If you recently lost a loved one and are serving as the executor or executrix of the loved one’s estate, you’re likely walking through the first few steps of the probate process.
Probate — the legal process of settling a deceased individual’s estate — can be confusing, time-consuming, and, perhaps most surprisingly, pretty expensive.
How much does probate cost on average?
Probate and the estate settlement process costs an average of $14K for each estate and typically lasts over a year.
That fee average includes:
- Court fees
- Filing Fees
- Notary Fees
- Travel fees
- Costs of selling assets
- Legal fees
- Executor fee
- Useful Software & Tools
- Any other professional help
Let's look at a few of those a bit more.
Common Fees and Probate Costs
Many executors are often surprised by the amount of small court fees incurred during the probate process.
Those fees might be small, but they do add up quickly. Let’s take a look at some of the court fees you might encounter:
Probate Filing Fees ($50-$1,200)
You’ll need to pay initial fees to file the estate settlement documents with your local probate court in order to begin the probate process. There are all sorts of documents you may have to file, and most include a fee to do so.
Although these fees vary from state to state, expect to pay anywhere between $50 to $1,200 to file the initial petition with the probate court*.
Certification Fees ($20 per copy)
As the executor, you will likely need to receive certified copies of the letters of administration or letters testamentary from the probate court. You might need these copies to show to your local bank, DMV, insurance companies, debtors as you work to settle the decedent’s estate.
Expect to pay up to $20 per certified copy of this documentation.
Surety Bond ($0-$2,000+)
Surety bonds, or more specifically probate bonds, are a form of insurance that protects beneficiaries and creditors if the executor or personal representative messes up or abuses the probate process. Many wills waive this requirement, but on average a surety bond costs 0.5% of an estate's value. So if the total probate asset value of an estate is $800k, then the probate bond would cost ~$4k.
Notice to Creditors Fees ($50-$500+)
Executors are required to file notice to creditors during probate, which is when you let anyone that may be owed money by the deceased know that the estate has started probate. This typically involves posting a notice in the local newspaper of where the deceased lived, which can range from a small sum to hundreds of dollars, depending on the length and how expensive the relevant paper is.
Miscellaneous Fees ($500-$15k+)
In addition to filing fees and certification fees, you will encounter miscellaneous expenses at each step of the probate process. Here are some of the fees that you need to consider:
- Mailing expenses to send notifications to heirs and beneficiaries
- Copying expenses for making copies of the will, death certificates, or other documents
- Legal fees if you decide to consult an probate attorney (here's how much a probate attorney costs)
- Notarization fees if any documentation needs to be notarized
- Storage fees for any assets that need to be securely stored
- Estate maintenance expenses
- Estate sale preparation fee
- Travel expenses
- Asset liquidation and valuation expenses, including real estate agents, appraisals, etc.
These fees aggregate in the long run and can prove to be costly.
You’ll need to ensure that you maintain a thorough, detailed budget as you encounter each expense, but that doesn’t mean executors and personal representatives have to pay it all themselves!
Almost all expenses incurred during the settling of an estate, including executor fees, can be written off, much like business expenses.
You just have to keep track!
But…
Unexpected costs and fees during the probate process can shock even the most experienced of executors.
The easiest way to avoid those shocks?
Figure out what makes probate more or less expensive.
Let’s see what that’s all about.
What Determines the Cost of Probate
There are four main factors:
- The Size of the Estate
- The State Where the Estate is Located
- The Complexity of the Estate Plan
- Ensuing Legal Battles
Of course meetings, misc. travel expenses, gas, and other smaller expenses add up, but these are the ones you need to pay the most attention to.
Let’s take a look at each factor separately in more detail:
#1 The Size of the Estate
Before you can estimate how much probate will cost, you first need to have a thorough understanding of the size of the entire estate.
As a reminder, an estate is everything someone owned. Not just their house.
And we’re not talking about just large assets like the house, land, and vehicles either.
We’re talking about all probate assets.
What determines whether an asset is a probate asset? I’m glad you asked.
Probate assets are all assets that must go through the probate court according to the local probate law.
Probate assets are generally all individually-owned assets that are not transferred through non-probate methods like transfer-on-death accounts.
That can include homes, vehicles, jewelry, cash, investment accounts… most things owned solely by the individual.
If that’s confusing, then the definition of non-probate assets might offer a better explanation.
Non-probate assets are assets that are jointly-owned or transfer automatically upon the death of one of the owners. These assets are typically associated with joint tenancy laws, life insurance policies, or with transfer-on-death accounts.
If you’re still unsure of whether the deceased’s belongings are probate or non-probate assets, that’s because there’s a lot of nuance, which is why we wrote a comprehensive guide.
