Written by Kiran Dhillon, Esq., MBA
Costly Probate Fees Avoidable with a Trust
Did you know that if you do not have a trust, your estate will most likely be subject to Probate after you die? Many people wish to avoid Probate for several reasons, including having their estate go through a public court administration, and to avoid costly Probate fees. Under California Probate Code § § 10800 – 10810, the minimum Probate fees charged for ordinary services for the personal representative and for the attorney is based on the value of the total estate, as follows:
- 4% of the first $100,000,
- 3% of the next $100,000,
- 2% of the next $800,000,
- 1% of the next $9,000,000,
- 0.5% of the next $15,000,000, and
- For all amounts over $25,000,000 a reasonable amount determined by the court.
Calculating Probate Fees
For example, if you have a home worth $500,000, a mortgage of $300,000, and bank accounts worth another $500,000, the total value of your estate would be $1,000,000, regardless of the mortgage. You would be subject to the following probate fees:
- 4% of the first $100,000 = $4,000
- 3% of the next $100,000 = $3,000
- 2% of the next $800,000 = $16,000
TOTAL = $23,000 in ordinary fees alone (not including extraordinary fees)
$23,000 x 2 = $46,000 in total Probate fees (for the attorney & personal representative)
The fees are essentially doubled because the attorney for the personal representative is entitled to the above fees, as well as the personal representative for the estate. In addition, under California Probate Code § 10811, there are also extraordinary services that an attorney may perform and request compensation for.
Many people are unaware that only having a Will still requires you to go through Probate.
The Benefits of a Revocable Trust
Having a trust is the best way to prevent having your estate go through Probate and to avoid these statutorily determined fees. When you pass away and have a trust, a private “trust administration” is conducted outside of the court system, which is not subject to the above statutory fees. A private trust administration can greatly reduce the costs of distributing your estate for your loved ones.