First, let me say that I am not an attorney or a financial planner, but I am curious. I was given a handout at an estate planning group by Kim Ward, a licensed Realtor with Horizon Real Estate in La Mesa, California. This handout provides a brief rundown on the costs of probate, and the purpose of this post is to state briefly some of its main points.
My purpose here is to increase your awareness of the costs of "going through probate."
1. Probate costs are very high. Maximum statutory fees that attorneys can charge for probate, per the California Probate code section 10810, are 4% for the first $100,000, 3% for the next $100,000, 2% of the next $800,000, 1% of the next $9,000,000 and 1/2% of the next $15,000,00. A separate fee is established by the courts for anything over $25,000,000.
2. If executors are part of the probate, both the attorney and executor will receive fees, thereby doubling the costs.
3. The estate's value is determined by the inventory and debts are not included. An example: If a house is appraised at $1,000,000 and it has a mortgage of $800,000 the assets for determining the probate attorney's fee is considered on the $1,000,000.
4. Estates are appraised by probate referees who are appointed by the State Controller. These probate referees also receive a fee based on 0.1% of the assets appraised.
5. It usually takes longer to probate an estate than to administer a trust.
If nothing else, I hope these statements will lead you to contact an attorney to review probate costs and consider the less costly alternative, establishing a TRUST.
