You may have heard the phrase “avoid probate” mentioned in materials related to estate planning, and wondered what the big deal about probate really is. There are many reasons to avoid probate, not the least of which is that it causes delay and hassle for beneficiaries, and can result in legal battles and family in-fighting. But one aspect of probate that is always true it that it costs money, from the cost of fees to hiring a probate attorney and personal representative.
Probate Court Fees
The initial filing fee for a probate case in Los Angeles County is $435 as of October 5, 2017. While this may seem reasonable, keep in mind that this is only one of dozens of potential court fees that can add up in probate court, with many fees also at $435 and even going up to $650. Here are just a few of the potentially costly fees that parties may face in probate court:
- Conservatorship Review Fee ($425)
- Petition concerning an advance health care directive and objection or other opposition ($435)
- Spousal or domestic partnership property petition and objection or other opposition ($435)
- Petition for order concerning sale, lease, encumbrance, grant of an option, purchase, conveyance, or exchange of property ($435)
- Petition concerning power of attorney and objection or other opposition ($435)
Again, these are just a few of dozens of potential fees a party might encounter in probate court. This is in addition to the cost of a court reporter, which is $764 per day (4 hours or more).
These fees may come out of the estate, or may be paid by other parties in the matter (e.g. other family members) depending on the source of the action.
The Cost of a Probate Attorney and Personal Representative
In addition to court fees, there is also going to be the costs of a probate attorney and a personal representative. There will generally be a probate attorney that represents the estate itself, and there will be a personal representative (sometimes called an executor) who is either named in the will or appointed by the court to oversee the distribution of the estate.
Probate attorneys often charge by the hour at typical attorney rates, but their maximum compensation for a probate matter when representing the estate is capped by California law at the following amounts:
(1) Four percent on the first one hundred thousand dollars ($100,000).
(2) Three percent on the next one hundred thousand dollars ($100,000).
(3) Two percent on the next eight hundred thousand dollars ($800,000).
(4) One percent on the next nine million dollars ($9,000,000).
(5) One-half of 1 percent on the next fifteen million dollars ($15,000,000).
(6) For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.
Note that both the attorney and the personal representative receive compensation up to these levels, meaning that, for example, the attorney can receive fees of up to $4,000 for the first $100,000 in the estate, and the personal representative can also receive compensation up to $4,000 for that same amount.
There are numerous strategies that individuals can incorporate during their life to avoid the probate process altogether, and an experienced estate planning attorney can provide you comprehensive guidance in achieving this goal.
What Does a Probate Attorney Do?
Many heirs or administrators of Wills will retain a probate attorney if they have claims regarding the Will’s validity or to ensure that all the proper paperwork and payment of fees and taxes are made. The duties of a probate lawyer include:
- Attendance at all court sessions
- Drafting and filing all necessary forms and reports
- Advising and consulting with the estate’s executor or administrator regarding creditor claims, allegations of lack of testamentary capacity or undue influence that could invalidate the Will, or dealing with any other issues that may arise
- Assisting in selling real or personal property or in maintaining it
What are the Statutory Legal Fees and Costs in a California Probate?
California probate rules require that you file a minimum of two petitions: a Petition to Probate and a Petition for Final Distribution. The cost for each is $395. For estates that have substantial assets, additional petitions may have to be filed.
When the Will is probated, the executor or administrator will have to publish a Notice of Probate in an approved newspaper. The court can provide you a list of approved publications. Costs can range from $100 to $450 depending on the publication.
Attorney’s fees in probate matters are largely based on statute, however an attorney can bill for additional fees if there is a Will dispute or other complications arise.
Under California law, attorney fees are based on the fair market value of the estate’s assets, without regard for any liabilities. These are calculated as follows:
- 4% of the first $100,000
- 3% of the next $100,000
- 2% of the next $800,000
- 1% on the next $9M
- 0.5% on the next $15M
- Whatever is reasonable for any estates valued at over $25M
For a $2 million estate, the calculation would be as follows:
4% of the first $100,000 = $4,000
3% of the next $100,000 = $3,000
2% of the remaining $1,800,000 = $36,000
As executor or administrator, you are entitled to charge these same fees, however, most will waive the fee unless they are having to handle complex issues or are spending considerable time in the estate’s administration.
Another cost is that of the appraiser, who has to value all of the testator’s assets. An appraiser’s fees are 0.1% of the value of the appraised property or $2000 for our example.
So for an estate valued at $2,000,000, you can expect the following costs and fees:
Cost of the 2 petitions: $790.00
Notice of Probate publication: $100 to $450
Appraisal fee: $2000
Attorneys’ fees: $43,000
Total: $45,890 to $46,240—if the executor wants to be paid, add another $43,000.
In complicated probates or where claims are made, then additional petitions are filed at a cost of $395 for each. You can also expect the probate attorney to request additional fees based on the attorney’s hourly fee, which will be hundreds of dollars per hour.
When an Estate Can Avoid Probate
First off, if there is less than $150,000 in an estate, then it will not go to probate court. Obviously, the vast majority of us have no idea when we are going to pass, much less how much property will be in our estate at that time or its valuation, so this is not a good planning strategy for avoiding probate.
Second, if there is a surviving spouse, then it is possible in some cases that an estate may not go into probate. In California, a person’s community property automatically transfers to his or her surviving spouse. Separate property is another story, however. If there is no will and no children, then that separate property may also pass to the spouse.
Finally, there are a number of estate planning instruments which can be used to pass property outside of probate. These include living trusts, testamentary trusts, life insurance policies, and property held in joint title. Proper utilization of these instruments can result in property transferring automatically to another party. If all property passes through such instruments, probate will not be necessary, and, at the very least, the amount of property that does go to probate can be minimized in order to simplify the probate process.
An estate planning professional can provide further guidance on how you can take steps now to avoid the probate process in the future and preserve assets for your loved ones.
Work with a Pasadena Probate and Estate Planning Attorney
Christopher B. Johnson is an estate planning attorney in Pasadena, CA who has helped thousands of individuals and families over the past 18 years in creating and reaching their estate planning objectives as well as in navigating the probate process in California to achieve positive outcomes. Schedule a consultation with him today to discuss your estate planning and/or probate goals.