I keep hearing about the high costs of probate. But is it really that expensive?
Well, what you consider expensive might vary from me or the next person. But is it more expensive than estate planning? If you own real estate or have an estate over $150,000, then the answer is that probate really is expensive compared to the costs of preparing an estate plan to avoid probate.
In California, many of the fees of probate are fixed by law. The bigger the probated estate, the higher the fees. The chart below will help you see how much will be coming out of your pocket (or rather your heirs’ pockets).
As you can see, even a modest estate can have some pretty hefty fees to the attorney and administrator of the estate. We haven’t even discussed court fees and various expenses that are not included.
When calculating the total value of your estate, keep in mind that it will generally be larger than you anticipate. For example, the value of your home will increase significantly over the years. Your retirement and investment accounts will also increase. You may have insurance proceeds that will be included as part of your estate. For that reason, it is generally best to overestimate the size of a probate estate. It’s always a nicer surprise to be paying less rather than more.
Compared to the costs of probate, the costs of estate planning are downright cheap. It’s a no-brainer. Pay a lesser amount today or have your family and heirs pay a larger amount later. Even with a small estate, the savings could be more than 90%.
Of course, this only considers the financial costs. Comprehensive estate planning is not just about limiting financial costs. It’s also about providing a disaster plan for your family to follow. Everyone will know their role and responsibility. They will know what they need to do and how to do it. They will also know what professionals they can rely upon for support during this difficult time. The moment someone passes is not the time to figure all of this out.
If you have a question of your own that you’d like to ask Mike, please use the contact page with the subject line “Ask Mike.”
Disclaimer: As with anything on the internet, this question and answer is general information and not directed at anyone in particular, not even the original questioner. Every answer presumes there are no other issues or facts that would make a difference. It is advised that you use this information as part of an enhanced discussion with an attorney capable of providing personalized advice in your jurisdiction. Again, I remind the reader that this website, including this post, is subject to a disclaimer that can be found at the bottom of the page.