When To Hire an Attorney to Create an Estate Plan
Are you thinking about hiring an attorney to implement your estate plan? You are not alone! Many of our clients here at Mainsail find themselves in this position at some point. However, the most crucial question is: who needs an estate plan?
The answer may or may not surprise you – but it's everyone! And yes, that means you.
Whether you only have a couch and a tv to your name or an estate the size of Bill Gates, it is essential to have an estate plan in place. Now with that said, the size of your estate should match the level of complexity of your estate plan. For the individual with minimal assets, a document or plan simply outlining "who gets my stuff "may suffice. For those with significant assets, complex trusts and gifting strategies are almost always necessary. Many times, it is thought that estate planning is only for those leaving behind large amounts of wealth. That really isn't the case.
However, if you have a complicated estate with substantial assets, it may dictate the need for an attorney. If you find yourself currently in a simple situation, you may be able to implement a basic estate plan without the need for an attorney. In simple cases, it may be acceptable to create a simplified will through a service such as LegalZoom or your employee group benefits options, if available.
However, as your financial situation becomes more complex and if more is at stake, hiring an attorney to help carry out estate planning strategies may be well worth any additional costs. There are three main considerations to help determine the need for an attorney.
Are you making a critical retirement planning mistake?
To learn retirement distribution strategies and develop a thoughtful income strategy, click here to claim your FREE online course!
Create an Estate Plan with an Attorney Based on Your Wealth Accumulation
The first is simply a factor of the wealth you have built when it comes to your estate plan. If you have accumulated a certain degree of wealth, an attorney is vital to be sure this wealth truly is distributed the way you wish. A clear signal to explore estate planning attorneys is if you find yourself with assets above the estate tax exemption limit.
As of 2022, the federal estate tax exclusion is set at $12.06M. However, many states have a state estate tax exemption as well. In Washington State, the state estate tax exemption in 2022 is much lower, at only $2.193M. Remember, your estate is all your assets (home, retirement, investments, life insurance, etc.), so you may quickly find yourself with assets above this state estate tax level. Although these levels may help make the answer much easier, asset levels are not the only consideration when hiring an attorney.
Hire an Attorney to Decipher Many Account Types in Your Estate Plan
Second, the type of assets you own may dictate the need for an attorney when creating or updating your estate plan. If all your assets are retirement accounts or those with beneficiaries listed, your beneficiary designations may simplify your estate planning. However, if you have non-qualified accounts, business interests, real estate, trust assets, or any other number of assets that do not include a beneficiary designation, hiring an attorney may be well worth it.
Are you prepared for taxes in retirement?
For more long term tax planning strategies, claim your FREE copy of Brandon’s book, Retire by Design!
Complexity in Your Family and Finances May Require an Attorney
The third is complexity when it comes to your estate plan. Complexity may come from any number of factors.
Complexity could refer to the family dynamic. For instance, a married couple with only one child may generally suggest a more straightforward scenario. However, a variety of situations, including blended families, beneficiaries with special needs considerations, those who have previous marriages or kids from different marriages, or other situations, may add to the level of complexity. In these cases, hiring an attorney may help ensure nothing is missed.
Complexity may also refer to your financial assets. If you have business interests, estate tax considerations, trusts in place, or multiple properties, an attorney in combination with a good financial planner can help determine the most effective estate planning strategy for your wishes.
Philanthropic goals may also dictate an additional level of complexity as you develop gifting and estate planning strategies. Determining which assets may be best to leave to charities vs. children, gifting strategies while living, and what percentage of assets can be left to a charity are all essential factors in maximizing your legacy.
It is said that there is no such thing as a perfect estate plan. That said, if you do find yourself in any one of these scenarios, a great financial planner should be able to help you strategize an effective estate plan. A planner may also help determine when you need to hire an attorney as well as coordinate with that attorney to ensure the legal aspects are buttoned up. We have spent most of this time discussing the passing of assets; however, a proper estate plan should also help determine how you will be cared for late in life and who may help make decisions if you are unable to. Starting with a proper financial plan that addresses your wishes is the best place to begin developing the strategic aspects of your estate plan and help make the most of any attorney's time. Please do let us know if we can help you with your financial and estate planning considerations or point you in the right direction for a great estate planning attorney in the greater Seattle area.