Cannot afford an inheritance plan? What to do with out spending a fortune
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Estate planning is not just for the rich, but the majority of Americans have no plan.
Plans can include a will, powers of attorney, and a living will – also known as a will. According to a 2020 survey of 2,400 people by Caring.com and YouGov, fewer than a third of Americans have one or more such documents.
Many people don’t like to face the thought of their own mortality, but they also may think prepping for it is too expensive, said Steve Parrish, co-director of the Center for Retirement Income at the American College of Financial Services.
“The perception of cost is clearly one of the things that is keeping people from doing this,” he said. “In some cases, you take certain steps and the cost is not that high.”
Here’s how you can create an estate plan without costing you a bundle.
A standard is made by a lawyer
When working with an attorney, prices can vary widely – from under $ 1,000 for a standard will and powers of attorney to $ 7,000 to $ 10,000 for complex real estate.
A standard is going to be good enough for a lot of people and not cost as much as people think, Parrish said.
You appoint the executor to oversee the distribution of the property and look after the creditors, and a guardian if you have children.
If there are certain assets that you would like to give to certain people, you can write what is called a preliminary letter. This letter sets out your wishes and is attached to the will, Parrish explained. You can make changes to it without changing your will.
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Wills can get complicated if you or your spouse were previously married or have a mixed family, or if you want a trust on the spot.
Real estate attorney Patrick Jennison of Bakersfield, Calif. Charges a $ 3,500 base fee for estate planning. A living trust is part of his documents, which he considers essential. A living trust created during your lifetime holds your wealth and determines what should happen to you after your death.
It is also about inheritance, which is the legal process that takes place after death to check the will and other matters. Estate is not required to transfer these assets after death if you have confidence.
Jennison believes missing an estate plan could cost more after death.
“It’s usually a lot more expensive and a lot more complicated in the backend,” he said.
“Probate proceedings are expensive. You have court and attorney fees that are significantly higher after death.”
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Online wills are cheaper than working with a lawyer. For example, LegalZoom charges $ 89 for a basic will, $ 99 for a full will, and $ 179 for an estate plan package. Nolos Quicken WillMaker and Trust has over 35 documents for $ 99.
If you want to use an online service, do your homework
“It’s a bit of a loaded gun,” said Jennison. “You need to be trained and understand how to use it.
“It can be used properly or improperly.”
Parrish agrees, noting that you should know what you are trying to accomplish before you do it.
“A lawyer is going to ask some of the good questions that you haven’t considered,” he said.
Protecting assets with no will
If you don’t have a will, you can still pass on some of your assets by titling them. There are several ways to do this.
Another owner of the asset such as real estate, bank accounts, and personal property is called co-ownership with the right to survive. If you die, ownership automatically passes to the surviving owner.
If you want sole control of your bank or brokerage account, you can turn it into a pay-on-death account (usually for a bank) or a transfer-on-death account (usually a brokerage account). You keep sole ownership until your death, until it is passed on to the person you have designated as the beneficiary.
If you have life insurance, an annuity and / or an individual retirement account, or 401 (k), you can designate a beneficiary to receive the funds after your death – no probate required.
Powers of attorney and wills
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Another important part of estate planning is powers of attorney and guidelines for healthcare.
You can find a standardized form for filling out a medical authorization form in most states, Parrish said. Some states have the form of a financial power of attorney, and most also have wills or advanced guidelines.
Just do an online search of the local bar association or your state’s website such as New Jersey to get the form.
The forms generally do not cost you, but you have to pay to have them notarized. Notary fees vary by state from free to $ 25.
“Some people still need or might still want to see a lawyer, but going to a lawyer is similar to any other consumer decision. That doesn’t mean you have to spend thousands,” Parrish said.
“You can search online like any other type of service.”
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