Your Will, Trust, and Estate Plan
A will and a trust are part of an estate plan that can provide your family and loved ones with the guidance they need to settle your affairs according to your wishes. A trust is another element that can work alongside a will or instead of one to handle your estate after your death.
What is the Cost?
The cost of creating a will is less than the cost of creating a trust, but your beneficiaries will likely face probate expenses. A trust avoids probate and its associated costs, but may require more upfront costs and ongoing expenses. Having both a will and a trust can reduce probate costs and address other needs of your estate plan. You can use other estate planning tools instead of a trust to avoid probate for certain assets.
Factors Affecting Cost
Probate costs are likely the largest expense associated with passing your estate to beneficiaries through a will, even though they are not direct costs related to creating the will. The will must go through probate, which requires court involvement. This can take a year or more if your estate is large or if there are complications. Your estate will be responsible for filing fees, attorney fees, appraisal fees, and other professional costs during this time. Overall, probate costs can amount to around 10% of your estate’s value. You will not have to pay these expenses personally during your lifetime, but they will ultimately need to be paid, meaning beneficiaries will inherit less in the end.
How to Reduce Estate Planning Costs
You have options to reduce the cost of creating a will or a trust. You can pass your estate to a living beneficiary through other means. Almost every state includes alternative laws. Some states, like Oklahoma, allow you to bypass certain probate requirements that must be handled by your named executor to manage your estate through probate. This can save money for your beneficiaries. You can also include a direction in your will that allows your executor to sell property and take other actions without going to court each time.
You can also transfer property by designating “payable on death” tags on certain assets like bank accounts and investments. This removes them from the probate estate. Naming beneficiaries directly on your retirement plans and life insurance policies serves the same purpose. These assets will bypass probate because they are already designated to pass legally to a beneficiary.
You can also hold property with another person similarly, by creating a deed that names you both as joint tenants with rights of survivorship. The property will pass directly to the other tenant upon your death.
Frequently Asked Questions
Can I write my own will?
You can legally write your own will without an attorney, but you run the risk of not distributing your estate as you wish. Online programs usually guide you through the steps of the process but often are not designed to handle complex legal issues. If you believe there may be potential problems, such as your beneficiaries contesting the terms of your will, consult an attorney.
What is the difference between a will and a trust?
You continue to own your property until your death when you decide to pass it using a will. A trust requires you to transfer ownership of your property into the trust at the time you establish it. You can maintain control over the assets, however, if you create a revocable trust that allows you to modify or revoke it at any time you choose, as long as you are of sound mind.
Do I need both a will and a trust?
Creating both a will and a trust can reduce your estate’s costs after your death because assets held in the trust do not have to go through probate. However, a trust cannot name a guardian for your minor children, so you will also need a will to issue such directions even if you are passing assets through other means.
Source:
https://www.thebalancemoney.com/average-cost-of-a-will-and-trust-6912544
Leave a Reply