How much should it cost me to have a lawyer prepare a will or a trust for me?
Asking how much a will or trust costs is much like asking how much a house costs. There is a wide range between a tiny cabin in rural Montana and the castles of the rich and famous in Beverly Hills or on Park Avenue.
Generally, the cost of a will or trust will depend on:
(1) The amount of legal time and skill your situation will require. For example, doing a will and trust for a billionaire with numerous categories of property and a complicated family situation, such as children from several marriages, is likely to require far more time and effort and skill than doing a "simple will" leaving a modest bank account to a spouse.
(2) How well you have thought out your wishes. When you get to the lawyer's office, you should have a general idea of what it is you would like done. This will allow your lawyer to help you through any hazy areas, suggest alternatives, and point out any problem areas. It will take more of your lawyer’s time, and cost you more money, if you wait till you get to the lawyer’s office before you start to think about who you want to inherit your property.
(3) The type and nature of your assets. For example, if all that billionaire owns is publicly traded stock held in one account at one brokerage firm, and she wants to keep on owning it, relatively little time would be needed by the lawyer to plan to deal with the assets. On the other hand, if he holds a bunch of real estate located in different states, oil and gas interests, patent rights, non-publicly traded stock, several partnership interests, owns several private businesses, has a 401(k) plan and IRAs, and was the beneficiary of several family trusts, dealing with that variety of property would usually take a lot more professional time.
(4) The total value of your assets. This is not because your lawyer figures you can afford more, but because the more assets you have, the more tax planning you'll likely need. Federal Estate Tax is paid only on large estates, so estates with fewer assets need less planning. Also, the more you have, the greater the potential liability the lawyer assumes if she or he makes a mistake.
(5) How anxious you are to reduce or minimize potential Federal Estate Tax, and depending on where you live and hold property, possible state and local estate and inheritance taxes. For example, you can leave an unlimited amount to your spouse (if your spouse is a U.S. citizen), and also can leave a total of $2 million free of Federal Estate Taxes to others. (This amount will increase to $3.5 million in 2009, then the tax will be repealed in 2010 and reappear in 2011 for estates over $1 million) (That assumes you have not made gifts during your life above a certain amount per year. This started in 2002 at $11,000 and is now $12,000 individual per year—$24,000 if your spouse joined in the gift. If you have given gifts of more than this amount per year, the gifts over the exempted amount will be deducted from your Federal Estate Tax exemption amount. So, if you left an estate of $2 million in 2008, that estate would ordinarily be exempt from Federal Estate tax. But if you gave gifts over the federal minimum in your life totaling $200,000, your Federal Estate Tax exemption would be reduced to $1,800,000, and your estate would be charged tax on $200,000.)
(6) If you have a large estate, and the types of assets you hold are appropriate, setting up a Family Limited Partnership might significantly reduce estate taxes, but would increase the cost of the project.
(7) Whether you are also looking for protection from possible future claims of creditors—which may involve the use of various U.S. and foreign partnerships and trusts for your assets.
(8) How unusual your bequests are. For example, if you intend to cut out the natural objects of your bounty (your spouse, children, grandchildren, and other relatives) and instead leave everything to a caregiver or an unpopular group, it would take a lawyer lots of extra time to establish that you were competent when you made these choices and to plan to make the will as safe from attack as possible, since it is much more likely that such a will would be challenged.
(9) How complicated and detailed your bequests are. For example, if you insist on designating a separate beneficiary for each and every item you own—the big pot to Bill, the yellow frying pan to Susan, etc.—that takes lots of extra time and is lots of work.
(10) How fast you want your will and/or trust done. If the lawyer must drop everything else to handle your will, it may cost a bit more.
(11) Your health—mental and physical. If your health is very bad, that would increase the chances that your will might be challenged. This would require some extra effort to minimize the likelihood of any challenge.
(12) Where you are based—and how good a lawyer you want. It often costs a bit more for a top lawyer in a major city than in a small locale. A highly experienced lawyer often charges more than an inexperienced lawyer. However, in most estate planning matters, the lawyer's fee is almost meaningless compared with the amount your heirs might save in estate taxes and probate costs, not to mention the hassle you can reduce for those who you'd leave behind.
(13) Whether the lawyer expects s/he'll ever get any more work from you, your family, or your estate. If this is a one-shot matter, you'll be likely to pay more.
While you should always ask what the fee will be for legal services, it makes little sense to shop for any professional service based solely on price.