Estate Planning: 5 Ways to Save on Estate Fees
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Good ol’ Benjamin Franklin once said “In this world nothing can be said to be certain, except death and taxes.” And just like avoiding filing your tax return will not make your tax debt go away, neither can you evade death. Not to mention, failing to prepare can put a terrible strain on your family, and unless you are a total douche (you aren’t, are you?), you really do want to try and prevent that.
Up until a few months ago, I actually knew very little about probate (a legal process that takes place after someone dies) issues. Then my dear aunt was diagnosed with terminal cancer. My aunt, being the sweet and selfless person she is, has been utterly committed to preparing her estate so that I, her estate executor, will have as easy of a time as possible handling things once she passes. Bless her heart; she is just an amazing person.
Unfortunately, as she and I started delving into the process of preparing for her death, we have found that dealing with probate as an estate executor can be likened to “hell” and a gigantic, expensive “pain in the ass.” This really is a bummer because being asked to be an executor is a huge honor. You don’t want your loved one to feel like they can’t agree to do it because they don’t have the knowledge, time, or money.
That’s why I am here, sitting on my couch in my pjs, writing this for you. I hope that the following tips on how to save money on probate costs will take some of the stress out of preparing your estate so your loved one can indeed see being an executor as the privilege it is.
Prepare a Last Will and Testament
While it may seem like a no-brainer, it is shocking to me how many people do not have a Last Will and Testament. Very few of my friends have one, even though most of them have kids. This is a terribly risky thing as the fate of your children and your estate will become the responsibility of the state. I don’t know about you, but I am NOT ok with that.
Luckily, preparing a Last Will and Testament is super easy when you use LegalZoom. Starting at just $69, and in a matter of minutes, you will have a will that is both legal and thorough. I used LegalZoom for my aunt’s will and not only was it laid out in layman’s terms, I had it done in 15 minutes. Take a look below at the different tiers available to you for wills:
Create a Power of Attorney and a Healthcare Directive
Just as important as a Last Will, a Power of Attorney and a Healthcare Directive are essential legal documents that will help your family and friends make decisions for you at the end of your life. While a Last Will and Testament covers everything after death, the Power of Attorney and Healthcare Directive deal with finances and health related decisions beforehand. Everyone, regardless of age, should have these two documents as they protect you when you are unable to make decisions for yourself. Again, much like the Last Will, having these items prepared will allow your family, not the state, to make decisions for you.
While LegalZoom offers these two documents, as well as the Last Will, for $149, they are actually quite easy to do on your own as they generally only require “fill in the blank” answers. Plus, your state’s Attorney General’s website will likely have forms for you to fill out.
Submit a Deed Upon Death
Here in Minnesota, if an estate is valued at less that $50,000, one can generally avoid probate court. One way to make that a possibility if you own real estate is to submit a Deed Upon Death/Transfer on Death Deed/Beneficiary Deed. This means that upon your death, your real estate is automatically deeded to the person of your choice and is therefore not considered a part of your estate.
According to Nolo.com, 26 states, plus the District of Columbia, currently offer this option. In order to locate your state’s form, you can usually find it by searching the internet, or you can contact your county’s land records office, which is also where you need to submit your completed form. Keep in mind that there may be a fee to record this information. Here is Minnesota’s form, in case you also live in the Land of 10,000 Lakes.
Also, a word of reassurance: transferring your home’s deed to someone does not make them legally responsible for your mortgage or other debt. That was a huge concern of mine when first considering this option, but rest assured that this is not how the process works.
Submit a Payable On Death for Cash Accounts & Investments
Another way you can try to avoid probate court is having your cash accounts – savings, checking, CDs, 401k, etc. – transferred to a beneficiary at the time of your death. Those funds then cannot be used to determine if your estate goes to probate court. It is also a super simple way to make sure that your executor has access to funds to pay for your last expenses. You will need to contact your financial institution for the appropriate forms.
In addition, thanks to the Uniform Transfer-on-Death Securities Registration Act, most states allow you to will a beneficiary your brokerage accounts, stocks, and bonds without needing to go through probate. You should contact your broker for instructions on how to do this as it varies depending on the type of investment.
Also, be sure that the beneficiary information on your life insurance policies are up to date. If you are young and don’t have a policy, get a free term life insurance quote from PolicyGenius.
LegalShield (formerly Pre-Paid Legal) has been a lifesaver for me, even before discovering my aunt had a terminal illness. In a nutshell, for as little as $17.95 per month, you are given a variety of legal services for free or at a reduced cost. I originally purchased a membership 6 years ago when I started nannying independently as I wanted some sort of protection. Since then I have luckily needed to use them very rarely, and usually only for updated wills, but it was so nice to know they were there if I needed them. Now that I am preparing for the death of my aunt, they have come in handy many times. I highly recommend giving LegalShield a try and perhaps even purchasing a membership for your executor, especially if you are dealing with a terminal diagnosis.
I mostly use LegalShield for legal advice over the phone, but they offer so much more. Below are some of their many benefits:
- Toll-free phone consultations with your Provider Law Firm for any personal legal matter.
- A phone call or letter on an attorney’s letterhead.
- Your Provider Law Firm will review an unlimited number of documents of up to fifteen pages each.
- After-hours legal consultation for covered legal emergencies.
- In the first membership year, 57.5 hours of trial time and 2.5 hours of pre-trial time are provided for trial defense.
- Health Care Power of Attorney preparation for you with annual reviews and updates.
- Directive to Physician/Living Will preparation for you with annual reviews and updates.
- Will preparation and annual reviews and updates. Trust preparation is available under the 25% discount. (Note: I much prefer the wills provided by LegalZoom. They are much more in-depth than the ones put together by LegalShield.)
- Moving violation assistance.
- Motor vehicle related criminal charge assistance.
- Up to 2.5 hours help with driver’s license reinstatement and property damage collection assistance of $5,000 or less per claim.
- Up to fifty hours of your Provider Law Firm’s time for an IRS audit.
- 25% off additional legal services.
- Additional services are provided if you upgrade to the family plan for $19.95 per month.
I am beyond satisfied with LegalShield and I so appreciate the support I have received from my firm as I try to understand all that goes into being a will executor. It is comforting to know that I have someone who will back me up if all this diligent preparation by my aunt and myself ends up being for naught.
To be honest, the prospect of losing my aunt sucks. I don’t think there is any way I can emotionally prepare for that impending loss. But at least I know that if I lose my shit when she dies, my ducks will be in a row with regards to her estate and that she has a proper amount of burial insurance to take care of the financial side of things. That is definitely a reassurance and I need plenty of that right now.
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I lost my step-dad in 2014 and it was very overwhelming trying to take care of everything even though he had a will. I didn’t know services like LegalShield were available though.
Helpful post! I don’t think about these things much as a young adult, but I definitely need to educate myself. Thanks for the post.
Your blog post shared very important information. Not many people think about these things before it’s literally too late.
This was a really interesting read, thanks Holly. Although my automatic answer is ‘I hope we don’t have to use this for a long time’, I suppose that’s the point – you sadly never know.
Lots of good info, even though I’m Australian it was good to read through. 🙂
Wow, talking about learning a lot…I’ve got a lot of stuff I need to do. We have a will and last testament, but that other stuff – say what now? Yeah, I have work to do. Thanks for laying it all out like this for us because it’s needed!
I’m sorry to hear of your aunt’s illness, but I am glad that you both have time to get things in as much order as possible before your grief really sets in. Transferable upon death accounts are so important to saving your beneficiaries’ time and heartache.