Do I need a will? – What does it cost and can I do it myself?
Nobody likes discussing this topic. The need for a will is not something fun to think about. One day, however, we all pass away and everything that we accumulate in life has to go somewhere (often, there’s a nagging feeling in the back of your mind that a making will is something you need to do, but there’s a little more to it than that). Whether you are Bill Gates or an everyday person, you need to find a way for all of your assets to pass to who you want with the least amount of effort and cost. Doing that is called making an estate plan and it often involves a will, plus a lot more. For most folks, it isn’t very expensive for an attorney to review your assets and goals and to help you make a plan. What can be very expensive is for an attorney to fix a problem that arises after you pass away if you didn’t have a will.
In this article, I will discuss different strategies and pricing typical in New Braunfels, Texas. It’s important to know that in this area of the law, all cases are individual and I cannot promise that any particular strategy will work in your situation, nor can I promise that something is going to cost a certain amount. The figures listed below are “ballpark” but I think it’s important to know them so that you can compare the different options and see why good estate planning is so important.
I don’t have much, why do I need an estate plan?
Everyone has assets. They can be items as complex as retirement accounts, trusts, and real property or as simple as the clothes on your back. The laws of Texas, alone, regulate how those assets pass upon our death. When building your estate plan, a good attorney will classify your assets into different categories, based on how the law says those assets can pass, and make a plan for them category by category. For example, the primary focus will be on titled assets such as your home and car. Titled assets have to be properly transferred from one person to another or the asset becomes unmarketable/unsalable. For example, your beneficiaries can’t sell a house that they don’t actually have title to, even if they have proper right to it and pay the taxes. This applies to a car or trailer (but DPS has an easy and free fix for that if you know to do it in advance).
Other assets such as a 401k, IRA, bank accounts, etc. fall into a similar, but different, category called non-probate assets. Those should automatically pass to the designated beneficiary or survivor on the account. If there is no beneficiary, they pass back to your estate and essentially fall into another category - personal property.
Personal property is often the leftover assets in the estate and probably consists of what you are thinking. It includes clothes, jewelry, television, art, animals, etc. Personal property often passes alongside the other assets but it can be more complicated if there is a dispute.
Example: “How does a home transfer?”
So how does a lawyer transfer those assets? A will of course! Well, maybe not. A will can accomplish the goal, but there may be a better and cheaper way to do it. A perfect illustration of this is demonstrated when considering most people’s largest and most important asset - their home. Often, the only reason a family needs to hire an attorney after a loved one’s death is to clear up the title to a home. There are at least four ways for title to pass in a home. Let’s look at all four and their overall cost to make that item pass.
1. Intestacy: The law provides that if someone dies, without a will or other estate planning, the home’s title may pass through the laws of intestacy. I won’t go into the details (there’s a lot), but there are rules that will allow the home to pass to whom the legislature thinks it should. Likely your spouse then kids, then parents and siblings, then grandparents, so on and so on. Often, the rules of intestacy do not align with what the deceased person wishes, especially when there are children from multiple marriages. To rectify, a lawyer must get involved and either draft and file a document called an affidavit of heirship (which has limited power), or petition the court to determine who the appropriate heirs are through administration of the estate. Your family will have no say in who gets what, the law is applied and there is no other option. It can easily cost thousands of dollars in legal fees but there are just too many variables to give an exact range. It can be far, far more expensive if there are siblings or other heirs in disagreement. It may even become impossible or impracticable if a potential heir does not want to cooperate at all.
