Probate is a process that takes place under the supervision of a court. During this process there is a proving of the will. The probate court examines the will to make sure that it is valid.
When you draw up your last will, you name an executor or personal representative. This is the person who will handle the business of the estate after you pass away. The probate court supervises the overall administration of the estate along the way.
Probate is in place to provide protections and oversight, but there are some negatives that go along with the process.
Probate Costs
Probate is not free by any stretch of the imagination. The executor is going to be putting forth a lot of time and effort during the process, so the executor is entitled to remuneration. The court will charge fees that currently exceed $900, and the executor will typically bring in a probate lawyer, so there are legal fees. In California, executor and attorney fees are set by statute. The fee for “ordinary” services on a $500,000 estate is $13,000 for the attorney and $13,000 for the executor. For a $1 million estate, that fee is $23,000 for both the attorney and executor.
During probate final debts must be paid, including taxes. As a result, a tax accountant may be engaged, and this will add to the expenses.
The executor must prepare the assets for distribution to the heirs during the probate process. This will often involve property appraisals, and the probate referee appointed by the court for appraisals will also charge for his or her services. There will also be property liquidation expenses.
When you add up all of these expenses, you can see that a substantial portion of the estate can be consumed during the probate process. This is all money that could have otherwise gone to the surviving family members.
Avoiding Probate
It is possible to avoid probate and the expenses that go along with it. There are various different asset transfer methods that facilitate probate avoidance.
Trusts can facilitate asset transfers outside of probate, and some trusts can satisfy other objectives as well.
Payable on death accounts facilitate transfers outside of probate, and property that is held in joint tenancy could change hands outside of probate. But these strategies can have significant drawbacks.
Life insurance proceeds can also be transferred free of the probate process, but great care needs to be used in selecting beneficiaries.
Free Probate Report
We have provided some very basic information about probate costs in this post. You should certainly understand all that you can about this process when you are planning your estate.
Our firm has prepared a series of special reports, and we have a report that focuses on the probate process. This report isoffered free of charge, and you can obtain access to your copy through this website.
To obtain the report, visit the Reports section of this web site.
Schedule a Consultation
If you would like to take things a step further, call our office for a consultation.
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