WHAT DOES PROBATE COST?

Billions of dollars are spent each year for probate.  Probate fees include court costs, personal representative costs, executor fees, attorney fees, bond fees and appraisal fees.

There is a wide variance in what it costs to open and file a probate case.  Examples of such fees and costs include the following:

• The fees your attorney and estate representative charge.  Some states set “reasonable fees” as the statutory attorney fee and the executor fee, usually based on a percentage of the gross value of the estate.  You can find out the statutory fees allowed for attorneys and executors in the probate reference tables.
• The types of services the attorney performs.  Besides statutory fees allowed for completing and filing probate forms with the courts, attorneys have the right to seek payment for “extraordinary services performed” whereby they deliver value to the estate due to unusually difficult or complicated circumstances posed by the probate.  For instance, attorneys can charge an extraordinary fee if they are asked to review real estate sales documents.  This task is not part of the normal statutory fee.
• The type of real estate the deceased owns.  If the deceased owns real estate in another state or another county, it may be necessary to open a second probate case in that state and county and pay additional attorney fees and probate filing fees.
• The cost of a professional testamentary trustee (a trustee of a trust created by a will).  If through your will you create a Testamentary Trust, the trustee also has the right to charge the statutory or reasonable fees allowed by the state and/or contemplated by the testamentary trust provisions.
• The fees the courts charge to open a probate case.  Some states base court fees on a percentage of the gross value of your probate assets.
• The cost of buying a Surety Bond for your executor, guardian or conservator, which is paid from your probate assets.
• The type of probate process required.   A simple probate case will cost less time and money than a normal probate filing.   The forms and procedures available to a surviving spouse can cost less time and money than a normal probate process.

FACT: Estimated Probate Costs

Available research shows probate costs can consume between one to eight percent of the value of your probate estate when you die.

WHAT TYPE OF PROBATE FORMS NEED TO BE COMPLETED?

The type of probate forms and probate procedure required is determined by state probate code.   The state code generally offers a simplified type of paperwork for small estates and surviving spouses.

• How do you calculate the probate value of the estate?
• How do you know if the estate is eligible for simplified probate procedures?
• What happens in a simplified summary administration probate process?
• What happens in a simplified affidavit procedure?
• What happens in a normal probate process?
• Are surviving spouses subject to probate?
• What happens if real property is owned in more then one location?

Q.    How do you calculate the value of the probate estate?

A.   The probate property page explains how family member or personal representatives can calculate the value of the decedent’s probate estate.

Pay careful attention to how state statues determine the value of probate property.   Some states define the dollar limit as your gross estate (the market value of everything you own with no deduction for debts).  Other states define the value as the net value, the fair market value of the asset less any secured debt).  Some calculate the value of the net probate estate (net value only of property left by will).

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Q. How do you know if the estate qualifies for a small estate procedure?

A. The probate state reference tables summarize the small estate procedures for each state and describe whether a state support a summary administration procedures or an affidavit procedure.

The tables summarize the type of property and the dollar limits for each state.  State probate codes are also listed so you can go on line and find out more about state probate rules.   .

You can also contact the probate court and see if they can provide information or resources relating to the administration of small estates.

A probate attorney will understand the nuances in the rules and help you decide if the estate qualifies for simplified small estate procedures

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Q. What is summary administration?

A. A summary administration is an abbreviated proceeding before a probate judge either with a will or intestacy when the value of the entire estate subject to administration in the state meets the small estate state limits.   These limits are usually based on the dollar value of the estate, and in some instances, the dollar value of real property versus personal property.

A judge can have an initial hearing and immediately authorize distribution of the assets to the beneficiaries.

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Q. What is a small estate affidavit procedure?

A.   Some states probate code allow a small estate to be administered by the use affidavits.    The affidavit gives the person named on the affidavit the legal authority to manage the assets, including requests to transfer title from the name of the decedent to a new beneficiary.

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Q. What is an affidavit?

A. The estate representative or the beneficiary fills out a claim form referred to as an affidavit, stating the owner has died and that he is the new owner of the asset.  The new beneficiary sends the affidavit and a copy of the death certificate to the person or entity holding the probate asset (i.e., a brokerage firm or a bank), and requests the probate asset be transferred into the name of the new beneficiary.

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Q. What happens in a normal probate procedure?

A.    A normal probate process is a court-supervised process.  The courts monitor the steps the personal representative takes, adding significant time and costs to the probate process.  Furthermore, unless you waive bond in your will, your estate representative may be required to post a bond guaranteeing his or her performance and protecting creditors.  The entire probate process is supervised by the probate court.   You, or a probate attorney, files documents so the following can happen:

• A judge determines whether or not the decedent’s will is valid
• The executor named in the will or the personal representative appointed by the court creates an inventory of the decedent’s probate assets and takes control of the assets; pays the decedents legal debts; files income and estate tax returns; and distributes the remaining probate assets to the individuals or entities entitled to the assets in accordance with the will or laws of intestacy
• The court approves the transfer of the decedent’s assets to the individuals and entities designated in the will or laws of intestacy.   Letters of Administration are issued by the probate judge to a personal representative, showing that the personal representative has the authority to act on behalf of the estate.

