It is true that, for many people, the primary goal of creating an estate plan is to avoid probate if at all possible. In most cases, people assume that probate will be too expensive and take too long, so the best option is to avoid it. Here, our Orange County probate attorneys will discuss whether the cost of probate is really a reason to avoid it.
How much does probate really cost?
Although there are a number of ways to create an estate plan that will help you avoid the probate process, the real question that our Orange County probate attorneys answer for you is whether that is really what you need to do. Ultimately, the question of whether probate is good or bad is somewhat subjective. Before you can decide whether probate avoidance would be beneficial, you first need to understand exactly what is involved in the probate process and then consider your needs based on your financial and family situations.
Typical fees and expenses you can expect in probate
It is not always the case that if you avoid probate you can avoid the need to pay legal fees. Probate avoidance using living wills or jointly-owned assets, for instance, will still result in tax consequences that must be dealt with. Using other estate planning tools in your estate plan for the purpose of probate avoidance usually require the expertise of Orange County probate attorneys. An attorney must be compensated for those services as well.
Attorney fees for estate planning and probate administration
Orange County probate attorneys, like all others, charge different fees for probate and estate planning services. Some attorneys charge a flat rate, while others bill on an hourly basis, with minimum charges for certain things. Regardless of the method, the fees charged must be fair and reasonable and must be approved by the Department of Revenue. In addition to attorney’s fees, there are other fees you can expect to pay as a part of the probate process. Some of these include court fees, personal representative fees, accounting fees, appraisal fees and business valuation fees.
The amount of court fees and personal representative fees are set by the laws of each state. There may also be some miscellaneous fees depending on the nature of the particular estate, including the cost of postage for mailing notices to the Personal Representative and beneficiaries and mailing documents to the court and taxing authorities; the cost of insuring and storing personal property; shipping personal property; and the cost of moving personal property.
The cost depends on the complexity of the estate
Probate can certainly be an expensive process. This is particularly true when the value of your estate is small and the nature of your assets is not too complex. However, sometimes family dynamics can make the probate process more expensive. For example, when there are disputes over property, legal proceedings may be required to resolve those disagreements. Unfortunately, people often create legal issues for themselves, which require hiring attorneys, which in turn, increases the costs.
On the other hand, when there are no unnecessary complications, and a comprehensive and properly drafted estate plan exists, there is really no need to fear probate. In fact, probate may be more beneficial for some, as the probate court supervises the process to make sure that everything takes place as it should.
Once all of the likely fees and expenses are added up, probate could cost up to 8% of your assets. This does not include estate and income taxes, which may need to be paid during the course of probate administration. Essentially, there are advantages and disadvantages to the probate process. The most important step you can take is to discuss with an estate planning attorney how various methods of estate planning will work for you.
Probate always costs so much money
While there are certain expenses that you can except as part of the probate process, every estate will not be prohibitively expensive. Probate typically includes attorney’s fees, court filing fees, and other basic costs. The reality is, many of the methods typically used to avoid probate will cost you money, as well. The issue is whether it would be better to spend that money now or let it be taken from the estate after your death. In some cases, the expense of trying to avoid probate years from now is a greater burden that the cost of letting your heirs cover the costs out of their inheritance later.
If you have questions regarding the cost of probate, or any other probate administration issues, please contact the Schomer Law Group for a consultation, either online or by calling us at (310) 337-7696.
Latest posts by Scott Schomer, Estate Planning Attorney (see all)
- What are the Advantages and Disadvantages of a Living Trust? - January 15, 2019
- Why Avoid Probate? - January 10, 2019
- When Do I Need a Tax ID Number for a Trust? - January 9, 2019