Oh man, estate plans are expensive! … Yes, you read that correctly. More so, I will repeat it. Estate plans are expensive.
Are we supposed to write that?
Why not? The truth is most people think it. We think any unexpected cost is too much.
If it’s been a while since you’ve paid for a repair, been on a date, or have gone clothes shopping, there is a good chance you might flinch when presented with the bill for a new set of tires, movie tickets, clothing, or even a cup of coffee.
But at one time or another, you’ve purchased all or most of these items because of their value. Regardless of whether that value contributed to your safety, enjoyment, self esteem, success, or just warmed you up on a chilly night.
So what is the value of an estate plan?
A great deal if you are a home owner. – Especially in southern California.
In the interest of keeping things simple, let’s say you own a house free and clear worth five hundred thousand dollars. On top of that, we are going to pretend taxes do not exist, you don’t own any other monies or assets, and not to worry – you don’t need them either. Even more fantastic to believe, you have no family save one perfect adult child who is to inherit your home, and a guaranteed promise from the universe that yours will be a perfect California probate proceeding.
Every state has its own costs for probate. Some estimate as much as five percent of the estate. California on the other hand is a little more complicated.
In California, we expect to pay four percent of your estate’s first one hundred thousand dollars. – Three percent of the next one hundred thousand. – Two percent of the next eight hundred thousand – one percent of the next nine hundred thousand – and a half percent of the next fifteen million, plus some other costs.
So, what does that mean for our five hundred thousand dollar home?
It means without a Trust, you should expect to pay fifteen thousand dollars. If the house is sold during the process, the cost is closer to fifty two thousand. – Keeping in mind this is our perfect world (uncontested, non litigation, no tax) scenario.
Now, providing your estate planning needs are as simple as those depicted in the fore mentioned scenario, you could pay a fraction of the cost and still have money left over. Money which could be used for purchasing an additional plan (not that you’d need it), updating, a reasonable set of tires, movie tickets, a pair of pants, the biggest low fat chai latte the place has to offer, peace of mind, perspective, and a probate free transition of property from you to your perfect heir, providing you keep the plan updated and accessible. … So, maybe estate plans aren’t so expensive after all?
