If you have not drawn up a living trust with a lawyer, or have failed to create an estate plan all together, your loved ones may need to probate some or all of your assets including property, personal belongings, bank account, and more. The cost of probate will depend on the value and type of asset that is being probated by the court. In general, the greater the value, the greater the probate cost will be.
What are some of the associated fees with probate?
The following are some of the costs that are associated with probate. Whether or not they will apply to your own situation is not possible to address until you’ve spoke to a probate lawyer.
Court Costs: Every state has their own laws and fee schedule for the probate process. They can vary from a few hundred dollars to several thousand dollars. Your county clerk or a probate lawyer should be able to give you a breakdown of these fees.
Personal Representative Costs: Your personal representative is the person who will oversee the probate process, pay off your debts, and distribute your assets. Compensation for this task is dictated by state laws. Some states ask that they are paid a reasonable fee while others ask that a fee equal to a percentage of value of the estate be paid. This percentage is usually between 5 and 10%. Some personal representatives will ask for a certain amount for the services rendered; this should be discussed during the process of creating an estate plan with a lawyer.
Lawyer Costs: The costs of having a lawyer guide you through the probate process can vary, but are often similar to the fee of a personal representative.
Accounting Costs: Depending on the value of the estate and the type of assets in probate, will depend on what you can expect in terms of accounting fees. For example, a small estate with 35 different stocks and bonds might have more accounting fees than a large estate with a CD and a bank account. If the estate owes taxes, the accounting fees might include filing state and federal tax returns. A lawyer might also do this for a relative fee.
Valuation Costs: During the probate process, high value assets will need to be appraised or valued. Examples of these assets could include property, businesses, real estate, jewelry, antiques, arts, cars, etc. The fees for this can be anywhere from a few hundred dollars to thousands of dollars.
Bond Costs: If your will does not waive the posting of a bond by your personal representative, he or she may need to pay for and post a bond. This amount is determined by the courts. Bare in mind that even if your will waives the posting of a bond, the court might still order one, particularly when minor children are involved.
Miscellaneous Costs: In addition to the above fees, you might also expect postage fees, storage fees (i.e. to store assets), shipping or moving fees, and more.
As a general rule of thumb, the probate process can take between 3 and 10% of your assets away from your beneficiaries. This does not include taxes or payable debts. Compare this amount with a living trust that typically takes between 1 and 5 percent of your total assets. Not everyone is suited to a trust, and may benefit more from a living will and going through the probate process. To learn more, you should consult a probate lawyer Memphis TN relies on for a free consultation.
Thanks to our friends and contributors from Wiseman Bray for their insight into probate law.