The cost of probate depends on several factors. One of the most important is the state where the decedent lived. The cost of probate varies from state to state, depending on the general cost of living in the state and state probate laws. Other factors also impact the cost of probate.
Nasdaq.com’s recent article entitled “How Much Does Probate Cost?” provides a breakdown of fees associated with probate. The process of probating an estate will settle the estate after the decedent’s death and following their last will and testament. It’s also used for those who die without a will or intestate. Assets owned only by the decedent are usually addressed in the will and distribute according to the decedent’s wishes. One generally names an executor in the will, and an estate administrator is appointed in the case of a decedent dying intestate. The executor takes an inventory of the decedent’s assets, pays the decedent’s outstanding debts, and presents the inventoried estate to the court for settlement. If there are no objections to the will, the estate is closed. If there are objections, the probate judge is responsible for settling them. The longer the probate process drags on, the more expensive it will be.
Probate can be a time-consuming process. A modest estate may take six to 24 months to settle. Larger estates can take even longer if they’re complex. It is also necessary to add more time if the will’s contested or the executor cannot find all the beneficiaries. The longer the process, the more expensive it becomes. Probate costs in 2021 run about 3% to 8% of the estate’s value. Let’s look at the critical costs of probate:
Court Costs. This includes filing fees. Some states require the same filing fee for all estates, while others have a graduated scale depending on the size and complexity of the estate—the more complex the estate, the higher the court costs.
Executor Costs. The executor of a will is typically paid at least a nominal fee. Fees are mandated by state law unless the decedent specifies in their will what the executor should be paid. Some states permit a flat and “reasonable” fee which the court may determine. Other states require a graduated fee, such as a certain percent of the estate for the first $100,000. If the will doesn’t state the executor’s fee or if the decedent dies intestate, the court determines the executor’s fee.
Accounting Fees. Accounting costs can be high with more complex estates. If the decedent has complicated business affairs to sort out or owns many stocks and other securities, the complexity will require higher accounting fees. The accountant must also file federal and state taxes as a final return.
Attorney Fees. Attorney’s fees can be state-mandated, determined by the court, or set by the attorney depending on the anticipated workload. When the executor believes an attorney is needed, the attorney is paid out of the estate.
Estate Administration Fees. A real estate agent may have to be hired and paid to dispose of property or businesses. The executor will often incur high costs of administering the estate, such as property appraisals. The executor must also manage the property until it sells or the estate closes.
The cost of probate is avoidable. If your plan is probate-free, more of your nest egg will transfer to your loved ones and chosen charities. Book a call today to discuss the specifics of your situation.
Reference: Nasdaq.com (Feb. 2, 2023) “How Much Does Probate Cost?”
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