In California, if your assets are valued at $150,000 or more and they are not directed to beneficiaries through either a trust plan, beneficiary designation, or a surviving spouse, those assets are required to go through the probate process upon your incapacity or death. Here are the costs you can expect if faced with probating an estate.
In Nevada County, for a “straightforward” probate, the largest court fees are incurred at the beginning and end of the process. The fee to file a probate petition is $435. Additionally, there will be a $435 filing fee to file the petition for final distribution of the estate assets. There will also be miscellaneous fees such as publication of the probate notice, fees associated with the probate referee, and fees for certified copies of court documents. If the estate is more complicated or if there are disagreements between parties, additional court fees may be incurred.
Personal Representative and Attorney Fees
In addition to court fees, there are much more substantial fees — those to pay both the personal representative (i.e. executors, administrators, etc.) and the attorney handling the estate. “Small” California estates with assets worth $150,000 or less may be settled without formal probate proceedings, using relatively simple transfer procedures. However, you may have already been to a bank or other financial institution and have been told you need “Letters Testamentary” or a “Court Order” to gain access to your deceased spouse’s or other loved ones’ account information. Sadly, running into resistance with banks and other financial institutions with regards to disclosing information following the death of a loved one is a common scenario. Enter the necessity to open a probate which results in fees for both the attorney and the personal representative.
Here’s where it can get really expensive for a probated estate. California Probate Code § 10810 sets the maximum fees that attorneys and personal representatives can charge for a probate. Higher fees can be ordered by a court in special circumstances and for more complicated cases. Statutory probate fees are; 4% of the first $100,000 of the estate, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9,000,000, and one-half % of the next $15,000,000. For an estate larger than $25,000,000, the court will determine the fee for the amount that is greater than $25,000,000.
The statutory fees chart referenced below is a breakdown of California statutory compensation for attorneys and personal representatives in probate cases for various sizes of estates. It is important to know that both the attorney AND the personal representative are paid under this statute. Thus, if both the attorney and the personal representative-elect to receive a fee, the amount paid will be double that shown below.
|Value of Estate||Compensation to Attorney and Personal Representative|
Determining the Amount of the Probate Estate?
In general, the value of the estate is determined by performing an inventory (and possibly appraisal) of the estate assets. The probate estate will be comprised of assets that are not distributed by other means. Items that should avoid probate include assets held in a revocable or irrevocable trust, an IRA or life insurance policies (with properly executed beneficiary designations), or real property held either as community property with right of survivorship or as joint tenants. These assets pass by operation of law without the need for a court to step in and oversee the transfer of ownership of assets. Commonly, the probate estate will be comprised of assets such as real property, bank or brokerage accounts that were never transferred into a trust, and/or death beneficiary proceeds that did not have a properly designated beneficiary.
If an accounting of the estate has been waived, the total value of the estate for personal representative and attorney’s fees purposes is the inventory, plus gains on sales, minus losses on sales. This is important – debts are not included in determining personal representative and attorney’s fees. Thus, if a house has a fair market value of $600,000, for example, and it has a mortgage of $300,000, it is considered an asset with a value of $600,000 for the purpose of calculating personal representative and attorney’s fees. Thus, the chances increase that your spouse or your children could be forced to liquidate or borrow against, for example, the family home, to satisfy the probate fees.
To take the example of the $600,000 fair market value home, if that home was to be probated, the estate would be on the hook to pay a whopping $30,000 in statutory fees!
Avoid These Fees with Estate Planning
You can see that proper estate planning during life, including the use of a revocable “living” trust, could save your loved ones a great deal of money and stress down the line. When you think about it, it doesn’t take much to compile an estate worth a great deal more than $500,000. It takes little more than a house with a mortgage and a checking account and you’re probably there.