Another Reason To Avoid Probate: The High Costs And Expenses
We have written in the past about the difficulties of probate and why one of the goals of a good estate plan is the avoidance of having to go through probate. But there’s another drawback to probate-the costs, Probate is expensive-and those are expenses that you could be avoiding, with proper estate planning.
If you have assets that aren’t left to anyone through a non-probate vehicle, such as a trust, or a pay on death account, or any number of other ways to avoid probate, and the value of your estate exceeds $150,000, you will find yourself in probate court.
Court fees sound minor – Just over $400, as of right now—but that’s just the start of your fees. You will also have additional fees for things like publication of notice of distribution of estate assets, fees for certified copies, and potential fees for appraisers. Appraisers may be needed, because the amount that attorneys or representatives can get paid is based on a percentage of the overall value of the state.
Representative and Attorneys Fees
But those costs are just the beginning. You’ll have to pay the fees for the personal representative of your estate, and for your attorney. The maximum fees that can be charged, by law, start at 4% for the first $1000,000. There is then an increased percentage added on, as the value of the estate gets higher. For larger estates, the fee can approach 5-6% of the total estate.
That’s the statutory maximum, but a personal representative can ask the court to grant more, if the estate is particularly challenging or complex.
Additionally, this is the maximum that can be charged for both the attorney and the representative—that means, if there are both in your probate case, you can double the percentages (in other words, in a $100,000 estate, it would be 4% to the attorney and 4% to the representative-so you would be paying 8% total in fees).
No Credit for Debts
Making matters worse, the value of secured property is its value—not the equity. So, for example, a $300,000 home with a $200,00 mortgage is valued, for the purposes of figuring out the percentage paid to attorneys and representatives, at the full $300,000. That alone would require the payment of $9,000 to both the attorney and representative, for a total of $18,000 in fees, for an asset that only has $100,000 in equity.
Contests and Challenges
If all this wasn’t bad enough it doesn’t take into account the expenses of contested probates. Creditors asking for money. Challenges to what creditors are owed. Disputes between family members about the will. Disputes about whether the person who passed had the mental capacity to make a will. All of these can easily multiply the amount of expenses that come, when an estate has to be probated.
Call the Torrance will and estate attorneys at Samuel Ford Law today for help managing your estate in a way that keeps you out of probate.