What Are the Costs Associated With Probate in California?

Probate is the legal process of transferring a deceased person’s assets to their heirs, if those assets don’t pass automatically. Probate is something many people worry about it because it can feel overwhelming, especially with the costs involved. It’s not something the average person is familiar with and includes all kinds of legal red tape. If someone dies without a will or with assets that haven’t been set up to avoid the court’s involvement, then the estate has to go through probate to validate the will, pay debts, and distribute what’s left. It’s important to talk with a probate attorney as soon as you can to find out what all the estate fees in San Diego, CA are going to be for your estate, as the specifics will very much depend on each unique situation.

Probate fees are determined as a percentage of the value of an estate. For the first hundred thousand dollars of an estate’s worth, the probate fee will be 4% of the total value. For the second hundred thousand dollars, the probate fee will be 3%. For the next $800,000, probate fees are 2%. For the next $9 million, probate fees are 1%, and for the next $15 million, probate fees are 0.5%. If an estate is worth more than $25 million, then the courts will usually decide on what’s reasonable compensation.

Unfortunately, California insists on calculating the worth of your estate based on the gross value, not the net value. The net value is everything that’s left after you have removed all debts and losses. This means, for example, that if the estate includes real estate that has been appraised at $3 million in value, even if there’s still a mortgage on that real estate of $1.5 million, the probate fees are calculated against the entire $3 million.

What’s listed above are just the regular probate fees. There are more costs involved. Just to file with the probate court costs several hundred dollars in state fees and more in county fees. You can typically expect to pay somewhere close to $900 in filing fees alone. Then, remember that you will have to contact local newspapers to publish a notice of the probate proceeding so that all interested parties and creditors will know about it. This cost can be anywhere from $200 to $1000, depending.

Then you’re going to have to pay the appraisers of the estate that are appointed by the court, and they are usually paid at a rate of 0.1% of the value of the asset they are appraising, with a minimum fee of $75 and a maximum of $10,000. If the estate has unique things that need to be valuated, like heirloom jewelry or fine art, the fee can be much higher because a specialist must be brought in. Finally, there will also be a number of administrative costs. These are costs for getting various things certified, notarized, calculated, or filed, for example, and you should typically plan to spend between $1,000 and $10,000 on these fees, depending on how complicated the estate is.

There are also some fees that some estates are liable to but which are not all that common. For example, if an executor is required to do something unusual that isn’t a typical part of an executor’s duties, they will usually need to be compensated for this. Typically, an executor gets the estate into shape and then passes it on to the beneficiaries. But if there’s a long delay, during which time the executor is required to continue running a decedent’s business and handling all the tax returns, etc., then this would usually qualify as something abnormal and would require a higher fee.

Miscellaneous expenses can sneak in, too. If you need to sell assets, for instance, then expect real estate commissions to take 5-6% of the sale. What if you need storage for personal items? That requires between $100 and $500 monthly. Don’t forget about travel costs for getting to hearings and the possibility of having to legally challenge a creditor’s claims, which can mean more legal and court fees.

Once you have passed on, there is very little that your beneficiaries can do to avoid or minimize the cost of probate. But there’s a lot that you can do if you talk with a probate lawyer now. There are many estate planning strategies that can help your family avoid these sometimes ruinous costs.

One of the best tools that you can use in these situations is to form a revocable living trust. This allows you to transfer the ownership of certain assets into the trust while maintaining control over those assets by naming yourself the trustee. Once you die, a successor trustee takes over and distributes all the trust assets according to the terms you set up. No court supervision is required, and this means all the assets bypass the probate process. That’s because the trust owns the assets, not your individual estate.

California allows certain smaller estates to bypass probate entirely, and even if you’re unable to completely bypass it, certain assets can. Currently, if the personal property in your estate is less than $200,000 and the primary residence is worth $750,000 or less, you can use a simplified procedure to transfer the assets. The cost here will be just a few hundred dollars to a few thousand, depending on the size of the estate.

If your estate is bigger than this already, there are some things that you can do to reduce it. A lawyer can help you explore whether putting assets into trust and taking advantage of yearly tax-free gifting limits, for instance, could put your estate below the threshold and save your family a lot of money.

Another way to avoid probate is to grant joint ownership of certain assets to your beneficiaries. There are many arrangements that provide automatic transfer rights. This would mean that, upon your death, the asset goes directly to the other owner without any fees or taxes. For married couples, if both are owners of the family home, joint tenancy usually comes with right of survivorship, but a lawyer can help you also set this up for other assets, such as bank accounts and securities.

There are some assets that can avoid probate entirely, no matter how much they’re worth. We’ve already mentioned some situations with real estate, but you can also designate a beneficiary for your retirement account and life insurance accounts. In some cases, it may be worth it to liquidate some assets in order to invest in more retirement or life insurance which can pass to a beneficiary without probate issues.

There’s more that can be done, and it’s important to speak with a lawyer as soon as possible. For help with your estate, reach out to us now at Frisella Neilson, APC in San Diego for experienced help.