When it comes to estate planning, the financial benefit is long-term. That being said, many struggle to see what the benefits actually are. The real question is, can you afford to not have an estate plan? This post will answer this question with a handful of illuminating examples.
Durable Power of Attorney
Cost of Preparation
Cost of Guardianship
Min. retainer $2,500.00
The durable power of attorney is an essential estate planning document. Through this document, you are able to select a trusted individual to act as your agent. Your agent can be a family member, friend, or professional fiduciary. If you are ever unable to attend to your affairs, your agent can step in and make decisions on your behalf. For example, if you are in the hospital or in a care facility, your agent is able to access your accounts to make payments so that you receive uninterrupted care.
However, the option of preparing a durable power of attorney is not always available. If you lack capacity to sign a durable power of attorney, a guardianship becomes necessary.
Last Will and Testament
Cost of Preparation
Testate Probate (will)
Intestate Probate (no will)
Min. of $5,000.00
A well-drafted last will and testament will include provisions that make for a smooth probate. Through a last will and testament, you are able to waive executor bond requirements. Additionally, appointing an executor through your last will and testament helps the Court confirm your executor nomination without the need for a hearing. Fewer hurdles equals lower legal fees.
In contrast, opening probate without a last will and testament presents challenges. Firstly, there is an order in which certain individuals can apply to become executor. RCW 11.28.120. Additionally, the Court may require the executor to post a bond. Furthermore, there may be need for a court hearing if the heirs of the estate do not agree over who should act as executor. More hurdles equals higher legal fees.
Many estate planning attorneys talk about how estate planning is a means to building generational wealth, and this is absolutely true. In 2022 in Washington State, individual estates valued above $2.193 million are subject to estate taxes. This means that anything above the $2.193 million mark is subject to Washington's estate tax, at a rate ranging from 10% to 20%.
Property owners either reach or surpass $2.193 million quite easily. Additionally, couples will often find themselves facing the possibility of estate taxes after the first spouse or partner dies.
For example, if Bill and Mary own $3 million in community property, they have no reason to worry about estate taxes. Each is worth $1.5 million while both are still living. However, if Bill dies and Mary inherits bills estate, Mary's estate is now worth $3 million and will be facing estate taxes. This can be avoided with estate planning.
An estate planning attorney can advise on trust and/or gift giving strategies to decrease or eliminate exposure to estate taxes and creditors. This means more of an estate will go to the beneficiaries. And this is how we build generational wealth.
*Fees included in examples are average amounts and do not represent fees of all matters. Legal fees can vary depending on the complexity of a matter.
Disclaimer: The purpose of this post is to provide general information and a general understanding of the law, not to provide specific legal advice. By accessing this blog site you understand that there is no attorney-client relationship between you and Sekhon Law, PLLC. This post should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.