A will is a legal document telling your loved ones how to divide your property when you become a spirit in the sky. In a will, you can dictate what each loved one will receive, including any pets, once you are no longer on earth. A will, to be valid, can only be executed when you are (a) over 18 and (b) of sound mind. Wills have technical requirements regarding witnesses. There are online services that promote cheap wills that you can electronically sign. Unfortunately, Ohio currently does not recognize electronically signed wills as valid.
A directive in a will to transfer property is not instantaneous; the will must go through probate after you have passed away to effectuate the property transfer. Probate is a court process to distribute your assets legally. Probate typically requires an attorney and takes many months. A will, alone, may not be the most cost-effective estate planning option.
While having a will is essential, avoiding probate is another critical piece of planning that online will generation services fail to address. There are different ways to handle assets that allow the property to transfer directly, upon the owner’s death, to a specific person – without the expense or time of probate. The cost to create these instruments is relatively low compared to the price to probate the same assets.
In addition to planning for your death, having health care and financial powers of attorney is equally important. These documents become seriously important if you are in a car accident, coma, or develop dementia. These documents help care for you while you are still alive, but you may not be able to make decisions for yourself. Many cheap online will-generating services fail to advise users of these documents’ importance.
Typically, a basic estate plan will run a few hundred dollars and includes:
- A will.
- Financial power of attorney.
- Health care power of attorney.
- Living will/advance directive.
- HIPAA release.
More complete plans, which include probate avoidance strategies, medicare planning, tax planning, schedules of tangible and digital assets, address interest in businesses, funeral planning, and much more, start around $1,500 and go up from there. A complete plan can save heirs from paying attorneys, probate, and reduce the taxable income on the sale of assets.
For context, filing fees alone for most probates are $100 – $300, depending on the county. On top of that, an executor of an estate, by law, receives 4% of the first $100,000 of probate assets, 3% of the next $300,000, and 2% of the assets above $400,000. This cost does not include the attorney’s fees the executor will likely need to hire to probate the estate! Hiring an attorney who concentrates on estate planning to craft a plan specifically for you is usually cheaper and more efficient.