The Cost of Probate in 2020
The current federal estate tax exemption for 2020 is set at $11.54 Million. For many of us, this exemption amount is hardly a concern as most of us will not owe federal estate taxes upon our passing. However, what should concern all California homeowners is the heavy cost of probate. Many individuals may seek out wills to avoid probate only to learn a will does not avoid probate.
California’s Probate Code provides a statutory fee schedule to compensate administrators and their attorneys. This fee schedule bases the fees payable to administrators and their attorneys on the fair market value of the estate’s assets (disregarding liabilities on those assets) and establishes the fees as a designated percentage of each $100,000.00 in estate value. (Probate Code § 10810)
But what does this mean? The following is an example:
According to Zillow.com, the median home value in California is currently $578,267.00. Therefore, probating just the family home upon the death of the owner would be calculated as follows:
Home Value - $578,267.00
$0.00 – $100,000.00 x 4% = $4,000.00
$100,000.01 – $200,000.00 x 3% = $ 3,000.00
$200,000.01 – $300,000.00 x 2% = $ 2,000.00
$300,000.01 – $400,000.00 x 2% = $ 2,000.00
$400,000.01 – $500,000.00 x 2% = $ 2,000.00
$500,000.01 – $578,267.00 x 2% = $ 1,565.34
Administrator/Attorney Fees (each) = $14,565.34
TOTAL FEES = $29,130.68
In total, administering just the family home through probate would cost the estate a total of $29,130.68. This figure does not include other estate assets such as checking and savings accounts, investment accounts, personal property and vehicles.
Call our office or click here today to take advantage of a complimentary one-hour consultation to discuss how estate planning can minimize costs and fees to your estate and allow you to pass more wealth to loved ones.