The Cost of Probate - Administration Expenses
It is not easy to get a handle on the cost of probate because it will differ from state to state, and sometimes jurisdiction to jurisdiction within a state. It also depends on how complicated your estate is. A ballpark range is 2%-7% of the value of your estate. If you have a $300K estate, for example, the probate expenses may be anywhere from $6K to $21K depending on where you are and how easy or complex your estate is. The major expenses of probate include:
Probate Court Filing Fees
Sometimes the value of the estate’s assets determines the court filing fees. In California, however, the cost to file for probate is $320 (August, 2008) no matter what the value of the estate is.
Personal Representative Fee
The executor or personal representative (also called administrator) may charge a fee for his or her services. Often this individual is a relative, and he or she may choose not to charge a fee. If a fee is charged, in some states the amount is regulated by statute, and in others it is what is “reasonable” for the work performed.
In Oregon, for example, it is a set percentage of the estate’s value. In some states, it is the same rate as that charged by the probate attorney, which typically amounts to 2-4% of the estate’s value. If the personal representative is derelict in carrying out his or her duties, the court may even reduce or deny compensation. Generally, the court must approve expenses and attorney fees in formal probate proceedings before they are paid.
Posting a Bond
If an executor is asked to post bond, this is to insure that if the value of the probate property declines as a result of the executor’s misconduct, the bond will make the estate whole again. It is like an insurance policy. Obtaining such a probate bond can be costly and depends on the value of the property subject to the bond. It can be $500 or much more if it is a sizeable estate. If there is a Will and if it waives the bond requirement, then the Probate Court will often -- but not always -- waive the bond.
Publication of Legal Notices
A publication fee is charged by the local newspaper, which announces the person’s death and how interested persons (creditors to whom the deceased owed money) can contact the attorney, executor or personal representative. The cost depends on the area, but fees generally run between $350 and $500.
Tax Preparer Fees
Depending again on the size of the estate, estate taxes may need to be paid. Tax preparer fees may run anywhere from a couple of hundred dollars to a few thousand dollars if the state is large or complex.
An appraisal by a court-appointed independent third party (a probate referee) is sometimes necessary if there are real property or other non-cash (personal property) assets in the estate, such as jewelry, artwork, etc. The probate referee fee may be statutory or set by custom in the area. Often the fee is a small percentage (e.g., 1/10 of 1%) of the appraised value of the asset, plus miscellaneous charges, such as mileage, photos, etc.
This is usually the largest portion of probate fees. In some states the attorney’s fees are set as a flat amount. In others, they are based on the size and/or complexity of the estate. They may amount to 2-4% of the estate’s value, but can be higher depending on how complex the estate is.
Attorney Fees in California
One example of a statutory formula for attorney fees is in California. It is one of a few states that sets statutory attorney’s fees based on a percentage of the gross estate, even though the netestate (after paying mortgages, debts, and so on) may be considerably smaller. These fees are only the maximum fees that can be charged, however. Nothing would stop the Personal Representative from contracting with an attorney for services based on an hourly rate, or at a lower amount. Here is what the statutory formula looks like:
4% on the first $100,000
3% on the next $100,000
2% on the next $800,000
1% on the next $9 million
0.5% on the next $15 million
Over $25 million, a reasonable amount determined by the court
Since this is the greatest portion of probate fees, as a Personal Representative of an estate, you should always try to negotiate lower fees where possible.
Go to Keeping Probate Costs Down for some tips on how to reduce the cost of probate.
Go to When There are Not Enough Assets to see what happens when the deceased’s estate will not cover his or her debts and the cost of probate.