The Advantages of Having An Estate Plan
As both estate planning and probate attorneys, nothing is clearer to us than the value of having an estate plan in place. Our clients tend to fall into two groups – those who’s relative died with an estate plan in order, and those who did not. The difference between them is shocking.
The first type of client – the prepared one – has worked with his relative (the “decedent”) to get her estate plan in order and kept on top of all her finances. There was a power of attorney in place for him to help with the decedent’s finances when she was alive. After her death, all her assets had a Transfer on Death or beneficiary designation to avoid probate, or were placed in a revocable trust to similarly avoid probate. The house, her retirement accounts, her car, her financial account, her safe deposit box, etc. – all were properly titled to avoid probate. Since no assets were titled in the decedent’s name alone, and all her debts were paid, there is no need to open a probate estate. Instead, we just filed a few pieces of paper and would be done within the week. This prepared client’s bill would be extremely modest, taking only an hour or two of our time, if that.
The second type of client – the unprepared one – is overwhelmed with the obligation thrust upon him. No estate planning has happened, and consequently, a substantial probate estate must be opened. The house isn’t in a trust or have a beneficiary deed, so it must go through probate. It will sit empty – an uninsurable – until it can finally be sold with the Court’s permission months down the road. The financial accounts have no Transfer on Death designation, and no one can access the accounts to pay bills or make deposits now that the decedent has passed. There could be a life insurance policy, but the client can’t find any paperwork on it in order to claim it. There are bills – so many bills! – coming in from the hospital, credit cards, cable, etc. and the client cannot handle them until appointed as the Personal Representative. With all the assets in the decedent’s name alone, everything must go through probate.
Probate is a nightmare for this client. The probate fees for the attorney and Personal Representative will each be equivalent to the value of a car. Depending upon the value of the decedent’s assets, that could be the price of two used Fords, or it could be the cost of two new BMWs. But don’t think that this fee is outrageous and unearned – the amount of time and effort it takes to comply with all the formalities and red tape of probate make Missouri’s statutorily mandated probate fees look quite modest in comparison. Think of it like having a reoccurring appointment at the DMV for 12-18 months. Everyone will have earned their fee twice over by the time the client and attorney make it through the probate wringer.
It is no surprise that the unprepared client tends to come back around to us as a prepared client. We inevitably have them reappear at our door, asking us to prepare their own estate plan or an estate plan for another relative. After having gone through it once, the unprepared client never wants to go through the probate process again, or leave that legacy for their children.
It is easy math. The cost of making an estate plan is a fraction of what it costs to go through probate. The hassle and time it takes to set up an estate plan is nothing in comparison to the hassle and time it takes if there is no estate plan. It really pays to be prepared.