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Wills · Living Trusts · Probate Law ·
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Wills · Living Trusts · Probate Law ·
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One of the main reasons to use a Living Trust is to avoid probate. When a will is probated, a copy of that will becomes a public record and is available for anyone to see. A Living Trust document never goes through probate and remains a private agreement between the parties. Avoiding probate is a means of preserving privacy, so that the world does not know the terms of the distribution of a decedent's assets. Another reason to avoid probate is that the probate process becomes an open forum for heirs and heirs-wannabe's to fight over the terms of a will. A Living Trust is much more difficult to challenge in court, and this tends to preserve family harmony. But the most common reason to avoid probate is to avoid the costs involved in probate.
Recognizing the rising costs of probate, California attempted to control those costs by passing a statute that lists the "maximum" costs of probate. The California Probate Code sets the maximum statutory fees that attorneys can charge for a probate. Higher fees can be ordered by a court for more difficult cases. The fees listed below are the statutory fees used to compensate attorneys and executors in probate cases. If both the attorney and the executor receive a fee, the amount paid will be double that shown above.
SIZE OF ESTATE |
STATUTORY FEE |
| $100,000 | $3,150 |
| $200,000 | $5,150 |
| $300,000 | $7,150 |
| $400,000 | $9,150 |
| $500,000 | $11,150 |
| $600,000 | $13,150 |
| $700,000 | $15,150 |
| $800,000 | $17,150 |
| $900,000 | $19,150 |
| $1,000,000 | $21,150 |
| $2,000,000 | $31,150 |
The fee is determined by a formula that ranges from 4 percent to 1/2 percent of the estate assets, depending on the size of the estate. On the average, the fees are between 2 and 2.5 percent of the estate assets.
Estates are appraised by probate referees, who determine the fair market value of the asset. The fair market value includes mortgages and other debts, which can result in an appraisal of the property that is higher than the equity that the deceased owned in the property. Probate referees are appointed by the state controller's office and they receive a fee based on .1 percent of the assets that have been appraised.
In probates that are complicated by lawsuits or tax problems, the attorney and executor can ask the judge to approve fees that are higher than those set by state law.
In addition to the statutory fees, there are costs for court filing fees, appraisal fees, publication costs, and miscellaneous fees charged by the county. A typical estate might incur $1,000 in court costs and other mandated fees.
The proceedings are controlled by a judge, who can decide disputes between heirs or between the heirs and the executor. Creditors are required to submit their claims against the estate within a four-month period, provided they have been notified of the probate. The executor is required, in most cases, to prepare an accounting and report of the executor's activities.
The cost is usually much higher than would be required for the administration of a living trust for the same size estate. It usually takes several months longer to probate an estate than to administer a trust. Most estates don't need the supervision of the court unless disputes occur between the participants.
AEPAD is the American Estate Planning Attorney Directory. While the information on this site deals with legal issues, it does not constitute legal advice. If you have specific questions related to information available on this site, you are strongly encouraged to consult an attorney who can investigate the circumstances of your situation and the particulars in your state.