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Costs for estate planning and administration

For those of you who practice in this area, how do you bill? lawyer32105/15/18
Many of the estate attorneys in my jurisdiction base their f pauperesq05/15/18
Only place I know that does that is California. I hate them jorgedeclaro05/15/18
Pennsylvania does it to. To be clear, I was referring to th pauperesq05/15/18
there are many reasons why a trust may be appropriate, not j dingbat05/15/18
Right, like your state has a crappy probate code. Or you nee jorgedeclaro05/15/18
1) bimbo trust 2) beachbum trust 3) malpractice protection dingbat05/16/18
Avoid the cost of probate means your state’s probate code, jorgedeclaro05/16/18
"the cost of administering the estate is usually less than t dingbat05/17/18
"Sure, on the sh*tlaw level, trusts have very little purpose jeffm05/17/18
indeed. Likewise, there's life insurance for proles in ca dingbat05/19/18
I ask questions designed to figure out how much work I have jeffm05/15/18
$275 for simple Wills for wife and husband. $200 for just o themapmaster05/15/18
I've heard it said many times in passing that it is common f jeffm05/15/18
Speaking of charging fees as a percentage of the estate, has jeffm05/15/18
Well, the percentage is closer to 3%, and unless the deceden chrissands05/16/18
Only estate thing I’d take on a contingency is a will cont jorgedeclaro05/16/18
I'm hiring one for a quiet title tomorrow. I expect it to be fettywap05/15/18
you need to check your state's laws. some states specify a dingbat05/15/18
lawyer321 (May 15, 2018 - 9:26 am)

For those of you who practice in this area, how do you bill? Do you charge for the initial consultation? Do you bill hourly or flat rates up to an hourly amount/size of estate?

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pauperesq (May 15, 2018 - 9:56 am)

Many of the estate attorneys in my jurisdiction base their fee on a percentage of the total value of the estate. Anywhere from 1-7% is standard.

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jorgedeclaro (May 15, 2018 - 4:47 pm)

Only place I know that does that is California. I hate them and I call them California trusts which would be absolutely unnecessary in any other circumstance.

Unless you have an estate that is going to hit the state or federal estate tax, you should only need a will. If this is not the case, it’s because your state sucks.

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pauperesq (May 15, 2018 - 4:49 pm)

Pennsylvania does it to. To be clear, I was referring to the administration, not planning.

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dingbat (May 15, 2018 - 9:43 pm)

there are many reasons why a trust may be appropriate, not just the estate tax.

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jorgedeclaro (May 15, 2018 - 10:46 pm)

Right, like your state has a crappy probate code. Or you need a bimbo trust to prevent surviving spouse from Anna Nicole Smithing your kids out of their inheritance. That's about it.

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dingbat (May 16, 2018 - 12:14 am)

1) bimbo trust
2) beachbum trust
3) malpractice protection
4) business transition
5) certain tax advantaged investment structures

And the big one: avoid cost of probate

I'm sure I could think of more, but I think I made my point

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jorgedeclaro (May 16, 2018 - 9:36 pm)

Avoid the cost of probate means your state’s probate code, especially the compensation part, sucks crap. Under a competent probate code that isn’t a special interests handout to attorneys, the cost of administering the estate is usually less than the cost of administering a trust.

I’ll buy trust in regard to a business transition, but that can generally be done with a testamentary trust as easily as intervivos.

Tax advantageous trusts are almost always for the purposes of avoiding estate tax (qtip, charitable remainder, etc). While they can have present tax advantages, none are as good as stepped up basis upon the death of the decedent. In the long run, they are estate tax avoidance mechanisms.

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dingbat (May 17, 2018 - 7:06 pm)

"the cost of administering the estate is usually less than the cost of administering a trust"

Um, no. Never - not where competent attorneys are involved. Trusts solely used to avoid probate take a lot less time and have less notice requirements, and therefore should cost a lot less, than estate administration. If it costs more, you're not doing it right.

As for taxes, trusts can be used to game the timing of the step-up in basis at death, can be used to redistribute tax attribution of income, and are used in some tax deferment strategies.

Oh, and I'd almost always create an inter vivos trust and fund it contemporaneously (or periodically) when it's easy for the grantor to do so, rather than requiring the trust to be established as part of the probate - that's just creating extra work for the attorney.

Sure, on the sh*tlaw level, trusts have very little purpose, but at the big-boy level, they're tremendously powerful. But that also requires big-boy attorneys.

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jeffm (May 17, 2018 - 7:29 pm)

"Sure, on the sh*tlaw level, trusts have very little purpose, but at the big-boy level, they're tremendously powerful. But that also requires big-boy attorneys."

So unfortunate and so true. The powers that be give special blessing to a fictional concept, and as long as you read the same fairy tale, it's all good. Fantasy Island is a big deal for the big-boys; they're so big, the stupidity makes sense in terms of real dollars. The big-boy attorneys aren't "big" like the big-boys. In that context, "big-boy" means trained to know things that protect/enable the big-boys.

