PROBATE MYTH NO. 3 THE COST OF PROBATE WILL EAT UP ALL OF THE ESTATE ASSETS

There are a lot of scary stories out there about how much probate costs. If you believe the worst of them, you might think that your family won’t get a thing once the lawyer fees and court costs are paid. Fortunately, that’s just not true.

First of all, many estates don’t even require probate proceedings. Generally, only assets owned in the deceased person’s name alone must go through probate. And if the value of those “probate assets: is small enough, the family can take advantage of probate shortcuts, which are less expensive than regular probate.

But even if the estate requires formal probate, costs likely to be less than 5% of the value of the estate. In most states, it cost several hundred dollars to file a probate case, a few hundred more to publish required legal notices, and a couple of thousand dollars to hire an attorney to handle everything. Throw in a few hundred more for miscellaneous costs like appraisals and certified copies of court documents. That’s it.

There are, however, two important exceptions. In these situations, probate costs could rise dramatically:

High attorney-fee states.  In a few states, most lawyers charge a percentage of the value of the estate as their fee, instead of charging a flat fee or hourly rate. California is one of those states. There, probating a $900,000 estate would result in an attorney fee of $21,000 which is likely to be much, much more than the work justifies. (And the fee is calculated on the gross value of the estate-so things like mortgages are NOT subtracted.)

Litigation over the estate. If someone contests the will or accuses the executor of misconduct, costs can soar. The estate will have to hire an attorney to defend it, and if the dispute goes all the way to trial, it will cost tens of thousands of dollars.

Tip: If you live in a state where attorneys can charge extra-high fees, make sure your executor knows that those fees aren’t mandatory. The executor should find a lawyer who will charge a reasonable flat fee or hourly rate.

Ref: Mary Randolph, J.D., Nolo

Kindly visit our Probate & Estate Administration website or Trust & Estate Planning website or contact one of our Estate Attorneys, Philadelphia or Probate Attorneys, Philadelphia for more information on this topic.