Who Pays Probate Fees?

The probate process can be difficult, especially while grieving a loved one. In most cases, the decedent’s estate goes through a legal process called probate where a court oversees the distribution of their assets, ensures their debts are paid, and settles all disputes over the estate. There are different types of fees paid throughout the probate process including court fees, potential attorney fees, and expenses for filing notices to creditors. Probate fees are paid through the estate of the deceased individual before distributing the remainder to beneficiaries (the people listed to inherit the various aspects of the estate).  This article will provide a clearer picture of the factors that affect probate fees, along with the best methods to avoid probate fees altogether. 

What Affects Probate Fees?

There are quite a few factors that influence how much probate fees will cost. How organized an individual is before they pass away can directly affect the difficulty of the probate process and potential fees. Let’s break down some of the situations that commonly incur fees: 

Existence of a Will

Passing away without a will is called “dying intestate.”Without the existence of a will, the probate process becomes mandatory. Though each state’s laws differ, most require the entirety of a person’s estate to be examined and dispersed according to the probate court’s determination. This process can be long and may require the help of a probate attorney. 

While having a will does not necessarily mean that heirs can avoid probate, it does make the process more manageable. Smaller, more straightforward estates can petition the court to avoid the full probate process (though each state has a different definition of a “small” estate). Large estates with an updated and clear will can reduce probate fees and simplify the probate process if all necessary documentation and assets are in order. 

Complexity

The more complex a will is, the more drawn out the probate process will be. Complex estates often have diverse assets or debts that need to be settled before probate can close. A diverse estate translates to a heavier workload for the attorney (and a greater payout to them). Firms can charge, on average, $250-$450 per hour based on the complexity of the estate. Depending on the state and estate size, it may be possible (and worth the money saved) to go through the probate process without the help of an attorney. 

Length of Probate

The length of the probate process directly influences how high fees will climb. On average, probate takes a minimum of four months and often closes within a year. The executor and attorney are both paid during the process. Some states put a maximum on the amount a lawyer can receive, but you can expect to pay anywhere from 4%-7% on average for attorney fees. If you suspect probate will take longer than average, it may be financially advantageous to negotiate a flat-rate fee with your attorney. 

Is There Any Way to Avoid Probate Fees?

With pre-planning beneficiaries in some states may be able to avoid probate. Let’s break down a few common methods used to avoid paying probate fees: 

Joint Ownership

Joint ownership allows a decedent to pass property to the surviving owner without having to navigate the probate process. There are a few ways to establish joint ownership: joint tenancy with a right of survivorship, tenancy by entirety, and community property. 

Joint tenancy means that property is passed to the owner still living through a “right of survivorship” (or, the asset automatically transfers to the surviving party). Tenancy by entirety means the same, but is reserved for those who are legally married. Community property laws ensure that the property owned by a spouse is passed to their surviving spouse. However, community property laws are only practiced in nine states; Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. 

Living Trusts

A person, called a grantor, may pass on an asset by creating a legal document called a living trust. A grantor can create a “trust” that places caretaking responsibility in the name of a trustee (person receiving the asset) to eventually take ownership when the grantor dies or becomes incapacitated. Trusts may help save on probate fees, but can be expensive to create and often require the assistance of an attorney to ensure they are not vulnerable to future contests or legal litigation. Read more about creating a living trust here. 

Payable-on-Death Registrations

Arranged through a bank or credit union, a payable-on-death account allows a person to add a beneficiary to their account. When the account owner dies, their assets immediately transfer to the beneficiary, bypassing the probate process. 

Give Away Assets During Your Lifetime

Assets gifted to an heir (before death) don’t have to go through probate and therefore are not subject to probate fees after death.  

An important note about gifting money to beneficiaries or heirs: the IRS limits the annual amount one person can give another without paying taxes on that money. The 2024 limit, also called the “annual gift tax exclusion,” is $18,000. 

How To Reduce Potential Probate Fees

In cases where probate cannot be avoided, there are still choices you can make to keep costs low and make the process go more smoothly. In this next section, let’s discuss the ways that you can avoid potential probate fees. 

A Clear & Organized Will

As we learned above, wills must go through probate. However, l getting specific about which beneficiaries receive what parts of your estate can help reduce the complexity and duration of the process, keep attorney fees low, and resolve probate quickly. 

Estate Planning

It is best if the processes described above (in the section on avoiding probate)  are done before a person dies.  Estate planning simplifies the probate process. 

Debt Consolidation

Debt can remain even after a person passes. Through the estate, the decedent’s debts are paid before beneficiaries get their inheritance. Debt greatly increases the complexity of the probate process and fees. Consolidating the decedent’s debts reduces the number of creditors that come forward to collect from the estate. 

Negotiation

It’s best to negotiate a contract that works with the needs of the estate. A lawyer, paid hourly, may only be required for simple probate processes. More complex estates should consider a flat rate so if a lawyer’s hours start to add up, the bill does not. 

Can You Contest an Executor’s “Reasonable” Compensation?

Executors are paid out of the estate, and the amount varies by state law. For instance, in California, there is legislation that states executors get 4% if no compensation is predetermined in the will. Any interested party may file a formal disagreement (called a contest) with the court and lay out their formal argument for disagreeing with the compensation. 

What’s the Statute of Limitations on Probate?

The statute of limitations to file a claim against a deceased person's estate depends on the state they lived in, but averages  1-4 years after the death of the testator (the decedent). The clock begins immediately following the death of the testator and must be initiated within the state-specified period to be valid. Creditors are barred from making claims one year after the death of the testator.

How to Find a Good Probate Attorney

Expertise.com has done the research for you! First, read our article on the 6 steps to hire a probate attorney. Once you’ve got the basics down, check out Expertise.com’s directory, where we list the top probate attorneys in each state. If you are unsure which provider might best fit your needs, let our concierge service find the most suitable attorney in your area by calling 848-BookPro (848-266-5776).