Do I need an estate planning attorney?
An estate planning attorney can help structure your legacy and make sure that your loved ones are cared for after your death. Below, you'll find an overview of lawyer roles and considerations for creating an estate plan.
When you might need a trusts and estates lawyer
A common misconception is that you only need an estate planning attorney if you're wealthy. In reality, almost everyone can benefit from an attorney's help. Estate laws vary by state, and they can influence whether your will, trust, or power of attorney is valid.
The following are a few cases where you might want to hire an estate planning lawyer:
- You have elderly parents or children who depend on your support.
- You're in a second or later marriage.
- You own a business.
- You own property in multiple states.
- You have minor children.
- You're recently divorced.
- You have a family member with a disability.
- You have significant assets, such as a 401(k) or IRA.
- Your estate is subject to estate taxes at the federal or state level.
If these situations apply to you, you can benefit from the counsel of an estate planning lawyer. They can help prevent any complications when dealing with the IRS, former spouses, or estranged relatives.
Services an estate planning attorney can offer
An estate planning lawyer will devise a plan for your estate to spare your family the stress and cost of probate court. Probate is a time-consuming and expensive process, but a good estate plan can help you avoid it.
In probate, the court directs distribution of your assets. Judges can distribute your wealth to your heirs and creditors as they see fit. To give you an idea of the cost, Americans spend about $2 billion annually on probate, $1.5 billion of which goes to lawyers' fees.
The following are some examples of things an estate lawyer can do for you:
- Prepare a valid power of attorney
- Identify all probate assets and non-probate assets if you will receive an inheritance
- Create a plan to minimize state or federal estate taxes
- Author a will or help with the probate process with or without a will
- Create a living trust to avoid probate and reduce tax liability
- File all necessary documents in probate court
- Prepare or collect on life insurance policies
- Settle disputes among heirs
- Handle the sale of estate assets
- Arrange payment of the decedent's creditors
- Distribute an estate after payment of taxes and creditors
Risks you have when representing yourself
Authoring a will or creating a trust without consulting a lawyer carries serious risks. Every state has specific laws that decide what makes a will, trust, or estate plan valid. If you're not familiar with these rules, your assets could end up being distributed contrary to your wishes.
For example, not all states recognize holographic wills—handwritten, unwitnessed wills. Unless the signing of your will is properly witnessed, your will could fall into this vague category. And if the court finds your will invalid, your estate will pass as if you didn't have a will at all.
An experienced estate planning attorney will know how to execute a valid will or trust in your state. There are many oddities in estate law. For instance, some states will deny probate of a will signed by witnesses who were not in the testator's, or your, line of sight at the time.
Failing to follow these rules can create problems for the loved ones you leave behind. Without a valid estate plan, they might be left with a huge tax bill or a complicated probate process.
Fees an estate lawyer charges
What you pay for an estate lawyer will depend on their level of experience, your location, and the complexity of your potential estate plan. In smaller cities, you might pay as little as $150 per hour. In large cities, you can expect to pay $200 or more per hour.
If your estate plan is straightforward, your attorney might charge you a flat fee. For instance, you might pay $600 for a basic will. In some states, attorneys are allowed to charge a percentage of the estate's value. Only a few states allow this, however.
Questions to ask an estate planning lawyer
When you first meet with a probate lawyer, you'll want to ask the following questions:
1: How much do you charge for the plan I need?
Many attorneys charge flat fees for basic wills, trusts, and powers of attorney. For attorneys who charge by the hour, be sure to ask how many hours they expect to spend on your case.
2: Does your quoted fee include regular reviews? What if I want to change my estate plan later?
Life can throw you curveballs, which can affect your estate plan. Ask your potential attorney if the fee you're quoted allows for future changes.
For example, you might get divorced, have another child, or acquire more assets. Ideally, you'll be able to adjust your estate plan easily without having to worry about added fees.
3: Can you offer me advice on retirement planning, life insurance, and other financial decisions?
A good estate planning lawyer will be able to offer you the complete package, including advice on retirement, tax planning, and insurance policies.
4: What is your plan to minimize my estate tax liability?
Your attorney should be able to tell you whether your estate reaches the threshold for estate taxes, and, if so, how much you can expect to pay.
5: Do I need a will, a trust, or both?
The size of your estate and the age and number of your potential heirs will affect the right plan for you. In some cases, a trust can make sure that your assets never enter probate.
Remember, estate planning isn't only for the wealthy. An estate planning lawyer can help make sure your assets pass on to your loved ones in the way you want, no matter the size of your estate.