You might think estate planning is just for those with palatial mansions or acres of oil wells, but if you’ve got a kid and two nickels to rub together, and you don’t take the time to write your will, someone else has already done it for you.
Judge Nikki DeShazo, who recently retired after presiding more than 20 years over Dallas County’s Probate Court No. 1, warns, “The state has [a will] in place—you just may not like what the court decides.”
Without a will, the court follows a hierarchy that goes something like this: If you have any children of adult age, they get first dibs on raising younger siblings. Next in line are the children’s grandparents, followed by aunts or uncles. Are you having flashbacks of last Thanksgiving when your brothers squabbled over the last turkey leg—except now it’s your kid and your bank account? Yes, it could get ugly—and expensive. But that’s not the worst of it; if extended family or friends don’t step up, your offspring go into the system. Read: foster care.
While it’s way more fun picking out nursery furniture, the minute you know you’ve got a bundle on the way, it’s time to start thinking about the unthinkable. But if you haven’t written a will yet (and your child has outgrown her nursery), you’re not alone. “My husband and I can’t agree on who we would want to raise the boys. And we’re afraid of hurting the feelings of those we don’t pick,” admits Wylie mom Katie.*
Don’t worry, Katie and friends, it’s never too late to take action. We’ve pulled together the latest estate-planning information, so you can focus on the here and now versus worrying about the future. Before you decide how to draft your will, consider the options carefully. One avenue may appear less costly or hassle-free, but the real costs come out of your estate once it hits probate court (where you transfer assets from the deceased to the beneficiary). “If you cheap out on the front end, you’re almost assuredly going to have problems later,” says attorney Keith Branyon with Jackson Walker L.L.P. in Dallas-Fort Worth.
THE NO-WILL-AT-ALL OPTION
What you’ll need: A total lack of conscience
Time involved: None
Cost now: Nada
Cost later: Potentially lots. An estate worth less than $50,000 incurs approximately $300 in probate court fees, plus attorney’s fees ($800 and up). Estates valued over $50,000 incur an additional minimum of $3,000 in attorney’s fees—and that’s if no one contests it. Assigning guardianship can cost even more.
THE JOHN HANCOCK WILL
What you’ll need: Paper, pen and legible handwriting
Time involved: Depends on how fast you write
Cost now: Paper, 2 cents (assuming you already own a pen)
Cost later: $200 in probate court fees, plus about $1,850 in “independent administration” fees
Also called a holographic will, this is often written as a last-gasp measure. What should you include? “There are some state-specific buzzwords we look for,” reveals DeShazo. “You want to use the word(s) independent executor or executrix to refer to the person to whom you wish to entrust your estate,” she explains. It must be a blank sheet of paper (no lines) and in your handwriting. Technically, it doesn’t have to be witnessed or notarized as long as the entire thing is in your handwriting, as well as dated and signed by you. But who wants to leave a decision about your kids up to the decision of handwriting experts?
MY HANDWRITING SUCKS, SO I’M TYPING THIS WILL
What you’ll need: A computer, two witnesses, a notary (for good measure)
Time involved: Add your WPM to the time it takes to assemble third parties
Cost now: Assuming you own a computer, just $6 for the notary
Cost later: Same as a handwritten will, unless someone contests it
If you’ve got chicken-scratch handwriting and you decide to type up your last wishes, it must be signed by at least two people. But, “Don’t just ring the doorbell of your neighbor on the right, then walk across the street to another neighbor,” advises attorney Jeff Yates of Plano. “Both witnesses must be present when [the will is] signed and neither [witness] can have any interest in the will.” It’s also wise to pony up an extra $6 to get it notarized, otherwise someone may have to track down your witnesses later.
THE DIY WILL
What you’ll need: Computer, software or Internet access
Time involved: Depends on the complexity
Cost now: Quicken Willmaker Plus 2009, $25; Legalzoom: $100 plus (depending on the plan)
Cost later: Same as the written or typed will, except these are often riddled with errors and can cost even more in legal fees
Whether from a box or downloaded online, the process is about the same. You’re probed on matters such as who takes care of your kids, who controls the purse strings—even minor details like, say, which lucky relative inherits your beloved snow-globe collection.
Says Stephanie* of North Texas, “It’s not like we’re the Rockefellers. All our friends use Legalzoom, so that’s what we used.”
But attorney Yates cautions, “Not all prepackaged wills, whether from a box or [downloaded] online, take into consideration the nuances of state-specific law. I’d much rather probate someone’s handwritten will than have to sort through the mess of a poorly written digital one.”
And, more importantly, no attorney reviews these will afterwards—none from Texas or elsewhere.
It’s vital to have an experienced probate attorney review the “DIY Will.” Attorney Brian Hall in Dallas says, “I’ve had attorney buddies who specialize in other areas [of law] think they can sift through a boxed will and make [necessary] tweaks. After messing with it for days, they’ll come to me and say, ‘Help!’”
THE LAWYER-ASSISTED WILL
What you’ll need: A good estate attorney
Time involved: About two hours for the initial meeting, a little homework on your part to decide who gets what and what goes where, about an hour for a follow-up meeting
Cost now: Single person: $450 plus; couple: $900 plus (for a simple will)
Cost later: Probate filing fee, $300; legal fees to probate, $1000 plus, depending on the complexity
When you weigh the cost of potentially mucking something up, you can see where hiring an expert pays. According to Yates, “There are enough options in estate attorneys for even the most modest budget.”
After all, when you hire someone to put together your will, you’re usually putting together a package consisting of legal documents that determine who gets your stuff, who takes care of the kids, your finances and even who pulls the plug should you be rendered incapacitated to make that decision.
How do you pin down the right attorney? DeShazo suggests asking, “How many wills have you written and how many have you seen through probate?” And to reduce costs in probate court, you’ll want to make sure your will has a “residuary clause” which states that, upon your death, all assets in your name will transfer to the name of your executor, she adds.
THE PASS-PROBATE-COURT, GO-DIRECTLY-TO-YOUR-BENEFICIARIES WILL AKA THE REVOCABLE LIVING TRUST
What you’ll need: A good estate attorney
Time involved: Same as the lawyer-assisted will, plus added time to transfer assets into your trust
Cost now: In most cases, $200 more than a simple will package
Cost later: If written and funded properly, likely nothing
When utilizing a Revocable Living Trust, your family’s major assets—such as your home, cars or land—must be funded and/or titled in the name of your trust. This allows your assets to avoid the cost of probate altogether, according to Jason Meredith, an estate-planning attorney in North Texas. And, more importantly, because your bank accounts and assets aren’t tied up in court for one to three months, your executor won’t miss payment on, say, your little one’s monthly preschool tuition.
There are other benefits to a living trust over a simple will. According to Meredith, “Wills, once probated, become public record, so they are more often contested. Trusts are private and rarely contested.”
And, while we’d rather not think about it, we’re going back to the unthinkable: Adds Meredith, “If you were hit by a truck and only rendered incapacitated, with a living trust in place, your executor can make the necessary medical decisions, have access to your bank account and oversee the care of your children. And, should you later die from the accident, your assets are all in your name so nothing has to be probated.”
Whether you decide on a simple will or living trust, find an estate attorney who not only fits your budget, but also understands the long-term goals you’ve set for your family.
Oh, and just in case … until you can see that attorney … don’t forget to draft a simple holographic will in case you get sideswiped driving over.
“We just jot something down on paper before vacation and leave it with my folks,” says Kelsey* of North Texas.
After all, in the end, something is always better than nothing at all …
All costs are estimations courtesy of the experts interviewed and may vary.
*Name changed for privacy
