The Cost of Estate Planning vs the Cost of No Plan

Many people may consider the cost of Estate Planning to be prohibitive. I’d like to dispel that notion, particularly compared to some of the possible alternatives. A reasonable analogy can be made to insurance (health, car, or home)—although we may grumble about paying for insurance, we know that not paying for insurance can be exponentially more expensive! The same is true of Estate Planning. In the following paragraphs I’ll describe the simplest complete Estate Plan commonly used; please note that if your circumstances require more complexity the pitfalls associated would multiply in complexity and ultimately cost as well.

An Estate Plan could consist of many legal documents, but the simplest version contains a Last Will and Testament (“Will”), Durable Power of Attorney (“DPOA”), and Healthcare Power of Attorney (“HCPOA”) (the last two collectively “POA’s”). Briefly, a Will is the planner’s choice for proper distribution of assets after death, including who will administer and distribute the Probate Estate. A DPOA allows an Agent to manage the financial matters of a living Principal person who is unable, unwilling, or unavailable to do so, although the Agent cannot override the actions or decisions of the Principal. Similarly, a HCPOA authorizes an Agent to interact with medical providers, communicate with health insurance agencies, and be a HIPAA Personal Representative, while also containing Advanced Directives.

This version of planning is relatively inexpensive and takes roughly 3-6 total hours of your attention when drafted and executed by an experienced attorney. In many cases but not all, it adequately protects an individual, their family, and their assets in difficult times such as death or incapacity of a family member. It also happens to be the most usual plan, benefitting the majority of people. Alternatively, what are the consequences of having no Estate Plan?

Having no Will often leads to the mismanagement, and prolonged probate, of an Estate, resulting in increased attorney fees and court costs, more property maintenance and taxes, familial disagreement, and extended time away from work to deal with these concerns. The cost of an Intestate Estate (without Will) is usually many times greater than the cost of having a Will prepared by an attorney and administering a Testate Estate.

Without a DPOA or HCPOA, a loved one commonly struggles to manage the Principal’s affairs in constant conflict with financial institutions, medical providers, and insurance carriers, always operating with a deficit of information and barriers to action. This is an incredible drain on time and resources, often costing thousands to tens of thousands of dollars even in the simplest of situations. It’s possible to petition the court for a Guardianship or Conservatorship in this case to alleviate the problems. These take several months to complete and feel like a part time job for the loved one petitioning and an annoyance at best for the Principal, including extra doctor visits, examinations, background checks, and hearings. As you can guess, the financial cost is significantly higher than the simple drafting and execution of two POA’s.

There is no question that Estate Planning is a worthwhile and affordable investment. It’s certainly a better deal than the undoubtedly more expensive and more emotionally difficult situations resulting from a lack of proper planning—even in the simplest case.

So please protect yourself, your loved ones, and your hard-earned assets with proper Estate Planning. To schedule a consultation or to ask any questions on the topic, contact the offices of Andrew Brower in NC or Scott Schmidt in SC.

Estate Planning & Admin