What Is Probate?
Many people wonder how probate works. Probate is the legal process that ensures that a deceased person’s will is valid, that all outstanding debts are paid from the deceased assets and that any remaining assets are distributed fairly amongst the deceased’s beneficiaries as specified in the will. Probate usually takes 1-2 years; however, it can be much longer if the deceased had no will, the will is contested or the deceased had a large amount of assets. When a will goes to probate, the deceased’s chosen representative or executor is sworn in by the courts, a public announcement is made to announce the deceased death so creditors have a chance to file a claim, all heirs are contacted and an complete inventory of the deceased assets are done. The probate lawyers will then use the deceased assets to pay off any outstanding debts and then will distribute all remaining assets to the deceased’s heirs as specified in the will.
Probate fees depend on the value of the deceased’s assets and on the lawyer fees. Probate costs range from 1-4% of the value of the deceased’s estate. In the United States, most states charge around the same for probate fees; however, states with a high cost of living like California and Florida have higher fees than states with a low cost of living have. Average probate cost is 1-4% of the value of the deceased’s estate in most states. Average probate costs are 3-4% for estates that are worth less than $100,000, 2-3% if the deceased’s estate is worth more than $100,000, and 1-2% for estates over $2,000,000. Probate fees also vary due to lawyer costs. Probate lawyer costs vary per location and law firm. If the will is contested, probate cost can be increased by thousands of dollars.
Probate Attorney Cost
Probate lawyer fees vary greatly depending on location, the lawyer and on the size of the estate. Lawyer fees are far greater for large estates than for small estates. Probate lawyer fees for the average size estate are $1500-$5000, around $10,000-$20,000 for estates worth around $1,000,000, around $20,000-$30,000 for estates worth around $2,000,000 and around $40,000-$50,000 for estates worth around $3,000,000. Probate lawyers are more expensive in states with a high cost of living like California, Hawaii and New York; lawyer fees are usually hundreds or thousands of dollars more in states with a high cost of living compared to states with a low cost of living. If the will is contested, it can stay in probate for many years, which can increase probate fees by thousands of dollars.
Probate By State
The cost of probate varies per state. Fees are calculated by a certain percentage of the value of the estate. In most states, probate costs are 1-3% of the value of the deceased’s estate; however in states like California and Florida probate costs are 1-4%. California probate costs are 4% of the value of the deceased’s estate if the estate is worth less than $100,000, 3% of the value of the deceased’s estate if the estate is worth $200,000 to $800,000, 2% of the deceased’s estate if the estate is worth $1,000,000 to 9,000,000 and 1% of the deceased’s estate if the estate is worth $10,000,000 or more. Florida probate cost is 3-4% of the value of the deceased’s estate if the estate is worth less than $1,000,000, 2% of the deceased’s estate if the estate is worth $1,000,000 – $3,000,000, 1.5% of the deceased’s estate if the estate is worth $4,000,000-$8,000,000 and 1% of the deceased’s estate if the estate is worth over $10,000,000.
Probate Bond Cost
A probate bond is bought by the executor of the will to help guarantee that the probate will be carried out legally and to the deceased specifications. Probate bonds tend to be expensive and difficult to get, but without a probate bond, the executor will not be able to access the deceased’s assets. There are several different types of probate bonds to suit every situation: there are trustee bonds, conservator bonds, receiver bonds, guardian bonds and administrator bonds. Probate bonds require renewal every year, so the executor will need to renew the bond for each year that probate goes on for. The cost of probate bonds varies depending on the size of the deceased’s estate and which type of probate bond is required. The cost of probate bonds range from $500-$10,000 a year. The longer probate lasts for the higher probate fees will be.
A person that is a beneficiary to a will that is in probate can get a probate loan. A probate loan allows a person to get a loan of $5000-$250,000 in 5-10 business days; the size of the loan depends on how much the person will inherit when probate is finished. A probate loan usually becomes due when the person receives their inheritance.
How To Avoid Probate
Probate can be very frustrating and stressful for the deceased’s heirs. In addition, probate costs can really add up if the probate lasts for several years, reducing the amount of estate that the deceased’s heirs will inherit.
To help avoid probate or at least decrease the amount of time a will is in probate, people should ensure their will is properly formalized and legal, and that all past debts are paid off. In addition, people can bequeath their estate to someone using a pay-on-death designation. Couples can avoid probate by filing for joint tenancy. People can also help avoid their will going into probate by gifting money, estate and items to loved ones; however, gifts cannot exceed $25,000.
Some software companies have made special software to help people learn about and prepare their wills themselves. The cost of probate software is around $50. Probate software can be purchased online or at some computer software stores. Using probate software is the least expensive way to make a legal will. People can also make a legal will at a courthouse for $100-$300 or with a lawyer for $300-$1000. Using probate software can save people hundreds of dollars on probate fees.
How Long Does Probate Take?
Probate usually takes 1-2 years. However, if the deceased has no will, the will is contested or the deceased has an extremely large estate, probate can take 5-10 years. The longer probate lasts for, the higher probate cost will be.