoided probate all together!  Not always, but very often, estate planning done by a qualified attorney, using the tools available under the law and properly maintained, will cost significantly less than the probate process.  In addition, proper estate planning can also ensure privacy, something not available through the probate process.

Again, our view is that for many people, rather than believing that they cannot afford proper estate planning, the reality is that such people cannot afford NOT to undertake proper estate planning.  We recognize that sometimes having sufficient capital upfront can be a challenge and therefore we offer financing options in certain circumstances.

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