Probate is a court procedure. It is much like an escrow when you are buying a house. In a probate, all assets that are subject to the procedure become part of the probate estate. There is a fee for filing the probate petition; there is a fee for publishing notice of the probate hearing in the newspaper; there is a fee for appraising any assets that must be appraised by the probate referee; there is a fee for the attorney; and there may be a fee for the executor.
The filing fee and the publication fee continue to increase. Right now, combined they are generally somewhat more than $1000 in my area. The appraisal fee depends on the value of the property and its location. An attorney’s fee that the court will approve is set by law (the statutory fee); it is based on the gross value of the estate. Gross value means the total value of all assets without deduction of any amounts owed on those assets. So, a home worth $500,000 with a $400,000 loan is valued at $500,000 for purposes of determining the attorney’s fee.
If the estate is uncomplicated and valuable, it may be possible to reach an agreement with an attorney to accept less than the statutory fee. The executor or administrator (the person appointed to manage the probate estate) is entitled to the same statutory fee as the attorney. If one of the children of the decedent acts as executor, the executor will often waive the fee. If a fee is accepted by the executor, the amount of the fee is taxed as income to the executor. Amounts inherited are not taxed as income.
The statutory attorney’s fee and a statutory executor’s fee are: 4% of the first $100,000 of gross value, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and .5% of the next $15 million.
For example, the fee in an estate valued at $500,000 would be $13,000, and the fee for a $1 million estate would be $23,000. In addition, the attorney may be awarded a fee by the court for “extraordinary” services concerning the work performed. Thus, the cost of even a simple probate can be quite expensive.
Another reason people try to avoid probate is because of the time involved. The reality is that in a simple estate where all property is easily ascertained, no sales of property are necessary while the probate is open and there are no disputes between beneficiaries, the probate can be completed in about six months to a year.
Unfortunately, all of the necessary favorable conditions are not present in every case and some probates are open for years, rather than months. Finally, some people do not like the fact that the proceedings in a probate case are a public record, and that it can be determined from the records the size and makeup of the estate and the beneficiaries.