How to Know If Estate Planning Attorney's Fees Are Reasonable
Is your lawyer charging too much?
Local and statewide business practices can influence what an estate planning attorney will charge for handling a particular matter, but her level of experience factors in as well. So how do you gauge that experience, and how do you know if you're being asked to pay too much?
It can help to understand the general rules and fee-setting process.
Your Initial Meeting
Most estate planning attorneys don't charge a fee for the initial meeting, but this is by no means a universal rule. Don't be surprised if the attorney does charge a small fee for sitting down with you for the first time. It can go either way.
An estate planning attorney is in business to earn a living, and time spent with you takes time away from billable hours that he could be spending on other clients' matters. That said, this is also his opportunity to "sell" you on retaining his services and to get an idea of what your matter involves. This is when he determines how many hours he and his staff will have to invest into resolving your issue...and if he wants to take your case on.
Many attorneys recognize the context of a first meeting and don't charge for it.
The Estate Planning Flat Fee
A set dollar amount typically covers the initial meeting—if you end up retaining the attorney's services—as well as preparation of basic documents, review of documents, and signing of documents. Some attorneys will also include assistance with funding your living trust as part of their estate planning flat fees if you decide you want one, while others charge a separate funding fee based on the value of the property they'll be helping you move into the ownership of your trust.
The only reasonable alternative would be for the attorney to charge you on an hourly basis. The downside to this approach is that it leaves a great deal of uncertainty for you as to what the final total cost will be. You can avoid this by asking your attorney to come up with a flat fee to cover all the services that she'll be providing to you. Just be prepared to move on and interview other attorneys if she declines.
Standard Hourly Rates
A flat fee is a composite of the attorney's standard hourly rate and how many hours he thinks he'll have to invest in your case to resolve it. Ask what that hourly rate is, and find out how much you'll be charged for the services of other attorneys and paralegals in the firm.
This will give you an idea of how many hours the attorney expects the firm to spend on your estate plan. If he quotes you a $5,000 flat fee and he bills his time at $200 an hour, he expects that he and his firm will spend about 20 to 25 hours on your case.
The general rule is that the higher an attorney's hourly rate, the more experience he has. All those hours might seem like a lot to you, but the attorney should have a pretty good idea of the time it will take to meet with you, answer your questions, design and draft your estate plan, review your plan with you, help you sign your plan, then help you fund your trust if you've chosen to include one.
Meet by Telephone First
It's common these days to handle a significant amount of business by telephone. Consider setting up telephone interviews with at least two estate planning attorneys before meeting in person. This will save your time and the attorney's time...if she's willing.
Don't expect a great deal of decisive information in an initial phone interview. That would be like the attorney giving her advice away for free. Your goal for this phone conversation should be determining whether you want to work with her or not.
Each attorney should be able to get a feel for what your needs are during this conversation and quote you a flat fee for your basic estate plan. Remember, you're not asking what you should do, but rather how much it's likely to cost you to do what you have in mind. This gives you the opportunity to compare the flat fees quoted by each attorney and narrow down your choice as to who you want to meet with in person.
Busier attorneys might not offer this option.
Ask for Details
Ask an attorney who's going to charge you more than another exactly why his fee is so much higher. Some attorneys are in the business of selling estate plans in bulk, while others are truly interested in giving you a high-quality estate plan and becoming your advisor for life.
Trust Your Gut
Your goal shouldn't necessarily be to find the cheapest attorney. Think about how comfortable you feel with each, because you'll have to be open and honest when discussing the most intimate details of your personal life and finances with this individual. Sometimes you have to go with your instincts. Only you'll know for sure who you'll be able to trust with this important part of your life.