When the time comes for your family to divide your estate according to your will, your family will need to go through the process of probate The larger your estate is, the longer the process will take and the more expensive it will be. Why does the probate process cost so much? These are the different costs that are associated with probate.
Each state has their own set of fees that that court will charge for their services. They can range between hundreds or thousands of dollars depending on what the court does.
For example, Massachusetts will charge $375 to petition the appointment of a trustee, plus an additional $15 surcharge for each person that petitions. That is just an example of one fee. Fees can be as small as $75 for the small estate closing statement, and as large as $400 filing a declaration of common trust fund. These fees will add up quickly over the probate process.
Personal Representation Costs
Your state will either charge a fee for a personal representative that is considered reasonable, or will charge a percentage of the assets going through probate. In California, an estate worth $100,000 would be assessed a 4% fee ($4,000) of the total value of the estate.
These costs can vary greatly depending on what kind of estate you have. A basic estate with no more than a home and bank account can expect to pay minimal accounting costs. If you have a much larger estate with stocks, bonds, property, a small business, and several pieces of property, your accounting costs could be larger than anticipated. Accounting costs will even cover filing an estate's federal tax return if it needs to be done.
Your bank accounts are very easy to place a dollar value on, but other things are not. That is where appraisal costs come in. To determine the total value of your estate, things such as real estate and personal property will need to be appraised. Your estate will pay for the appraisal fees.
Every cost incurred during the probate process will be itemized and billed to the estate. This includes being charged for things as small as postage needed to mail legal documents and notices. If there are costs associated with storing, insuring, and moving personal property, those costs will be passed along to the estate as well.
Minimizing Costs Through Estate Planning
Thankfully, there are ways to minimize the amount of probate your family and friends will have to go through. A living trust is a way to divide assets before your death, allowing your family to avoid probate entirely if it is set up properly. Bank accounts can be assigned beneficiaries, a step that is often ignored when setting up a new bank account. Assigning joint ownership of property will cause the property to be automatically transferred to the other person upon your death.
Work with an estate planning attorney like LeBaron & Jensen, P.C. to find alternate ways to divide your assets, and you will minimize or eliminate the probate process.