2. Probate of a will: The traditional planning method is through the probate of an individual’s will. In order to do this an attorney must go to the court and ask the court to allow probate of the will. As long as the will was executed correctly (which can be difficult to do under the laws as they stand) and there are no other outstanding issues, the court will follow the instructions in the will. Depending on what the will said and what assets exist, the cost to probate can be as low as $2000.00 but the price can rise exponentially depending on various factors. It’s best to employ an attorney to draft and execute new wills to avoid problems in probate that may increase the price. A classic “law school example” of how non-attorney prepared wills can cause problems in probate is when a generalized will template/form from an office supply store or online website is used in Texas. These often omit language needed in Texas. For example, in many other states, if a will does not specify (not a good idea) that the deceased persons assets should be distributed independently from the court’s supervision, there is no court oversight necessary. In Texas however, the law is the opposite – if the will doesn’t specify independent administration (still not a good idea), the court has to be involved in every decision the executor makes. This can increase the cost of a probate by thousands of dollars - just due to one sentence being left out. So, for a grand total, when using a will as your primary estate planning device, you and your estate will incur the cost of the will itself approximately $500.00 + the cost of probate at $2000.00 minimum. Overall $2500.00 minimum.
3. Transfer on death / “Ladybird” Deed: Probably the easiest way for your home to be transferred to whom you wish is by recording a deed, in the deed records of your county, that you wish your home to be transferred upon your passing. That, along with a simple recording of another document by your family after death is all that you have to do. This, or a variant of it, is almost always recommended by our firm for spouses, especially, to consider. It protects what is likely your most significant asset from having to go through the courts to clear up title. Cost for an attorney to draft the deed and record it is approximately $500.00 - $1000.00.
4. The title is placed in a Trust: There are situations where trusts are a useful estate planning tool, but more often than not, they are unnecessary. One of the biggest problems is that in order for a trust to be in existence, there must be a trustee. This person is vested with a huge legal and financial responsibility and is considered a “fiduciary” (google “duties of a fiduciary” if you want to scare yourself). It is very difficult for a person to comply with all of the duties vested upon them when they are made a “fiduciary.” It’s not typically an issue until someone is not happy with the trust (including the beneficiary of the trust) and sues the trustee. Even well-intentioned and honest persons can incur huge legal fees fighting a lawsuit simply because they were kind enough to act as a trustee. For large estates, banking institutions make great trustees that are able to follow all the rules easily, but for a price. For small estates, however, only in unique situations should there be a trust. A good example of an appropriate creation of a trust is when a underage child inherits an estate because their parents have passed away. A well-crafted estate plan will plan for this contingency but only create a trust if necessary. The cost to pass your home through a trust is too difficult to calculate because there are so many factors involved, but the whole process can easily add up to far more than the above three alternatives. Trusts are a good and necessary tool for attorneys in many situations outside the scope the article, but in most cases, other methods are easier and cheaper for the client.
“What about the other assets?”
A similar strategy to the above is applied to other assets when a lawyer makes an overall estate plan. The important thing to understand, however, is that for most people there are other ways than a will to transfer your estate to whomever you wish. A will is often used by attorneys as a backup to some other means of transfer and the overall plan. A good attorney will help you effectuate your needs in the most affordable way possible. Because of that, even hiring an attorney to draft and execute a will with an overall estate plan, is likely going to cost far less in the long run than if you try to do just a will yourself or ignore it altogether.
“What should I do?”
Estate planning is complex and your circumstances are unique to you. When you are ready, talk to an attorney and explain your situation. At our law firm, we offer free consultations and will look at your exact situation and give you a quote for our services before you hire us. Most estate plans for couples can be created for under $2000.00, unless you have a unique situation, and less than that as a single person. A good estate planning goal is to attempt to avoid probate and save the estate money. There’s no guarantee that there will never be a need for probate if circumstances change, but an estate plan should attempt to work around it. If you see attorneys that advertise a much lower rate for a “plain jane” will, remember the old adage that “you get what you pay for.”
If you have an interest in the commentary above, please reach out to our firm so that we can provide legal advice for your unique situation. Nothing in the commentary above, alone, constitutes legal advice as it is purely hypothetical and educational, and it is not intended to, nor does it create, an attorney-client relationship with Traeger & Ricks, PLLC.