Every morning when I awaken, I wonder whether the politicians changed all the rules again.…
The Cost of Estate Planning Procrastination
As a comprehensive financial advisor, I have reviewed over 70 wills written by some of the best attorneys around the country. Yet, inevitably, there are mistakes in the overall estate plan. In no way are the attorneys at fault; rather, the culprits are typically time and money.
For example, family estate documents prepared by an estate attorney can cost between $1000 and $3000, a fee that gives many pause, and literally slows their estate planning process. Hourly attorney rates range from $250 to $500/hour. Add to that the time an attorney needs to oversee every nuance of the estate plan, to include ensuring your beneficiary designations, titling and income tax planning are correct, and the cost can skyrocket to between $5,000 and $8,000. The fairly wealthy ($10,000,000 plus) may not flinch in paying those fees; for many, though, that cost could lead to estate planning procrastination.
Yet, no one can afford to be without a well-crafted will and estate plan addressing the most critical estate planning elements, Titling and Beneficiaries, to avoid scenarios like these:
- A lawyer writes a revocable trust, but the client does not re-title the assets in the name of the revocable trust. To correct the error, your bank and brokerage accounts need to no longer read: John Smith, but instead should read: The Revocable Trust of John Smith.
- A lawyer writes a will that says upon my death I want assets to go into trust for my spouse or children, but the beneficiary designations and the titling bypass the will and everything goes directly to the heirs.
- A lawyer writes a will that says you leave everything in trust for your wife or children and explains further the need for the beneficiaries of your retirement plans to be the Trust. But, without understanding the income tax implications, that decision could cause substantially faster income tax consequences on retirement assets.
- A lawyer writes a will that says I leave everything to my spouse, and if they are not alive I leave everything to my minor children.
However, without using a custodian or trustee, the funds will be adjudicated and overseen by the courts until the child is 18 years of age when the courts will give the child the monies. To leave assets to minors assign a custodian or trustee. The document would read like this for a custodian: My brother, Ryan Smith, is custodian for my minor child, Drew Smith, under the Pennsylvania Uniform Transfer to Minors Accounts (UTMA). This protects the money for the child to age 21. For a trust seek legal advice for beneficiary wording.
A lawyer writes a will that says upon the first spouse to die please make this specific bequest of cash, but because all of the assets passed by way of title and beneficiary your future bequest is forgotten.
Examples of costly will and estate planning errors abound. In truth, the highest fee is procrastination.
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