You're Too Young for a Will. Right?

Wrong. Do some cheapo estate planning, now.

Photographer: Gallery Stock

Mark Rioboli's daughter turns 18 this month. Her big birthday present from Dad: A will.

“The minute you turn 18, I think it’s important to get some very basic documents in place,” said Rioboli, a financial planner with Independence Advisors LLC in Wayne, Pa. He expects it will cost $300 or $400 for a lawyer to draw up the papers.

Sixty-four percent of Americans don’t have a will, according to a Harris Poll released this year. That’s worrying, at a time when Americans are having kids later in life, and when there are more and more blended families likely to fight over Grandma’s jewels.

Wills can be expensive. Some law firms charge $3,000 or more for a full estate plan.

But not everyone needs a deluxe set of documents prepared by pricey lawyers. Online options can produce a will for a few hundred dollars, though a cheap will can be dangerous. “There are no do-overs” in estate planning, said Charles Bennett Sachs of Private Wealth Counsel, Inc., in Miami. “You don’t have that wiggle room to make mistakes.”

Here's how to get a solid will and other essential documents without bankrupting your heirs.

Even 18-year-olds need an estate plan

A will may seem a silly priority for young people with hardly any possessions, but it's not just the will. You also need a health-care advanced directive and powers of attorney in case you're incapacitated. These documents, which can vary from state to state, are arguably more important than a will. If you die without a will, state law determines how your assets are distributed. Not great. But if you’re hospitalized without powers of attorney, your family has no clear way to decide on your medical care, and no access to your bank account to help pay your bills.

Online options are getting better

Fill-in-the-blank wills and estate-planning software have been on sale for decades and have collected plenty of critics. “Legal documents are not a do-it-yourself project,” said George Reilly of Safe Harbor Financial Advisors in Occoquan, Va. Individual situations are just too complicated for one-size-fits-all products, he said, and anyway rules vary greatly from state to state. Even properly executing, witnessing, and notarizing a will can be a challenge for an amateur.

Online, companies are trying to answer those concerns by connecting clients with networks of attorneys across the country. LegalZoom this summer started selling an “estate plan bundle” that starts at $149 for a single person, $249 for couple. Clients go through an online process to fill out an estate plan but can also consult an attorney before, during, and after the process, for up to a year. “We can handle a pretty high degree of complexity as long as you consult with the attorney,” said Laura Goldberg, LegalZoom’s chief marketing officer.

Online startup Rocket Lawyer gives new users a one-week trial when they can create legal documents, including wills and powers of attorney, for free. Through an online form, they can also ask questions of Rocket Lawyer’s network of 700 lawyers for no charge. More extensive advice is available for a subscription that starts at $40 a month.

Know when you need a lawyer

When it comes to estate planning, there are three broad categories of people, said Barry Eckstein, a financial planner in Wantagh, NY. The first, people with simple finances and without minor children, can often do fine with online wills. A second group needs advice from a competent lawyer, with expertise in local law. This includes parents with younger children and people with more than $100,000 in assets. Finally, there's the group that needs heavyweight estate planning expertise, such as owners of businesses or property in several states and those with millions of dollars they’re trying to protect from estate taxes.

But don’t pay too much

The amount lawyers charge for an estate plan can vary from $750 or less for a simple situation to several thousand dollars for complicated estates. The extra cost isn’t always necessary. Specialists at small firms will generally be cheaper than lawyers at expensive downtown law firms, Rioboli said. These estate-planning experts might also spot problems that would be missed by generalist lawyers who handle other matters like personal injury claims, he said.

When shopping for a lawyer, ask what it will cost not just for a will but for an entire estate plan, including health care directives and powers of attorney. Otherwise, said Maggie Kirchhoff of Wisdom Wealth Strategies, the final cost could be much higher than you were initially told. Kirchhoff said a full package for her clients in Denver typically costs $1,500 to $2,000.

In addition to a will and health care documents, people with complex estates may need to set up a trust. Trusts can transfer assets to heirs without involving probate courts; that's particularly useful if you own property in several states. But, Eckstein warned, some lawyers are too eager to set up clients in trusts, even when it’s not necessary. “If it’s not done correctly, it can cause more problems,” he said.

The last resort

A “holographic will” is a signed, handwritten will, often drawn up without legal formalities or even witnesses, that is valid in about half of the U.S. (Its name comes from the original meaning of "holograph" -- a document written in the hand of its author -- and has nothing to do with three-dimensional images.) It's harder to prove the validity of such an informal document, and a court may easily misunderstand your scrawled-out instructions. Still, it could be better than nothing. “If you have absolutely no resources, that could be a good starting point,” Kirchhoff said.

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