You can check out that guide here.
Moving on…
Once you’ve determined whether an asset will go through probate or avoid the process entirely, you should have a better idea of the size of the estate.
Note: you can also add all of the assets up in Atticus to make building that inventory way faster.
Can you skip probate entirely?
Here’s where things get a bit more tricky: the size of the entire estate will determine whether the estate needs to go through probate or can avoid probate.
If an estate’s total probate assets are below a certain threshold, it is possible that the estate can avoid probate.
In some states, the threshold for an estate to avoid probate is $50,000. In other states, the threshold is as high as $100,000.
Each state has its own threshold, so you need to research your state’s probate laws to determine what the probate threshold is.
If the deceased’s estate has probate assets that exceed the minimum threshold, then the estate will need to go through the probate process.
An Atticus shortcut is to just assume you’ll have to go through probate if they owned a house. Most people blow right past that small estate affidavit ceiling with a home.
But even if you have a home, you may not need to go through full probate, which is what we like to call the highest level of probate.
For more on figuring out what level you’re in, open an Atticus account or have a look at our Beginner’s Guide to Probate.
The more assets that the estate has, the more expensive the probate process will be. There are a number of reasons for this: higher state estate taxes, more assets to inventory, more assets to appraise, a longer distribution process, and more chances for clerical or administrative issues.
Although each estate’s value and total probate costs will be different, having a clear estimate of the estate’s value and expected costs will ensure a smoother, more efficient probate process.
#2 The State Where the Estate is Located
Because each state has its own unique set of probate laws, the probate costs for the estate will be directly correlated to the domicile (location) of the estate.
When an individual passes away, the estate's domicile location determines which probate laws the estate falls under, both for interpretation of the will and for intestate (dying without a will) distribution.
What if the individual had multiple houses?
Unfortunately, you can’t pick and choose your domicile to gain a more favorable tax rate or more affordable probate process.
(well at least after someone passes away. People do it all the time beforehand. E.g. domiciling in TN but spending a lot of time in NYC)
To determine the estate domicile, the court looks at the following factors:
- Whether the deceased was on temporary work detail, attending school, or stationed in the military
- Place of the deceased’s employment
- Location of the deceased’s personal residence(s)
- Location of the deceased’s family
- Where the deceased’s vehicles are registered
- Where the deceased is registered to vote
- Whether the deceased files a state tax return
- Other facts reflecting the deceased’s involvement and ties to the community
Because death taxes are applied based on the deceased’s domicile, it’s important to know exactly where the domicile is located. Only a handful of states have estate and inheritance taxes, but choosing the wrong domicile could have drastic consequences on the estate during probate.
Here’s a breakdown of inheritance and estate taxes by state:
If you’re still unsure about the deceased’s domicile, check out our Guide to Estate Domicile. This comprehensive guide will walk you through the steps to figure out the correct domicile for the estate.
#3 The Complexity of the Estate Plan
The third factor that can influence the cost of probate is the complexity of the deceased’s estate plan.
Each estate looks different, but there are a handful of questions that you should be asking as you prepare to begin the probate process:
- Did the deceased have a will?
- Did the deceased have many assets?
- Did the deceased have multiple residences, and have we determined the domicile?
- How many beneficiaries are there?
- How many heirs are there?
- Did the deceased have debt?
- Are there any will contests?
- What taxes are owed?
- Can we access the safe deposit box?
Answering each of those questions individually would require another article (or even a few more articles), so let’s just focus on a few of the highlights.
It is important to know if the individual died testate (with a will) or intestate (without a will). Testate or intestate settlement will have a huge impact on the entire probate process.
Testate and intestate distributions look very different.
When an individual dies with a will, the will is used to determine which beneficiaries receive which assets.
When an individual dies without a will, however, inheritance will occur according to the state’s intestate distribution laws.
To read more about testate versus intestate inheritance, check out our resource here. This guide offers a thorough overview of the testate and intestate estate distribution process.
But what if you don’t know whether the deceased created a will or not? You’ll need to begin searching for the will immediately.
If you don’t know where the deceased’s will is, there are a number of places to begin the will search: the deceased’s local clerk of court, house, personal safe, safe deposit box, family members and friends, attorney office, and bank are all good places to start.
Searching for the will can add unnecessary costs and stress to the probate process. To learn more about searching for the deceased’s will, please visit this article that we have put together.
What if there is a will but the beneficiaries disagree on the validity of the will?
You might have a will contest on your plan, which will cause further stress and only generate more expenses during the probate process.
