Since avoiding probate of your estate is a primary reason for getting your estate planning documents done, understanding what probate is –and isn’t—is important.

In the specific context I’m addressing here, probate is a court process that oversees the administration of the estate of a person who died while a resident of San Diego County without a properly funded trust and who owned assets worth more than $184,500* that do not automatically transfer to a named beneficiary upon the owner’s death. The probate process is slow and it’s expensive.

Because the various stages in the estate administration process are reported to and overseen by the probate court, probate is very time-consuming. Most probate petitions take well over a full calendar year to be resolved.

The probate process is also expensive, and the associated costs are mandated by statute. After a probate petition has been filed and other procedural requirements satisfied, the court will appoint a person to serve as the personal representative of the decedent’s estate. Because the probate process is difficult to navigate, the personal representative will usually, wisely, retain an attorney.

Two of the personal representative’s main responsibilities are identifying and inventorying the assets of the estate. Cash and liquid assets like bank accounts can be listed and valued by the personal representative in the petition, but other estate assets must be appraised and valued by a personal called a probate referee, whose fee for performing the valuation is calculated at one-tenth of one percent (.001) of the assets valued.

The personal representative’s fees are based on the full value of the estate and calculated at 4% of the first $100,000 in value, 3% of the next $100,000 in value, 2% of the next $800,000 in value, 1% of the next nine million, and .5% of everything over ten million. Fees for the personal representative’s attorney are calculated using the same formula. Significantly, fees are calculated based on the unencumbered value of the property.

The best way to illustrate the significance of probate fees is by using a hypothetical. Let’s suppose Emily from Escondido died without a trust, leaving the following assets subject to probate: a vehicle valued at $14,000 and other personal property valued at $8,000; a single family home valued at $1,206,000 (with a $786,000 mortgage balance); two $1,000 Series EE US savings bonds (valued at $1,652), and cash and bank accounts totaling $26,000.

Under this hypothetical, the probate referee would be entitled to fees of $1,230 for valuing the car, personal property, home, and savings bonds. The personal representative would be entitled to $25,557 in fees, and the PR’s attorney would also be entitled to receive fees of $25,557. Statutory probate fees in excess of $52,000 are particularly harsh given that Emily’s estate has a net value of less than $469,652 and probate could have been avoided entirely with proper planning.

You can use the real-world formulas provided in the hypothetical to ballpark the probate fees that would be required if your estate had to be probated. Or get in touch and I can provide you with an estimate after I obtain some information from you about your assets.

Let’s work together to make sure the proper documents are in place so your estate will avoid probate and the amount distributed to your beneficiaries will be maximized.