Does Estate Planning Actually Save Money?


Volume 6 • Issue 2 • February 2016

The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. In this month’s issue, we will look at how estate planning can actually save money for you and your beneficiaries. If you are interested in learning more about the ideas and processes discussed in this newsletter, please contact us for an initial consultation.

One of the underappreciated benefits of estate planning is the fact that it actually saves people money. That may seem counterintuitive when you think about the need to pay your estate planning attorney, accountant, and financial advisor, but it is actually true. While there is an up-front cost to estate planning, it should really be viewed as an investment where the long term economic benefits more than outweigh that cost. What are some of the ways you save money? Here are a few.

  1. Avoiding Probate - While certain costs in the administration of an estate will always exist, those costs are increased if courts are involved. There are filing fees and publication fees to pay, legal documents that must be prepared – all of which cost money, sometimes thousands of dollars. A trust on the other hand can be administered without the need of court involvement, thus saving those extra costs.

  1. Avoiding Guardianships and Conservatorships - As with probates, the need for a guardianship and/or conservatorship proceeding involves extra costs for filing fees and document preparation. In addition, these proceedings can go on for much longer – as long as the protected person remains incapacitated.

  1. Avoiding Disputes - Unplanned estates are often pregnant with potential disputes between family members. These disputes can drain the estate of assets and leave your family at odds for generations. Careful planning can anticipate the disputes and attempt to proactively deal with them.

  1. Estate and Income Tax Savings – A well considered plan could save you substantially when it comes to income or estate taxes. This includes capital gains taxes when the stepped-up income tax basis is not protected.

  1. Beneficiary Designations – The beneficiary designations on assets like retirement accounts or life insurance policies should be planned. A lack of a beneficiary may necessitate a probate that would otherwise be unnecessary. The wrong beneficiary designation on a retirement account may accelerate the taxes on these accounts or result in the loss of tax deferred or tax free growth.

  1. Inheritance Protection - A solid estate plan can help protect beneficiaries from unwise decisions that result in the loss of the inheritance. It can also protect assets from being lost in frivolous lawsuits.

  1. Remarriage Protection – A well drafted estate plan can take into account the possibility that the surviving spouse will re-marry. In such an instance, the new spouse may claim a share of the estate meant to ultimately pass to your children. Proper planning can avoid this outcome and thus preserve the value of the estate.

These are just a handful of ways that the investment in your estate plan can actually save money for you and your beneficiaries.   There is simply no substitute for proper planning with a qualified team of professional advisors.  While there is an investment of both time and resources, the benefits can far outweigh the costs.

This Newsletter is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.