19 Jan What is Probate and How Much Will it Cost?
If you have recently lost a member of your family, you are no doubt experiencing an emotional and stressful time. Finances may be the last thing on your mind, but they’re something you will need to handle. You might be hearing the word “probate” and wondering how it applies to your situation. Conversely, if you and yours are all alive and well, you may want to familiarize yourself with the idea now. With advance estate planning, you may greatly simplify the probate process. But if you’re asking “What is probate?” we’re here to help. Probate costs, too, so let’s take a look at what you can expect.
What is Probate?
Probate is a court-supervised process that decides where a deceased person’s assets go. The court authenticates a will if one exists. Otherwise, probate court handles “intestate succession,” or how to distribute assets when the person left no will.
A probate court will enumerate the assets and determine their value. It will also review final bills and outstanding taxes. After settling all debts, the court will allocate the remainder of the estate (if there is anything remaining).
If you already have a lawyer who has handled your family’s estate planning, contact that person’s office for assistance. Otherwise, seek a qualified estate lawyer right away. You should take steps to handle the estate before companies start knocking on the door for past due bills.
Each state has its own provisions for the probate process, referred to as probate codes. In the event that there was no will, intestate succession laws take effect.
Despite the state-to-state differences, the steps are largely the same:
- Authenticating the last will and testament, if one exists.
- Appointing a personal representative or executor.
- Locating the decedent’s assets.
- Determining values of the assets.
- Identifying known creditors.
- Paying bills.
- Preparing and filing income tax returns.
- Distributing the balance of the estate to the beneficiaries.
This process can take anywhere from a few months to two years depending on the complexity of the estate. An up-to-date estate plan can help the process along.
Some types of assets skip probate. These may include life insurance policies or bank accounts with “payable on death” clauses.
Of course, you may already be experiencing stress related to finances, so the thought of spending money on probate may concern you. You will want to know how much it’s going to cost. It will most certainly differ passed on where you are located and where the will was authenticated. A safe estimate regardless of location would be a range of 3%-7% of the total value of the estate. The costs could include:
- Appraisal costs
- Personal representative fees
- Court costs
- A surety bond (a type of insurance policy)
- Legal fees
While some of these fees are bound by state laws, some of the others are open to negotiation. In some states, the attorney fees are estimated as a percentage of the estate, and in other places, you might be able to negotiate down those costs.
Another factor that can affect the value of the estate, and therefore the probate costs, is whether any disputes arise during the process. If someone contests the will or there was pending litigation against the estate, expect additional costs. These depend on how much of the estate assets will be utilized to pay court costs and how much will remain afterward.
If you find yourself handling the estate of a deceased person, contact a lawyer right away. Let us know if we can help you. A knowledgeable, understanding legal team can make a big difference during a trying time.