Question: What do most people do during a recession?
Answer: They cut everything, of course.
They may cut back on meals out, vacations, gifts, and other things that are considered non-essential. An example of a “non-essential” matter might be your estate plans. An estate plan seems like something that can wait; something that can be taken care of at some future time. But an estate plan must never be considered a “non-essential”.
The reason for this is simple: there are some things that can be controlled, while others cannot. Personally, I love going out to dinner. Eating out, however, is obviously not essential. While I love the freedom of dining in a restaurant, it’s obviously less expensive to cook. While I can curb my urge to go out to dinner during tough economic times, there are other matters over which I have little or no control, such as the unpleasant topics of disability, illness, and death. The fact that these events are often unexpected shows why estate planning should not be left for later, but should be tackled today.
However, estate planning is different from other products and services. If you don’t buy a new refrigerator, do without or continue using the old one. If you don’t buy a vacation, you usually stay home. But this is not the case with an estate plan. Whether you realize it or not, all the world have an estate plan right now. The state has devised a plan for those who have never written a will or trust. Through intestacy laws, each state dictates the transfer of assets after death for those who die without a will. For example, in California, when a husband dies “intestate” (ie, without a will), his property will be divided in certain proportions between his wife and surviving children. But most of my clients would prefer that their surviving spouse, often the widow, receive their complete inheritance, reasoning that his future purchasing power is much less than that of the children, and that he has a greater immediate need for the money. However, this concern No dictate the outcome in California. If the husband dies without a will, his property will be divided between his wife and his children. this would be the case even if (for example) the children are incredibly rich and the surviving wife lives in a public housing project in abject poverty.
Your estate planning takes control from the estate and gives control back to you as the estate planning consumer. Having a will returns control: Your state legislature no longer has the final say regarding your estate plan. Also, while a will is a good estate planning tool, in many cases a trust is much better. In general, real estate owners incur much lower costs when transferring property through a trust than through a will. With wills, it is often necessary to open a succession procedure. This is not usually the case with a trust.
The reason for this additional expense is simple: a probate proceeding is nothing more than a specialized lawsuit, and in a lawsuit the lawyers and the court want to get paid. While other states may differ, in California, both the attorney’s fee and the executor’s fee are based on the value of the estate as indicated by a payment schedule in the Probate Code. Those fees are paid directly from the property in the estate. For example, under section 10800 of the California Probate Code, a modest $300,000 estate going through California probate will cost $9,000 in attorney fees. If the administrator or executor collects the full legal fees, the cost will be doubled to the amount of $18,000. A slightly larger estate of $500,000 would cost $13,000 in attorney fees, with a grand total of $26,000 if the executor/administrator also collected the fees from her. Other costs, such as filing fees and fees from the appraiser (called a court “referee” in California) would be additional charges additional a attorney and executor fees.
Also, this is only a minimal statutory charge. If the lawyer is engaged in extraordinary services, he may ask the court for additional fees.
These costs should be compared to a typical trust, which can cost a few hours of time in meetings with the attorney and a few thousand dollars to prepare. Therefore, an uncertain economy is not a justification for avoiding estate planning. Rather, it is a reason to take control and ensure that your decisions are carried out at the lowest possible cost to your family and loved ones.
Disclaimer: The information in this article is not legal advice and its use does not create an attorney-client relationship. Any liability that may arise from your use of or reliance on this article or any link in this article is expressly disclaimed. This article should not be relied upon as legal advice, and is subject to change without notice, or may contain outdated or dated information, or information that is not relevant to your jurisdiction. If you need legal services, you should consult an attorney.