The concept of will contests ties directly into our fourth factor that influences probate cost:
#4 Ensuing Legal Battles
You’ve found the will, appraised the assets, created an inventory, and submitted the estate paperwork to the probate process.
But then you encounter a problem—the estate beneficiaries disagree on whether the will is actually valid or not.
Settle in. You have a will contest on your hands. This legal battle can take many months — even years — to resolve and can become very expensive.
In simplest terms, a will contest is a legal proceeding that occurs in probate when interested parties file a claim with the probate court to dispute the validity of the document.
Why might someone try to legally dispute the validity of the will? There are usually a few main claims:
- The testator (will creator) was not of sound mind when they created the will.
- The testator was under duress or undue influence.
- The document was forged or altered.
It’s important to note here that any random person cannot contest the validity of the will.
The only people that can file claims against the will are interested parties to the estate.
In the eyes of the probate court, an interested party is someone who has something to gain or lose from the contents of the will. This implies that the individual is either a beneficiary listed in the will or one of the deceased’s legal heirs.
To avoid long, complicated legal battles, an executor needs to maintain careful records regarding the will’s origins.
As the executor of the estate, you need to be able to answer the following questions:
- When did the testator create the will?
- When did the testator sign the will?
- Who are the witnesses listed on the will?
- Who notarized the will?
- Who are the beneficiaries listed in the will?
- Who are the beneficiaries or heirs that could contest the will in court?
Knowing the answers to these questions will be beneficial in avoiding future legal battles during the probate process.
We now know the four factors that can influence the costs of probate. But how can you reduce them?
How Can You Reduce the Cost of Probate?
Probate is never cheap, but there are ways to minimize costs and unnecessary expenses during the probate process.
There are really two ways we can approach the concept of lowering costs:
- What Can the Testator Do During Their Lifetime?
- What Can the Executor Do During Probate?
Let’s first take a look at how the testator can minimize future probate costs while they are still alive.
What Can the Testator Do During Their Lifetime to Lower Costs?
There are a number of ways that an estate owner can lower anticipated estate settlement costs before their death.
Let’s take a look at some of those methods:
- Create a Trust
- Create Transfer-on-Death Accounts
- Open Life Insurance Policies
- Title Property as Joint Ownership
- Domicile in a lower tax jurisdiction
Remember when we discussed the idea of non-probate assets earlier? Each of these steps will convert assets from probate assets to non-probate assets.
A trust account is a valuable vehicle to store and transfer assets.
Trusts avoid probate and maintain the privacy of the creator, so this is a great option for anyone looking to avoid both the publicity and difficulty of probate.
As we discussed earlier in this article, transfer-on-death accounts, life insurance policies, and joint ownership assets are helpful tools in transferring assets upon death
This ensures that the assets avoid probate and transfer to the named beneficiaries smoothly and efficiently.
If those are the steps that a testator can take during their lifetime to minimize probate costs, what can an executor do before or during the probate process to ensure that there are no unexpected costs?
What Can the Executor Do to Lower Costs During Probate?
To lower the cost of probate, an executor needs to do the following: plan, organize, and budget.
Let’s take a look at each action individually:
#1 Plan
Remember the four factors that influence probate costs that we discussed earlier? The factors were the size of the estate, the state where the estate is located, the complexity of the estate plan, and any ensuing legal battles. The executor must create a plan for how each specific factor will be addressed.
This means the executor will need to ask the following questions: what is the size of the estate, and how will that impact probate? Where is the estate located? How complex is the estate plan? Are there any anticipated legal battles?
Answering those questions and creating a plan to address any issues will ensure that future costs are minimized.
#2 Organize:
Organization is critical for any executor. An executor must have thorough, detailed documentation regarding any decisions made on the estate’s behalf. This will help reduce doubling any expenses or wasting more money by paying for counsel than you need.
#3 Budget
A detailed budget is essential. If any questions ever arise surrounding mismanagement or poor administration, the executor will be on the hook to prove that all executor expenses are accounted for. You should also budget and try to get the work you need done for the minimum cost. This doesn't mean you should be cheap — you should hire professionals who can do the work you need and do it well, but maybe you skip hiring the most expensive lawyer in all of Los Angeles, for example.
What we recommend doing next
If you’re a new executor, you might still be confused on what first steps to take.
That is a-okay, and that’s why we exist.
All we want to do is spare people some of the headaches of probate and get through this as quickly, cheaply, and stress-free as possible.
Probate can actually be rewarding when handled correctly, too — you’re fulfilling someone’s wishes, after all!
For a bunch of amazing tips on succeeding as an executor, check out: What Separates Successful Executors From Flops