A relatively uncomplicated probate case can take over a year from filing to closing.  During that time, the beneficiaries have neither possession nor control of the property left to them although, in certain circumstances, the beneficiaries may petition the court for a living allowance and/or special funds for things like tuition payments.

Probate takes time because the process is a sequential process, with some time period required before the next step can take place.  For instance, a probate case requires sending out a notice to creditors.  The court gives the creditors four months to respond.  If your estate must file a federal estate tax return, the case will not be closed until the IRS approves the estate tax returns.  If the value of your probate assets requires a complex probate procedure, probate could last six to twelve months.

This is one reason someone who opens a probate case immediately gets a direct mail piece offering to loan money while waiting for his or her inheritance.

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QAre surviving spouses subject to probate?
A. Yes.  However, many states allow a surviving spouse to complete and file a special type of probate form and follow an expedited process.

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Q. What if real property is owned in a different state?

A. If real estate is owned in more than one state, the estate representative must calculate the probate value of the real estate in each state.  An ancillary probate procedure is required in the state where the real estate is located.  State laws will determine if the ancillary process can be accomplished with affidavits.

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WHAT TYPE OF PROBATE PROCEDURE IS REQUIRED IF SOMEONE DIES WITHOUT A WILL?

There are two types of probate estates:  (1) intestate; and (2) testate.

The probate procedure followed if the decedent  did not leave a valid Will is referred to as an intestate estate..

A probate procedure followed if the decedent did leave a valid Will is referred to as a testate estate.

• What is the difference between a testate estate and an intestate estate?
• Are the duties of a personal representative any different than those of an executor?

Q. What is the difference between a testate estate and an intestate estate?

A. For a testate estate, the Will controls who receives the decedent’s assets and the Will nominates an executor who manages the probate process.

In an intestate estate, state intestate succession laws dictates who is entitled to the estate.  State laws also determine who the court appoints as the personal representative to manage the probate process.

One other difference between a testate estate and an intestate estate is the rules regarding surety bonds.  The person who prepares a Last Will and Testament can include instructions waving  the executor’s requirement to purchase a surety bond.  This requirement of the personal representative to purchase a surety bond cannot be waived in some state when there is no valid Last Will and Testament, making the probate process most costly for intestate estates.

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Q. Are the duties of the personal representative any different than those of the executor?

A. The personal representative appointed by the court has the same responsibilities as an executor named in a will.

The personal representative  must inventory the decedent’s estate and determine if the estate has probate assets.   If the estate has probate assets, the personal representative must determine whether to follow the state rules for small estate or a court supervised formal probate procedure.

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If you have a special needs child, it’s important for you to understand the difference in outcome between leaving them assets in a will or a trust.

A Last Will and Testament

• If you give assets to a special needs child via a will, the assets are now considered property owned by the child.
• The value of the assets may eliminate the opportunity for a child with special needs to obtain assistance from available local, state or federal assistance programs.

A Living Trust or a Testamentary Trust

• If your trust has instructions to manage assets on behalf of a special needs child, these assets are not considered to be owned by the special needs child.
• The value of these assets is not considered when applying for local, state or federal assistance

WHEN IS THE PROBATE COURT INVOLVED IN OUR AFFAIRS?

The probate court has a responsibility to manage our affairs when we can’t.

This can happen in three different situations:

1. You die and own assets titled in your own name, or the estate is the beneficiary.  Since you can no longer manages these assets, someone must be given the legal authority to manage these assets on your behalf.  The probate court has the responsibility to appoint an estate representative and monitor the activities of the estate representative.
2. You become incapacitated.  The law will consider you unable to manage your financial affairs or make your own health care choices.   Someone must be given the legal authority to make choices for you.  The probate court is obligated to appoint a conservator to manage your affairs, and then supervises the activities of the conservator.
3. A minor child is named as a beneficiary.   Since minor children cannot legally “own” property, a guardian must be appointed to manage their affairs until the minor child is considered an adult.  The probate court has the responsibility to appoint a guardian and to monitor the actions taken by the guardian.

When the probate court is involved, several things happen:

All of the information regarding you and your financial or health affairs are public records.   In many courts, these records can be accessed online by anyone.

The cost of probate comes from your net worth.   These costs can include court filing costs, legal fees, surety bond, and reporting fees.

The person appointed to be in charge of making choices for you or your minor children must follow choices set by state statutes, which may not be your choices.

The courts will appoint someone to act on your behalf, or on behalf of your minor children.   This person may not be someone you would want making choices for you and your minor children.

You can find out more about the probate process and avoiding probate on these pages:

• Probate assets
• Minor children
• Durable Power of Attorney For Finances
• Living Trust
• Conservatorship