Probate: Many people have heard of it, few know what it is.
Probate is the court supervised procedure in which your property is inventoried, your debts are paid, and your property is distributed to your beneficiaries. If you die with over $150,000 of assets and you do not have a living trust, your estate will most likely go through probate, even if you have a will. If your estate is less than $150,000, or if you are married and it is your spouse that died, there are a variety of summary administrative procedures that can be used to transfer property to your spouse or your heirs.
The two main problems with probate are time and expense. A typical probate will take nine to eighteen months from start to finish. Probate attorney fees are based on the gross value of your estate.
For example, an estate consisting of a $500,000 house will generate probate attorney fees of $11,150, even if there was a mortgage on the house. This attorney fee does not include fees for extraordinary services, such as fighting a will contest, selling real property, or preparing tax returns. These are all billed at the attorney’s hourly rate.
In addition, your personal representative is entitled to the same percentage fee as the attorney. In the above example, your personal representative would also be able to receive a $11,150 fee for a total of $22,300 in fees. In the case of a living trust, the fees to settle the trust, including the fees payable to your trustee, would typically be $2,000 to $10,000 and the trust would be able to be distributed within six months (in many cases).
In most cases, probate should be avoided. In all cases, it can be avoided through proper estate planning. Sometimes, however, you have no choice. It is at those times you need an attorney who is familiar with probate and who can navigate you through the process.