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Choices, Choices, Choices!
July 31, 2012
Choices in soda
Dear Julia,

Life is full of choices.  Sometimes you can't tell one thing from another, there seem to be just repeats.  There is the same thing over and over again.  Get up, go to work, come home...  But then there are patterns.  Sometimes patterns can be beautiful.  Then sometimes, when there seems to be a sameness, there are actually big differences.  And when there are differences, you may need to make a choice between one thing and another.   


This newsletter is about important choices. 

Picking Your Deal...
Aren't They All the Same?

Choices in shoes Everybody likes a deal. Whether it is finding an item on sale or getting a discount on a bill, we can all appreciate a savings.

In estate planning, a deal is not always immediately recognized. In fact, sometime the deal never becomes tangible though the benefit has been received.  This is all because when you engage a law firm you are purchasing services rather than a product.  

We all can determine the value of a pair of shoes or a car because they are tangible products. Trying to determine the value of an estate plan, on the other hand, proves infinitely more difficult. What are your receiving for the money you spend? Is it actually saving you anything?

Ceiling repeats A typical plan for a married couple which includes a Trust, pour-over wills and powers of attorney costs around $3,500-4,500. Typically there will be $1,000 worth of changes and updates during the couple's lifetimes.  There is also a cost for administering the Trust after each spouse's death which can be as little as $2,500 or more depending on the administration needs.  Though these costs can be higher or lower depending on the clients' wishes, a typical married couple, with no beneficiary disputes, spends about $10,000 from creation and amendment of the documents through the death of the surviving spouse (the second spouse to die) and the ensuing trust administration.

In the alternative, a married couple can choose to forgo any estate planning. That saves on all the expenses associated with estate planning services but does not avoid other significant expenses.

Home choicesIf the married couple owns a home and has some savings, it is not unusual to have an estate worth $1 million, excluding retirement plans.  There will be "things to do" at each death. 

At the first death, there will be little to do and de minimus legal fees.  But at the surviving spouse's death a probate must be opened.  

What is the cost of a probate on a $1 million estate? The statutory attorneys' fee for a $1 million estate is $23,000. The personal representative (e.g., executor) for the estate also is entitled to a $23,000 fee. The court costs for a probate run close to $1,000.  Thus, by the time the probate is completed $47,000 of the couple's hard earned money will be distributed to non-beneficiaries. This amount increases as the size of the couple's estate increases.

levels Not purchasing estate planning services may cost a couple $37,000 more than if the couple had purchased such services. Thus, the question a couple must answer is whether spending $10,000 ($4,500-5,500 during life) is worth a savings of $37,000?
This savings can be even greater if the surviving spouse or both spouses lose capacity and a conservatorship must be established.  Usually if both spouses are alive and one has capacity, a conservator will not be necessary.  Conservatorships are expensive to create and administer yet they are almost completely avoidable with proper planning. 

The cost to establish a conservatorship starts at $10,000 and increases exponentially depending on the surrounding circumstances.

Dome Once established, a conservatorship must be administered and reports made to the court for an annual cost of about $2,500 to $3,500. This does not include the human cost of a public proceeding in which a person is deemed incapable of caring for him or herself.  Nor does this include the cost of probate that will need to be opened upon the surviving spouse's death.  

Additionally, estate planning services can save on estate and income taxes, reduce the chance of litigation, control how and to whom a person's assets are distributed, and increase efficiency in administering a person's estate, amongst other cost saving benefits.  

The question a couple must ask themselves is what are these savings worth to them?

Let us help you with your choice.

The attorneys at the Law Offices of Julia P. Wald would appreciate the opportunity to help you with your estate planning choices.

Let us talk to you about your potential costs so you can decide among your options.

The Law Offices of Julia P. Wald
1108 Fifth Avenue
San Rafael, California 94901
This email was sent to news@waldlawyers.com by news@waldlawyers.com |  
The Law Offices of Julia Wald | 1108 Fifth Avenue | Suite 202 | San Rafael | CA | 94901

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