3 Ways To Avoid Probate Costs
How can we avoid probate costs? The word Probate is synonymous with “expensive” in California. The formal court process is expensive due to the variety of costs. These costs include attorneys statutory fees, administrator’s statutory fees, appraiser fees, to accounting fees, court filing fees, and more. Depending on how complex the case is, the fees can run into tens of thousands of dollars.
An Example of Probate Costs
John owns a property in Los Angeles valued at $600,000 with a mortgage of $500,000. His net equity in the property is $100,000. John passed away without a will or trust and his loved ones have to administer his estate. His property is the only asset he had. Here is a breakdown of the fees for John’s estate:
Statutory Attorney Fees
Statutory Administrator Fees
Court Filing Fees
$ 1,000 to $1,200
$ 100 to $1,000
$ 600 to $900
This total fee of roughly $33,000- $35,000 assumes that the case went smoothly without any fights erupting between family members. If the family decides to sell the property while its being probated, that will result in another $3,000-$10,000 to the total cost as extraordinary fees and additional filing fees.
The good news: some of the probate costs can be reduced. For example, not selling the property in probate can eliminate the extraordinary attorney and administrator fees. In addition, the family member administering the estate may choose not to take an Administrator’s Statutory Fee which will reduce John’s estate bill by $15,000. But, the total standard fee above (attorney fees + all other expenses), will remain. Those fees are statutory and nonnegotiable.
Here are three simple ways to avoid probate costs altogether:
1. Name A Beneficiary To Avoid Probate Cost.
The probate process determines who gets what when there is no beneficiary designation. Naming a beneficiary is the easiest way to avoid probate. Common beneficiary designation assets include:
- Life insurance
- Retirement plans
2. Create A Revocable Living Trust To Avoid Probate Cost
For example, a revocable living trust is a great way to avoid court altogether. A trust works well if properly created and funded by an experienced estate planning attorney.
3. Own Property Jointly To Avoid Probate Cost.
You can avoid going to court if the property you own is held jointly with a right of survivorship.
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Contact our office today to schedule a free consultation to discuss whether creating a trust will be the right course of action for you.