Keeping Probate Costs Down - Useful Tips
Whether or not you have a will, your estate will be probated, which means it will go through a legal process to ensure that your assets are properly distributed. The probate process can be expensive, regardless of the size of the estate.
Fortunately, there are some measures that can keep probate costs down. Some fees are non-negotiable, such as the court’s filing fee and the newspaper’s fee for publication of a legal notice. But other fees, even if statutory in your state, are negotiable to a certain extent or may be avoided altogether. Here are some tips for saving the estate money:
- Personal Representative’s Fee
When making your will, choose a close friend or relative to be your executor who is willing to perform this job without charging a fee. This will be a substantial savings as the executor may charge up to 2-4% of the value of the estate for his or her services. If you don’t have a close friend or relative to handle the job, shop around for a bank or corporate executor and find the best rate. Their rates may be negotiable—you don’t know unless you ask!
- Posting a Bond for the Personal Representative
Include in your will a clause that waives the personal representative’s bond requirement if the court has one. The bond, which can amount to $500 and more, is to ensure that if the value of the probate property declines as a result of the executor’s or administrator’s misconduct, the bond will make the estate whole again. It’s like an insurance policy.
- Tax Preparer Fees
Some estates are small enough not to owe any estate tax, as such, no tax return needs to be filed. If an estate is large enough, however, to owe estate taxes, an executor should get a few estimates for completing the tax documents from certified public accountants (CPAs). It may be prudent to use the deceased’s accountant who may already be familiar with the assets to a certain extent, and may, therefore, be able to charge less because they already have some of the information on file. These fees are certainly negotiable and a few hundred dollars or more may be saved.
- Appraisals of Property
If appraisals are necessary for real and/or personal property, the fee for the appraiser, also sometimes referred to as a probate referee, may be statutory or set by custom in the area. The statutory amount is a maximum, however, and may be negotiable.
- Attorney Fees
This is the largest chunk of probate fees. Either set by state law or by practice and custom in your community; it will differ from place to place. But attorney’s fees are absolutely negotiable! Even where there is a statutory amount set out by state law, this is a maximum, not a mandatory amount. You can always negotiate a lower fee or an hourly rate to save the estate some money.
There are some vehicles you may use in your estate planning to avoid probate for some or most of your assets. See frequently asked probate questions. You should contact an experienced estate planning attorney for more specific information on how to use these and other methods of avoiding probate when planning your estate.
For more information and an explanation of the costs involved in probate, visit The Cost of Probate—Administration Expenses