It is entirely reasonable and prudent to ask what a legal project will cost prior to authorizing work to begin. When it comes to estate planning, the more difficult issue is identifying what work you want performed. The following considerations should be taken into account.
Value of Legal Services ≠ Number of Pages. Clients occasionally look to the depth of the stack of papers to determine the value of the work performed. In reality, the number of pages has little to do with value conferred.
Is a Will All You Need? Most clients need more than just a will. Almost all of them also need fine-tuned beneficiary designations, advance directives for health care and durable powers of attorney.
Analysis in Designing Optimum Plan. Analysis is to an attorney what diagnosis is to a doctor. If you don’t meet with your attorney (in person or in a comprehensive phone call) to discuss and analyze your circumstances, you will probably end up with documents that don’t fit properly or are incomplete. Rather than paper, you are buying his knowledge and experience. For example, your attorney should have knowledge of the following:
● the best choice for executor
● planning to eliminate or minimize estate taxes
● planning to minimize income tax
● optimum disposition of closely-held businesses
● whether a will can be challenged
● a beneficiary designation trumps a will
● a marriage or a divorce revokes a will
● optimum trusts (or custodial accounts) for minor children
You won’t have the benefit of this experience and advice using do-it-yourself forms. Even for a very “simple” plan, the meetings and analysis should take a minimum of one hour.
Cost of Preparing Will. After performing the analysis described above, the drafting may or may not be relatively easy. Provided the will is similar to a standard template, an experienced attorney should be able to draft the will in perhaps an hour. Keep in mind, however, that most wills are not entirely “standard,” since every family has slightly different circumstances. Additional time is needed if you desire provisions that are custom drafted especially for you. (Although the materials are cheaper, custom drafting is really no different than building cabinets to fit the particular dimensions of your kitchen or bathroom.)
Cost of Preparing Advance Directives and Powers of Attorney. Absent custom provisions, this is largely a word processing exercise warranting only a few minutes of attorney time.
Beneficiary Designations. For many clients, IRAs and 401(k)s are their most valuable assets. A little known fact is that the beneficiary designations for these assets “trump” the will. It not unusual for clients to designate a primary beneficiary (usually the spouse) but no secondary beneficiary (usually the children). This may cause the decedent’s “estate” to be the beneficiary, which unnecessarily accelerates the deferred income tax on these assets. If you have minor children, you should designate trusts for them as the beneficiary, to avoid the expensive complexity arising when benefits are payable to a minor. Beneficiary designations can be time-consuming because they must be individually downloaded from the IRA or 401(k) custodian and filled out. This can easily take one or two hours. But your plan has a glaring “gap” if you don’t complete this step.
Cover Letter Explaining Plan. Your attorney should provide you a letter that explains and describes your plan and how the various documents accomplish your objectives. This can be saved for reference when you review the documents every few years. Even using stock templates as a starting point, the letter to the client takes time, but is valuable.
Summary. If you just want your attorney to draft a will, with no meetings, analysis or supplementary documents, the cost should only be an hour or two of attorney time. But is that really what you want?