Having an estate plan ensures continuity of wealth through inheritance, making an estate plan lucrative for families of all classes. If an individual does not know the nuances of probate, it might be a very expensive affair for him/her. Without any premeditated estate plan, an individual may end up paying more than he or she should.
To have a clearer idea of what the expenses are entailed during probate an individual should first research about what exactly it is. By researching it, one may find the various fees involved, ranging from court fees to attorney fees and accounting fees. By leaving behind your wealth for your children, you are making sure that you are keeping property within the family.
Costs Incurred During Probate
The total cost of the probate can differ depending on the conditions and value of the property. Understanding probate and its confusing laws is one thing, but to fully comprehend the breakdown of its costs is another. Peruse through the following content to get an overview of the possible costs arising out of the probate process.
#1. Court Fees
Court fees allow an individual to represent themselves in court when probate is in process. Only a certain administrative or executive body can list the costs of applying for court fees. Complex and high-value estates are most often more expensive than assets which are relatively cheaper. However, people who have a poor financial position can sign forms waiving the court expenses.
#2. Attorney Fees
One of the most expenses involved in probating is hiring an attorney. An attorney’s job is to represent you to their maximum capacity. Attorneys are expensive and inexpensive depending on their preferred type of charge and/or by the value of the estate. Some lawyers charge a flat fee, while others have a rate (billing clients by the hour). Attorneys even accept a commission: a percentage of the total gross value of the estate involved in the probate process.
#3. Executor Fees
State law often gives stipulated reasonable compensation to executors of an estate. They have generalised this fee by keeping the amount at 3 or 4 % of the value of the estate. An executor does not have to perform the same duties attorneys are tasked with. However, in the occasion of a complex probate process and high-value estate they can demand for extraordinary fees, if they feel it is applicable.
#4. Accounting Fees
Accounting fees are incumbent on the value of the estate. They are also related to the sale of the estate and the administration of any general bequests. One of the significant benefits of having an accountant is that they can close estate taxes by requesting closing letters from the IRS once the federal estate tax returns are filed in the name of the estate.
#5. Bond Fees.
Bond fees are important payments individuals need to file in order to execute their estate plan. This is because most jurisdictions rule that an executor must post a bond in order to be appointed as a personal representative of the estate. Without the probate bond, the estate has no protection from fraud and embezzlement, and most important of all, it has no representation in a legal court. Executors, similar to executor fees, are reimbursed once the probate is closed.
How to Reduce Probate Expenses
Probate expenses generally keep increasing in scale due to the accumulation of various fees. One must understand that some estates are complex, or intricate with full of details, and high-in value. The higher the approximate value of the property held in question, the higher the fees of the attorney hired. Yet, having an estate simple in design and not so high in value may not need an attorney.
This is because these types of estates and their probate process can be handled by the individual himself/herself. While doing all the necessary paperwork and drafting may be taxing and highly time-consuming, it would surely save an individual many thousands of dollars.
An estate plan is an expensive affair if not done right. Individuals interested in probating their estate should know the various fees involved in the process. The expenses are generally higher if one hires an attorney, especially if the value and complexity of the estate do not demand one. Therefore, know the value of the property being probated and acknowledge whether an attorney should be hired, while taking into account the other expenses involved.