Your loved ones can face probation of your assets if proper estate planning is not taken up. This can lead to the addition of unnecessary costs. There are many cases each involving probate of assets costing millions of dollars.
The probate process can cost up to 3% to 8% of the total value of the property on avoidance of estate planning. Yet, this cost can vary by the value and type of the estate’s property. This is untrue for estate properties that have minimal value as they can dodge probate costs. This is because these estates do not need a probate process by law.
The following provides an estimation of the different types of costs involved under the probate process.
Less complicated estates that involve estate planning do not generally need an attorney. Thus, such estates would not have to incur these costs.
Several state laws dictate the value of an attorney’s fees. Such fees are generally determined in the way of an individual’s representative fees. Yet, an attorney can also ask for fees that are above and beyond the attorney’s fees mandated by law. These ‘extraordinary fees’ are generally asked by an attorney based on their potential.
Executor fees are generally determined at the time of writing a will. However, state laws may apply if a will is silent on such an issue.
An executor or “personal representative”, may also ask for extraordinary fees. Such fees would be over and above basic fees of probate. This generally happens in two cases. Either a decedent leaves a business for selling or distribution amongst beneficiaries.
Some states do not provide an exact amount and emphasize reasonability. Other states provide for a specified percentage, for example, 4% for the first $100,000 and 3% for the next $100,000.
Court Fees generally occur between a few hundred to over a thousand dollars. The determination of this fee refers to the complexity of the estate. The number of forms required under the probate process also influence this determination.
Filling a typical probate form costs around a hundred dollars. This is the same for most states. Yet, such costs may vary with a differential valuation of estates.
Accounting costs can incorporate the filing of tax returns for the estate. At times, this process may be undertaken by the attorney. In such a case, attorney fees would include accounting costs.
This cost depends upon the type of estate along with the nature of assets.
Business Valuation Fees and appraisals
Appraisal fees may vary between a few hundred to a few thousand dollars. Business valuation fees may run up to several thousands of dollars.
The probate process requires the valuation of the estate and business interests. This valuation of assets should be of the time of death of the decedents. Other assets for valuation include jewelry, cars, antiques, etc.
Your executor will post a bond in a sum dictated by the probate judge. The estate must pay off this amount.
Some probate judges have necessitated that when the estate has minor beneficiaries, postage of bond is mandatory.
Miscellaneous expenses include many varied costs. For example: postage, storage of estate, transporting individual property, insurance, etc.
How to Avoid Probate Costs?
You can always avoid many of the probate costs by doing a little estate planning. You would realise that a little estate planning during life, with inclusion of a “revocable living trust” can help save a lot of time, money and effort involved under the probate process. Anyone with an estate with valuation of more than the $150,000 mark, can suffer a lot due to probate costs. A revocable living trust is private and clarifies how your estate will get divided when you die. The expenses for this process are between 1 percent to 5 percent of your estate rather than 3 percent to 8 percent of your estate involved under probate.
The complete expense of all court charges range from 3 to 8 percent of your estate. Smaller estates usually have the higher rate, after meeting the fixed costs specifications. A $1,000,000 domain may cost $80,000 for execution, yet it would be absurd for a $100,000,000 gauge to cost $8,000,000 to execute. Thus, you should focus on probate processes and estate planning to prevent your loved ones from going through unnecessary effort, procedures and money.