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dingbat (May 19, 2018 - 11:36 am)

indeed.

Likewise, there's life insurance for proles in case they die, and life insurance for the rich in case they don't want to pay tax.

your average dumb-fkc won't have a clue what I'm on about, and those in the know are envious of those who can do it.

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jeffm (May 15, 2018 - 10:13 am)

I ask questions designed to figure out how much work I have to do. The simplest of wills is, "Everything to my wife, if she survives me, but if she predeceases me, everything to my descendants, per stirpes." It names an executor, with an alternate or 2. It contains a trust for minor beneficiaries to terminate when the beneficiary reaches the age of (whatever), naming a trustee and an alternate or 2.

I'll provide that for $350, and usually, it comes with at least a financial POA for another $175. Quite often, it includes a physician's directive for another $175. Rarely, a medical power of attorney for another $175. Typical estate planning for one person will be $700 on the low end.

From there, the price goes up according to how "custom" they want to make the will. Specific bequests, life estates/remainders, etc. For those, I just figure another hour or two, based on how the interview goes.

"Your wife can get hers done at the same time, and I'll do hers for 1/2 price." Hers will come to another $350 on the low end. $1,050+ for the pair. Sometimes when I'm feeling charitable, I'll do it for an even $1,000 and will not charge for a few simple custom provisions.

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themapmaster (May 15, 2018 - 4:09 pm)

$275 for simple Wills for wife and husband. $200 for just one spouse

But Wills are loss leaders for us. The real objective is to probate the Will later on and take a 2% cut of the gross value of the estate. Doesn't take many millionaire decedents to start making it rain at 2% or even 1%.

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jeffm (May 15, 2018 - 4:23 pm)

I've heard it said many times in passing that it is common for firms to charge a percentage as a fee to handle estate administration. I've never been comfortable with that concept, even though the executor's fee defaults to a percentage by statute. The statute also excepts some common, easy stuff from the percentage calculation - for example, to move money from the decedent's bank account to the executor's.

I just look at it as work, just like any other work. If I make a fair hourly rate, it's all good.

Sec. 352.002. STANDARD COMPENSATION. (a) An executor, administrator, or temporary administrator a court finds to have taken care of and managed an estate in compliance with the standards of this title is entitled to receive a five percent commission on all amounts that the executor or administrator actually receives or pays out in cash in the administration of the estate.

(b) The commission described by Subsection (a):

(1) may not exceed, in the aggregate, more than five percent of the gross fair market value of the estate subject to administration; and

(2) is not allowed for:

(A) receiving funds belonging to the testator or intestate that were, at the time of the testator's or intestate's death, either on hand or held for the testator or intestate in a financial institution or a brokerage firm, including cash or a cash equivalent held in a checking account, savings account, certificate of deposit, or money market account;

(B) collecting the proceeds of a life insurance policy; or

(C) paying out cash to an heir or legatee in that person's capacity as an heir or legatee.

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jeffm (May 15, 2018 - 7:02 pm)

Speaking of charging fees as a percentage of the estate, has anyone on here done this?

Say a typical client is going to get a $300,000 house and a $15,000 car, with say, $150,000 in savings and liquid investments, with another $35,000 in personal belongings, appliances, furniture, etc. That's a $500,000 estate.

To get 5% of that, your fee would be $25,000. I couldn't stare my client in the eye - especially a long-term client who has trusted me for years - and charge a fee like that.

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chrissands (May 16, 2018 - 5:51 pm)

Well, the percentage is closer to 3%, and unless the decedent has a few Monets or Rembrandts hanging around, household belongings are capped at $5,00 Moreover, in my jurisdiction, we use the auditor's website to evaluate the house, which is usually considerably less than what it will sell for. If the client is a long term client, I usually take 10% off our fee. Furthermore, if there no creditor's claims, everything can be found easily, all the beneficiaries sign the necessary waivers, and I am not receiving constant calls from a beneficiary claiming that another relative stole the ceramic mug that the decedent promised him, then I will offer a discount up to another 25% off the fee. Therefore, the fee would be more in the $7500. And I can look the client in the eye and ask for $7500 every day of the week.

Now, I usually advise my clients on how to avoid probate even if they do not use a trust. Then again my fees for basic estate planning are higher than other lawyers who simply provide the client with a one or two page will.

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jorgedeclaro (May 16, 2018 - 9:44 pm)

Only estate thing I’d take on a contingency is a will contest where the facts were good and the dollars were high. I’ve represented people in estate disputes where I agreed to float the bill because they were going to get a nice inheritance regardless, in which case I let them know finance charges are the cost of floating.

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fettywap (May 15, 2018 - 9:46 pm)

I'm hiring one for a quiet title tomorrow. I expect it to be about $2500 down, and then billed at $250 an hour.

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dingbat (May 15, 2018 - 9:46 pm)

you need to check your state's laws. some states specify a fixed percentage, other states ban fees based on size of the estate and mandate hourly.

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