Can Someone Else Pay for My Estate Plan?
Estate planning is not just for the wealthy—every adult should have an estate plan. Despite this, most Americans do not have one. One of the most common reasons cited is the perceived cost of creating an estate plan, leading many to wonder, “How Can I Afford My Estate Plan?” However, the cost of not having an estate plan can be far higher than the cost of drafting essential documents like a will, power of attorney, or healthcare directive, especially if you become incapacitated or pass away without one. While many Americans face financial challenges that make it hard to prioritize estate planning, having someone else cover the cost of your estate plan can be a helpful solution. In most cases, it is perfectly acceptable for a third party to pay. However, even though this can be a generous gift, attorneys must follow ethical and professional standards that prioritize the interests of the client—the person creating the estate plan—regardless of who pays.
The Cost-of-Living Crisis and Its Impact on Estate Planning
As of 2024, only 32% of Americans have a will, according to a survey by Caring.com.1 This is surprising, given that about two-thirds of Americans believe having a will is “very important” or “somewhat important.”2 To avoid potential legal conflicts and protect your assets, it’s crucial to review and update these designations promptly to ensure your steps to protect your estate after divorce are effective, and to consider how you can afford your estate plan.
While the percentage of Americans who recognize the importance of a will has remained steady, the number of people with estate plans has declined. So, what causes this gap? The main reasons people avoid creating an estate plan are procrastination and the belief that they do not have enough money or property to warrant one.3 Another significant barrier, cited by 16% of respondents, is the belief that estate planning is “too expensive.” It’s worth considering, “How can I manage the costs of my estate plan?”
With about one-third of U.S. workers living paycheck to paycheck and nearly half of young adults (ages 18 to 34) receiving financial help from their parents, financial constraints are a significant issue.4 Additionally, 37% of Americans say they couldn’t afford an unexpected expense over $400, and 21% have no savings at all.5
Setting Clear Expectations
Experts in retirement income and financial planning note that the perceived cost of estate planning often outweighs the actual cost. The co-director of the Center for Retirement Income at The American College of Financial Services has pointed out that the perception of cost is “clearly one of the things” that keeps people from preparing a plan.6
Regardless of whether concerns about cost are real or imagined, they remain a significant barrier to getting an estate plan in place. It is important to remember that having an estate plan—however modest—is better than having none at all and considering “How can I afford it?” may offer solutions.
Estate planning is often described as a gift to oneself and one’s family. It brings peace of mind by ensuring that one’s legacy is handled according to their wishes. However, when someone else covers the cost of an estate plan, it is crucial to establish clear expectations from the start. Both the client (the person creating the plan) and the payor (the person paying for the plan) need to understand the process. Discussing early on how you can afford your estate plan helps set these expectations.
What to Expect from the Attorney
Attorneys must follow strict professional codes of conduct. Our duty is to act in the best interest of our client—the person creating the estate plan—not the person who is paying for it. Our professional responsibilities include providing competent legal advice, maintaining confidentiality, and avoiding conflicts of interest.
If someone pays for another person’s estate plan, our obligations remain solely with the plan creator. The person paying does not become our client, even if they cover the costs. If an attorney prioritizes the payor’s interests over those of the client—especially if the payor is also a beneficiary—it could lead to a conflict of interest. It’s vital to ensure the costs are understood upfront, so you know how much you can afford to spend on your estate plan.
What to Expect from the Planning Process
While the person paying for the estate plan can come to our office to handle the payment, they do not need to be present during any part of the estate planning process. However, their involvement may depend on the client’s wishes or comfort level. Asking, “How can I afford my estate plan?” can lead to discussions about payment options and third-party involvement.
If you, as the client, decide to allow the payor to attend our meetings, you must sign a waiver of attorney-client privilege. The payor must also sign a document acknowledging that they are not our client.
Once these formalities are addressed, we can begin the planning process. The specifics of this process will depend on your unique circumstances and the estate planning tools that best achieve your goals. This planning includes considering the question: “How can I afford my estate plan?”
If you choose to create a will, you will need to decide who will inherit your assets and who will serve as the executor to manage your estate, distribute inheritances, and settle any debts. We also advise every client to have a plan for incapacity, which designates who will make medical and financial decisions on your behalf if you are unable to do so.
Clarifying Your Wishes
If someone offers to pay for your estate plan, it can be wise to accept this generous offer. However, it is essential to understand that our representation is strictly for the person creating the estate plan—not the person paying for it. We are obligated to act in the client’s best interests and cannot allow the payor’s preferences to influence the legal advice or decisions made.
As long as this is clear to everyone involved, we can move forward with the estate planning process. Some additional documentation may be required if the payor is present during meetings.
No matter who pays for the estate plan, our priority is to ensure that your wishes are clearly documented and respected. Since updating an existing estate plan is typically more affordable than creating one from scratch, you might find it easier to afford any future changes yourself. Contact us today to get started on creating or updating your estate plan.
- 2024 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey/ (last visited Aug. 26, 2024). ↩︎
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- Sarah Foster, Penny-pinching nation: More than a third of workers say they’re living paycheck to paycheck, Bankrate (Jul. 15, 2024), https://www.bankrate.com/banking/living-paycheck-to-paycheck-survey/. ↩︎
- 37% of Americans can’t afford an emergency expense over $400, according to Empower research, Empower, https://www.empower.com/press-center/37-americans-cant-afford-emergency-expense-over-400-according-empower-research#:~:text=Greenwood%20Village%2C%20COLO%20%E2%80%93%20July%202,according%20to%20new%20Empower%20research (last visited Aug. 26, 2024). ↩︎
- Rachel Minkin et al., 2. Financial help and independence in young adulthood, Pew Rsch. Ctr. (Jan. 25, 2024), https://www.pewresearch.org/social-trends/2024/01/25/financial-help-and-independence-in-young-adulthood/. ↩︎
