Estate planning on a budget — options when money is tight

This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

Your parent wants to do some estate planning, but money is tight. Your parent is on a fixed income. Paying an attorney several thousand dollars for comprehensive estate planning is not realistic. Your parent asked whether there are options for getting basic documents done without spending a lot of money. The answer is yes, though you have to understand what you're getting and what you're missing.

Estate planning doesn't have to be expensive. A simple will or a basic power of attorney can be done relatively inexpensively. But it requires understanding what you can do cheaply and what requires an attorney investment. It also requires understanding the potential pitfalls of trying to do too much on the cheap.

Getting basic legal documents in place, even if they're simple and inexpensive, is better than having nothing in place at all. Understanding how to get what your parent needs done without breaking the bank helps you move forward with planning even if money is tight.

Understanding the Basics

The cost of estate planning varies widely. A complex estate plan with a trust and comprehensive documents prepared by an attorney might cost several thousand dollars. A simple will and power of attorney prepared by an attorney might cost a few hundred dollars. Using online legal services or state-provided forms might cost much less. But there's a relationship between cost and comprehensiveness. You generally get what you pay for.

That doesn't mean you have to pay a lot. Many families don't need the most comprehensive planning. Many families need straightforward documents that address basic issues. There are ways to get those done inexpensively.

One key understanding is that some documents are more important than others for your parent's specific situation. If your parent has minimal assets and is on a fixed income, a comprehensive estate plan with trusts might not be necessary. A simple will and a power of attorney might be sufficient. Understanding what your parent actually needs is the first step to budgeting appropriately.

Another key understanding is that documents created inexpensively are still better than no documents at all. A will created using an online service or a state-provided form that costs nothing is better than having no will. A power of attorney created inexpensively is better than no power of attorney. If your parent can't afford an attorney, getting inexpensive documents in place is better than waiting for affordable options or never doing it at all.

But there are pitfalls to inexpensive documents. They might not be specific enough for your parent's situation. They might not comply with your state's requirements. They might not account for tax issues or complicated family situations. They might create more problems than they solve. Understanding these pitfalls helps you know when to invest in an attorney and when inexpensive options are probably sufficient.

Budget-Friendly Options

Many states have state-provided forms for wills, healthcare directives, powers of attorney. These forms are designed to comply with state law and are available for free or minimal cost. Your state bar association might have them. Your state legislature might have them posted online. Some nonprofits create state-specific forms. These are legitimate documents that have legal effect. Using a state-provided form for basic documents is a reasonable budget option.

Online legal services like LegalZoom, Rocket Lawyer, and others create documents based on information you provide. These services are less expensive than an attorney, though still not free. They create documents based on your state's law. They're probably sufficient for straightforward situations. For someone on a tight budget, these services might be a good option.

Library legal aid clinics exist in many communities. Attorneys volunteer to provide limited legal assistance. You might be able to get a quick consultation with an attorney for free or for a small donation. This might not be enough to have an attorney prepare comprehensive documents, but it might be enough to review documents you've prepared or to answer questions about whether you're on the right track.

Legal aid organizations provide free or low-cost legal assistance to people who can't afford it. Your parent might qualify based on income. They might be able to help you understand options and possibly prepare documents.

AARP has resources about estate planning. They have guides and sometimes have low-cost legal clinics or attorney referrals for their members.

Bar associations often have fee schedule information. Your state bar association might have information about what reasonable fees are for basic documents. This helps you know whether you're being quoted a reasonable price.

Your parent might focus on the most essential documents first and add others later. If money is extremely tight, a power of attorney and a basic will might be the most essential. Doing those now, even inexpensively, and adding other documents later when money is available is reasonable.

What to Consider

If your parent's situation is straightforward—modest assets, no complicated family situation, no special concerns—inexpensive options probably work fine. A simple will and power of attorney created using state forms or an online service should be sufficient.

If your parent's situation has complications, an attorney investment is probably worth it. If your parent owns real estate in multiple states, has significant assets, has a blended family, has special concerns about certain beneficiaries, or has other complications, getting an attorney to handle it properly is worth the investment. The cost of mistakes is often much higher than the cost of doing it right the first time.

If your parent's documents will need to be used soon,your parent is in declining health, needs to access medical care, might become incapacitated,investing in an attorney to make sure documents are solid is important. If there's time and documents might not be needed for years, inexpensive options might be sufficient.

If your parent is concerned about privacy, an attorney-prepared trust might be necessary. If your parent is willing to go through probate, a simple will might be sufficient.

If your parent wants to avoid probate, an attorney might need to set up a trust or arrange beneficiary designations. This is more complex than a simple will and probably worth an attorney investment.

If cost is the barrier, ask whether your parent qualifies for any assistance programs. Some seniors qualify for legal aid. Some bar associations have limited-scope legal services where you can have an attorney review documents for a lower fee than creating them from scratch.

Taking Next Steps

Assess what your parent actually needs. Does your parent need a will? A power of attorney? A healthcare directive? A trust? What's actually essential for your parent's situation?

Look at your parent's budget. How much can your parent realistically afford to spend on legal documents?

Research your state's resources. Look for state-provided forms. Look for legal aid organizations. Look for AARP resources. See what options are available in your area.

If your parent's situation is straightforward and money is tight, consider using state forms or an online service. These are inexpensive and, for straightforward situations, legitimate.

If your parent's situation has complications or if documents will need to be used soon, consider consulting with an attorney. Many attorneys offer free initial consultations. A free consultation can help you understand whether your parent needs attorney help or whether inexpensive options would work.

Consider whether your parent can do basic documents now on a budget and add more later. A simple will and power of attorney created inexpensively now is better than waiting to do comprehensive planning that might never happen.

If your parent qualifies for legal aid or has access to bar association resources, explore those.

Consider whether any other family members can contribute financially to getting documents done properly. Sometimes adult children are willing to help pay for their parent's estate planning because it benefits the whole family.

This is one of those situations where letting perfect be the enemy of good is counterproductive. Your parent's perfect, comprehensive estate plan created by an attorney is great if you can afford it. But if you can't, a simple, inexpensive plan is much better than no plan at all. Getting basic documents in place, even if they're simple and created inexpensively, accomplishes the important goal of having something in place rather than nothing.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.