Rising Costs of Probate.
Our state legislature is fond of telling us that they have not “raised taxes” for several years. What has happened, however, is that the state charges more for state services than it used to. That trend has been especially true for the probate court system.
In general, California law requires that all decedents’ estates with a gross value (no deductions for debt) of over $100,000 be administered through supervised court proceedings known as probate. Estates include all assets owned directly by the decedent at the time of death. This includes not only real property in California, but also all of the decedent’s personal property, wherever located.
Both the executor’s and attorney’s fees are determined by the gross fair market value of the estate as of the date of death. With a gross value of $100,000, your estate will pay the executor and attorney a total of $8,000 ($4,000 each). For a $250,000 estate, the total probate fees are $16,000 ($8,000 each). If the estate is appraised at $1,000,000, the fees total $46,000 ($23,000 each).
In addition, the estate pays other costs, such as filing and appraisal fees, publication of notice costs and bond premiums. In recent years, the filing fees have increased dramatically. Filing fees now approach $400 each. In the past, this fee was only paid once. Now the rules require that the fees be paid each time a petition is filed with the court. Since most probate proceedings require several petitions, the costs of probate have become more expensive than ever. At a minimum, a probate requires a “Petition for Probate” and an “Account and Petition” to conclude it, thus costing approximately $800 in filing fees. Taken together with $200 in newspaper notice publication, initial costs start at $1,000 and move upwards from there. Should a real property sale be required, at least one other petition to the court is also involved.
Participation in court proceedings is never a happy occasion. With probate, this is especially true. It is time consuming compared to trust administration, and each step of the way is subject to court scrutiny. Constant court appearances are required every six to eight weeks. Because probate is required in all California estates of a value above $100,000, unless the assets already belong to a trust, have a trust prepared. Even the smallest probate administration will cost a minimum of $9,000 (unless the executor/administrator waives his/her fee, and that still leaves $5,000 in fees and costs to be paid), far more than the cost of having a trust prepared.
Lastly, probate costs the surviving heirs time. Santa Barbara County’s court system works remarkably well, given the constraints of severe budget cuts which have occurred in recent times. Other locales have not fared nearly as well and our experience has been that probate processing time has lengthened dramatically in some venues. Despite our good fortune in our community, a probate matter must nevertheless follow statutory requirements and even when careful attention is paid to deadlines and procedure, there is no way to avoid waiting out the required time periods for giving notice to creditors and publishing notice. When hearings before a judge are needed as probate frequently requires, there are notice requirements to be met as well, which cause long stretches of time between when we want things to be done and when they may actually be permitted to occur by the court. As a result, transferring title to assets through probate takes considerably longer than doing so through the vehicle of a trust.
By Christopher C. Jones © Jan 2011
