By Jennifer Tucker
February 27, 2024 | 1 Min. Read
If you worry about leaving your loved ones with large expenses upon your death, you’re not alone. It’s smart to consider the costs of settling your estate and proactively plan to reduce or avoid expenses where possible.
Here are some common expenses to consider when you’re making an estate plan:
You may want to specify that costs associated with your funeral, burial, or cremation are paid from your estate to avoid out-of-pocket costs for your beneficiaries.
There’s a lot of work involved with managing and distributing an estate. Executors of your estate may be entitled to compensation for their services, which can be specified in your trust or will.
The administration of your estate may require help from an attorney. The cost of estate planning services varies by state and can range from $500 to more than $5,000.
Estate tax is a tax a beneficiary receives on assets they inherit. Luckily, in 2023, the federal estate tax exemption was over $12 million and as long as the amount inherited is below that number, it is not subject to federal estate taxes. However, state taxes may apply.
Probate is a public legal process where the court oversees the distribution of assets. Probates can be a time-consuming and costly process.
These expenses are typically paid from your estate before assets are distributed to your beneficiaries. Consider consulting with a financial advisor or estate planning attorney for advice on organizing your estate plan. These experts will ensure you anticipate every expense and have a plan in place to help your loved ones reduce or avoid unexpected expenses when you pass.