What Is the Cost of Probate? Both time and money
Most of us have heard that it’s wise to avoid the probate process, but we don’t necessarily know why. Simply put, there are two major problems with probate:
- It can tie up property for months, and sometimes for more than a year.
- It’s expensive. In some states, attorney and court fees can cost up to 5% of an estate’s value.
What Does the Probate Process Look Like?
While the probate process does involve a probate court, most of what happens during probate is essentially clerical. In the vast majority of cases, there’s no conflict, no contesting parties, and none of the usual reasons for court proceedings.
Probate rarely calls for legal research, drafting, or a lawyer’s adversarial skills.
The probate attorney, or the attorney’s secretary, fills in a small mountain of forms and keeps track of filing deadlines and other procedural technicalities. In some states, the attorney makes a few routine court appearances; in others, the whole procedure is handled by mail.
The costs of Probate usually include:
- Lawyer’s fees
- Executor fees (which may be waived)
- Probate court costs and filing fees
- Other expenses of guiding an estate through the probate process
Attorneys’ fees. A probate attorney’s fees for a “routine” estate with a gross value of $400,000 (these days, this may be little more than a home, some savings and a car) can easily amount to $20,000 or more.
Other probate costs: court and filing costs, accountant’s fees, appraiser’s fees to obtain the value of certain estate assets, fees for obtaining certified copies of death certificates, the costs of sending important documents by certified mail, and more. These additional probate costs can add up quickly.
Avoiding Probate Costs – the way to go!
How does a person avoid probate? This happens when people take steps during their lifetime to make sure that their property is transferred to their loved ones outside of the probate process.
This happens by:
- making a Living Trust – and putting your most valuable assets into the Trust
- naming specific beneficiaries for investment and bank accounts, retirement accounts, and insurance policies
- using a Transfer-On-Death deed to name a beneficiary for your real estate, if this is available in your state
- co-owning property with the “right-of-survivorship,” so that it transfers automatically to your co-owner at your death
- making gifts during your lifetime
Taking steps to avoid probate on significant property (such as your home and other real estate, or your investment and bank accounts) can have a big impact. You’ll reduce the amount of property that will be subject to probate—which will reduce fees and ensure that your beneficiaries receive more of their inheritance and in a more timely way. In some states, reducing the amount of property subject to probate may also qualify an estate for a simplified probate process.
For more information on Probate, you can search online to see how the Probate process applies in the state in which you are a legal resident.