Effective Planning – Structure Determines Cost

A number of people, who shy away from Estate Planning, cite cost as the major reason for their decisions. While it is only natural for people to want to save money, we normally would encourage people to understand the fact that what you pay for is what you get. By all standards, a good service should ordinarily command a good price.

Today, we outline the different levels of services available to you and the fee range associated with each service. We caution though that these are at best – our own estimates (an industry average as it were and does not apply to any particular Trust Company or Law Firm) and may be significantly different from what you will find out there. It is however a good point to start your negotiations.

Finally, need we remind you that no professional Estate Advisor will give you a fee quote without first understanding your transaction. The key is to ensure that you have a proper brief and your Advisor has all the information at his disposal to give you a stress free plan.

Do-It-Yourself (N0 – N30,000)
As the name implies, this service involves you doing it all yourself. This applies majorly to Will drafting and you can find them in most websites. Some organisations have the template ready on their website; all you need do is fill them out.

Pros – Least expensive and in most cases cost little or nothing. However, you may be asked to consult a professional as you may need one to complete the process for you.

Cons – Relies on one-size-fits-all solution. You can be sure however that not all issues will be covered here. So be prepared for potential legal issues as some do not explain or provide explanations to important ancillary documents (Power of Attorney, Living Will, etc.). Finally, you may get the wrong impression that once you have filled out the forms, you are done with your Estate Plan. This (filling out the forms) is only just the beginning.

Online Preparation Firms (N30,000 – N100,000)
This is done without any contact with a professional Estate Planner. All you need do is fill out a questionnaire online and the firm gets back to you with the result.

Pros – Fast and inexpensive. This may require you asking some other professional to separately review these for you for any errors and omissions.

Cons – You will be relying on a generalised structure, which may not suit your person, purpose or circumstance. Documents are generally all purpose built and may not necessarily have been prepared by a Professional.

Will-Based, No Tax Plan (N100,000 and above)
This is probably people’s first contact to Estate Planning, and may include a Will and other ancillary documents. Depending on the size of the firm and its location, you may have to pay more particularly if firm is sited in big cities and towns.

Pros – You may opt for this option if you do not have a complicated family structure as plans are more custom built and designed for personal situations and circumstances. It is also good for people who have acquired properties in their name – especially real estate properties – and are looking at avoiding the cost of transfer associated with funding a Living Trust, which could typically be in the region of 15% of the net asset value. You may also be able to negotiate what you are paying as fee for the drafting of your Will. Most times, the cost is up to market forces.

Cons – More and more people are going with some of the previous options. Additionally, most professionals believe this plan is not complete and leaves your Estate in the public domain when you are no more. The very fact that a Will is not a private document discourages a lot of people. Additionally, Estate taxes are in the region of about 10% as at 2014. This may not remain the same in the next few years.

Trust-Based Plans (N200,000 and above)
This plan is gradually gaining popularity among those just starting out although it is being effectively used by the rich. An increasing number of Estate Planning professionals prefer this option to the Will-based plan because it not only provides an effective way to reduce or eliminate Estate taxes, but it can also protect a family during adverse conditions e.g. during incapacity or illness. Whoever you engage must have the required technical ‘know how’ to prepare the necessary documents to avoid issues in the long run. Be sure to know that this kind of structure will go a long way in determining how much you will pay.

Pros – Most professionals are quite at home with this planning tool. To arrive at the best fit, a number of professionals will have to work together – lawyers, accountants, bankers and financial advisors. A well drafted Trust can provide security, privacy and protection for your loved ones.

Cons – This requires more work even on an ongoing basis. You may however have to pay more in the long run if you employ the services of inexperienced hands in creating the Trust.

Advanced Planning (N500,000 and above)
This may very well be for the rich as it involves highly complex structures, which might also include foundations that have the potential of affecting people across generations.

Pros – This may go beyond just preparing documents and structuring deals. Highly experienced professionals get directly involved in moving government policies towards the enhancement of the Estate Planning profession. The experience from these activities comes to bear when it comes to structuring transactions.

Cons – These services because of the cost involved may be too expensive for the common man.

We will advise that before you consider cost, the kind of service you opt for is important. Start by trying to assess your Estate Planning needs. As much as possible, have them written down even before you start discussing with anyone. You could begin your discussions at FBN Trustees. Call us today.