Let's face it - death is a costly business, and it's not just the funeral costs - think about the costs of settling your affairs after you're gone. If you don't have any estate plan at all, then your loved ones will be left in the dark and the legal fees will quickly add up. But even if you do have an estate plan, if you haven't taken the time to maintain it, then it won't work the way it's supposed to and, again, the legal fees will quickly add up. And if your original estate planning documents can't be located by your loved ones after you die, then what was the purpose of signing them? Here are some tips for minimizing the legal fees associated with settling your estate.
1. Make a good estate plan.The overall cost to set up a good estate plan will be far less than the cost of settling your estate without a plan. I know this from years of experience in settling the estates of people who had really good plans and people who had no plans. But the key here is to set up a good estate plan, not one that you've created using a computer program or forms that you've found in a book or online. And you need one that is complimentary to your status in life - in other words, a simple Last Will won't cut it if your estate is taxable. Spend the money while you're alive, and you'll save your loved ones a great deal of money after you die.
2. Maintain your estate plan.Once you have your initial estate plan in place, don't stick it in a drawer and forget about it. A good estate plan for you today will most likely be different from the plan that you'll need in 2, 5, or 10 years. Use an attorney who has a formal maintenance program to insure that your estate plan will continue to work as your life and the law change. Again, spend the money while you're alive, and you'll save your loved ones a great deal of money after you die.
3. Use a Revocable Living Trust.A fully funded Revocable Living Trust will allow your assets to avoid probate after you die. Depending on the laws of the state where you live and the laws of any other states where you own real estate, avoiding probate can save your loved ones anywhere from a few thousand dollars to hundreds of thousands of dollars. And in some cases, particularly with a nontaxable estate, your loved ones can completely settle your affairs with little or no assistance from an attorney, meaning little or no attorney's fees and costs.
4. Have a debt plan.Have a plan in place for paying off all of your final bills after you die, including estate taxes. The worst case scenario is to have lots of debt and assets that need to be probated which will force your loved ones to hire an attorney to sort it all out. In this situation, you may end up sticking your loved ones with the attorney's bill instead of it being paid from your estate. Begin a debt reduction plan now and buy life insurance to provide your loved ones with a source of quick cash to pay your bills.
5. Let your loved ones know where your estate plan is being stored.
If your loved ones don't know where your original will, trust, health care directives and power of attorney are being stored, then they won't have access to these important documents during a time of crisis. At the very minimum let someone you trust know where to find your original documents and who to contact in case of an emergency or after you die. Alternatively, create a document location list
and a contact list
and let someone you trust know where to find these lists. These simple and practical tips will save your family valuable time and money after you're gone.