It may seem odd to hear a lawyer say this, but much of my work as an estate planner is helping people avoid future entanglements with lawyers. I regularly help my estate planning clients identify places where litigation or other legal issues might arise so we can nip potential problems in the bud. My goal is for more of my clients’ money to go to their families and less to the government or to paying lawyers’ bills.
Here are three simple areas where, by properly planning up front, you can minimize legal fees in the future:
1. Avoid Probate.
When you die, your assets will usually go through a court-supervised process called “probate” before they get to your beneficiaries. In Virginia, it’s not uncommon for this to take well over a year. If there are complications, that can easily turn into multiple years of your executor paying attorneys and other professionals for assistance. On even a relatively simple estate, bypassing the probate process can easily save thousands of dollars.
Critically, and what many people don’t realize, is that this is true whether or not you have a will! Wills, in and of themselves, do NOT avoid probate. However, you can avoid the hassle and expense of probate by some of the following methods:
- Beneficiary Designations – Financial assets and business interests can be passed outside of probate by beneficiary designations. There are downsides to using beneficiary designations, but they can also greatly simplify asset transfers on death.
- Transfer On Death Deeds – Real estate can be passed outside of probate by a transfer on dead (TOD) deed. This is a relatively new tool, less than a decade old in the Commonwealth of Virginia. A TOD deed works very similarly to a beneficiary designation, transferring a piece of real estate quickly and easily on death.
- Trusts – The cornerstone of modern estate planning is the trust. A trust is very similar to a will, but crucially, it passes assets outside of probate. This saves time, money, and stress for your loved ones, and can also provide extremely powerful protection against threats such as divorce and death taxes.
There are many other ways to avoid probate, and you should consult with a professional to determine which are right for you.
2. Name a Mediator.
I have clients who come to me knowing there is friction among their children, or between their children and spouse, or even between their children and grandchildren. I also have clients who wouldn’t dream their kids would fight or that their families would break down after a death.
One way to minimize that risk of friction is by naming a third party to resolve disputes. This can be a family friend, trusted advisor, or attorney who is authorized to break ties, mediate between siblings, and otherwise do whatever is necessary.
Above all, you don’t want a family dispute moving into the court system, where the wealth you accumulated over decades can be siphoned away in months.
3. Name Your Own Agents.
Mental capacity can become an issue for many people as they age. If you become incapacitated and do not have simple documents naming people to act for you, especially by a power of attorney, the only way for your loved ones to take legal and financial action on your behalf is by going through a guardianship proceeding. This is a lengthy, expensive, and potentially extremely stressful process.
Setting up powers of attorney and medical directives is relatively fast, simple, and inexpensive, and it can save a world of trouble and expense for the people you care about.
Estate planning is very much an area where an ounce of prevention is worth a pound of cure. Take steps now to ensure your money will go to your loved ones when you die, and not to paying lawyers’ bills!
Contact Ben Tiefenback at email@example.com to plan your estate, alter your estate, or ask any questions you may have.