High costs of probate in California best avoided with estate planning
By Barbara Craig, Attorney at Law
The costs of probate in California are specified by the California Probate Code. When a person passes away owning personal property valued more than $150,000 or real property valued more than $50,000, that person’s estate must be administered by the Probate Court.
The California Probate Code mandates the amount of fees the attorney and personal representative (executor or administrator) can charge for handling the probate of an estate of the decedent (person who passed away). The total amount of the fees to be charged are determined by the gross value of the decedent’s estate.
How estate value is determined for probate
The decedent’s estate includes all real and personal property owned by, and titled in his or her name at the time of death. Real property is land and all structures or improvements permanently attached to it. Personal property is all cash, investments, vehicles, mobile homes, art work, jewelry, and similar assets owned by the decedent. Any interest in business assets is also part of a probate estate. The gross value of the estate is the total value of all the decedent’s assets, before any deductions for loans payable or other set-offs.
Not all assets owned by a person are part of the estate. Benefits that can be paid to a named beneficiary directly are not part of a decedent’s estate. Assets like money from an IRA, 401(k), and payable-on-death bank accounts are not part of the decedent’s probate estate so long as proper beneficiaries are listed. Property also held jointly with another person who has survivorship rights is also excluded. Property held in a revocable or irrevocable trust is not part of the probate estate either, as long as the trust has been funded and beneficiaries properly listed.
How probate costs are calculated in California
The attorney’s and personal representative’s respective fees are calculated as follows, based on the gross value of the estate:
Four percent (4%) for the first $100,000 of estate assets; and
Three percent (3%) for the next $100,001 of estate assets up to $200,000; and
Two percent (2%) for the next $200,001 of estate assets up to $800,000; and
One percent (1%) for the next $800,001 of estate assets up to $9 million; and
One-half percent (0.5%) for the next $9 million of estate assets up to $25 million.
Reasonable fees determined by the court may be charged for any estate valued more than $25 million.
Below is a chart of estate sizes which illustrates the fees which will be be charged. In addition to the attorney’s and representative’s fees, the court charges a fee to initiate the case. This fee currently starts at $435.00.
| Gross Value of Estate Assets | Attorney Fees | Representative Fees | Total Fees |
|---|---|---|---|
| $100,000 | $4,000 | $4,000 | $8,000 |
| $250,000 | $8,000 | $8,000 | $16,000 |
| $750,000 | $18,000 | $18,000 | $36,000 |
| $1,000,000 | $23,000 | $23,000 | $46,000 |
| $2,000,000 | $33,000 | $33,000 | $66,000 |
| $9,000,000 | $103,000 | $103,000 | $206,000 |
Strategies for avoiding the high costs of probate in California
Because the gross value of the estate determines the fees which will be charged, it’s best to reduce the value of the probate estate to as little as possible – hopefully, to the point that no probate proceeding is even necessary.
Proper estate planning can ensure that all assets owned by the decedent are held in such a way that the costs of probate are eliminated. Estate planning strategies include drafting and funding a Trust and/or drafting a Last Will and Testament. Having a will alone is not sufficient to avoid probate if assets are valued at more than $150,000 or the decedent owns real property.
For the average homeowner here in the South Bay, probate would be required and can be quite costly. Preparing an estate plan now is significantly less expensive than the costs of probate, and will provide you the peace of mind of knowing that your financial legacy is protected for the benefit of your spouse, children, or other designated heirs.
Do you have questions about estate planning, wills, trusts, and avoiding probate? Contact Estate Planning Attorney Barbara Craig to schedule a free consultation. Serving clients in the South Bay area including Torrance, San Pedro, Lomita, Harbor City, Carson, Wilmington, Long Beach and other nearby communities.
Image courtesy Sam Howzit