Navigating the legal terrain of probate and estate planning can be overwhelming. However, there are experienced professionals who are willing to help make the process smoother and more cost-effective. An estate planning attorney can save you lots of money in the long run by avoiding expensive probate fees. When you’re not adequately prepared to deal with the distribution of assets in court, then you can lose a lot of the asset value in probate fees.
What Do Probate Fees Include?
If someone passes away and has assets, whether or not they leave a will or unless they have prepared a Revocable Living Trust, the beneficiaries of the assets will have to go through the state court system and stand to lose a lot in probate fees.
These probate fees are varied, with many of them hidden until payment is due. They include, but are not limited to the following;
- Personal representative fees
- Fees for the attorney
- Accounting fees
- Bond fees
- Appraisal and business evaluation fees
- Other miscellaneous fees
After going through the process, and incurring all of these fees, beneficiaries can lose between 3% to 8% of their assets. Fortunately, this isn’t the only way to leave your assets. These fees can be dramatically reduced to the equivalent of 1% – 3% of the total assets with the help of an estate planning attorney.
The Expense of Probate Fees
You may be wondering how much probate costs, and what the impact will be on those left behind. The overall cost will vary depending on the type and value of the estate’s property. A general rule of thumb is that the greater the value of the estate, then the more the probate will cost.
In general, state law dictates the benchmark for court fees, executor fees and attorney’s fees. Other costs will be determined by the estate, such as accounting fees, appraisals and business valuation fees, bond fees and miscellaneous fees.
The cost of probate covers the above-mentioned fees which can change in value depending on the complexity of your case. For example, the filing fee to open probate is typically a few hundred dollars regardless of the estate, but the bond fees will be largely determined by the size of the estate.
Is There A Way To Avoid Or Lessen Probate Fees?
A way to avoid probate for several types of assets including real estate, bank accounts, vehicles, etc. It requires a trust document and to name someone as a successor trustee and then transfer ownership of your property to yourself as the trustee of the trust.
This includes the “right of survivorship” that automatically transfers ownership of the property from one to the other. In Florida, this can be done by joint tenancy or tenancy by the entirety.
Payable-On-Death (POD) Designation For Bank Accounts
A POD designation can be added to bank accounts so that a beneficiary can claim the money after your death without going through probate court proceedings. While you’re still alive, the POD beneficiary has no rights to your money.
Transfer-On-Death (TOD) Registration For Securities
It’s possible to register stocks and bonds with a TOD form that names a beneficiary to inherit the account automatically after your death, with no need for probate proceedings. Instead, the beneficiary will deal directly with the brokerage company.
Some states offer other options such as transfer-on-death deeds for real estate and transfer-on-death registration for vehicles. However, Florida does not allow for these methods.
Responsibility of Paying Probate Fees
When someone passes, there will be loose ends to tie up. While the costs of probate may not fall on the beneficiary or executor per se, the expense will most likely be taken from the value of your assets.
The executor will first pay any outstanding taxes or bills, such as hospital fees if you passed away after being hospitalized. Some assets may need to be liquidated in order to cover these costs. If there is not enough value in the estate to cover all costs, then it will become insolvent. In this instance, the beneficiary may receive nothing.
Get Help From An Estate Planning Attorney
At Handin Law, we have more than 50 years of experience helping clients with their estate planning and probate needs. Contact us at 954-796-9600 to find out more about how we can help cut down your probate fees. We also offer other estate planning advice.