“If you fail to plan, you are planning to fail.”Benjamin Franklin
This old motto rings true for estate planning. Did you know that a couple spending approximately $2300 on a living trust, that is part of a comprehensive estate plan, can save their beneficiaries upwards of $29,000 in probate fees and expenses on an estate valued at $500,000? An estate planning attorney can guide you step by step through the process to help you to distribute that $29,000 to a beneficiary instead of paying probate fees.
The probate court in California provides a court supervised process for transferring assets to the beneficiaries listed in one’s will or for those who die intestate (without a will or trust). California probate code section 10810 sets forth statutory fees based on the gross estate value of your assets at your death.
Assets include the value of real estate, business interests, bank accounts, investments, personal property and household goods. The probate estate generally does not include retirement accounts, life insurance or assets placed in living trusts. If your assets (those in your name alone with no designated beneficiary) are not in a living trust when you die, and the total of such assets exceed a specified threshold (currently $150,000), they would be subject to probate court oversight. The ownership of real property (in your name only) at your death may also trigger a probate proceeding, in the absence of a living trust.
Compare Probate Fees With Cost To Establish a Living Trust
Depending on your individual circumstances and the complexity of documentation and planning required to achieve your goals and objectives, the cost of establishing a comprehensive estate plan can range from $1800 to $5000. This initial investment in your estate plan can save your beneficiaries thousands of dollars in probate costs and fees.
In most cases, a flat fee for establishing an estate plan will include the attorney’s fee for discussing your estate plan with you and for preparing a living trust agreement, your will, durable power of attorney or other necessary legal documents; supervision over their execution; and services or instructions for funding your living trust.
See the statutory probate fee chart below to compare costs:
CALIFORNIA STATUTORY PROBATE FEES & COMMISSIONS
Probate Code Sections 10800 & 10810
Gross Estate Attorney’s Fee Executor’s Court Costs Total
|$150,000||$5,500 +||$5,500 +||$2,000||= $13,000|
|$200,000||$7,000 +||$7,000 +||$2,000||= $16,000|
|$300,000||$9,000 +||$9,000 +||$2,000||= $20,000|
|$400,000||$11,000 +||$11,000 +||$3,000||= $25,000|
|$500,000||$13,000 +||$13,000 +||$3,000||= $29,000|
|$600,000||$15,000 +||$15,000 +||$3,000||= $33,000|
|$700,000||$17,000 +||$17,000 +||$3,000||= $37,000|
|$800,000||$19,000 +||$19,000 +||$3,000||= $41,000|
|$900,000||$21,000 +||$21,000 +||$3,000||= $45,000|
|$1,000,000||$23,000 +||$23,000 +||$3,500||= $49,500|
|$2,000,000||$33,000 +||$33,000 +||$4,000||= $70,000|
|$3,000,000||$43,000 +||$43,000 +||$5,000||= $91,0000|
|$4,000,000||$53,000 +||$53,000 +||$6,000||= $112,000|
The fees above do not include other third party costs.
4% of first $100,000
3% of next $100,000
2% of next $800,000
1% of next $9,000,000
½ of 1% on the next $15,000,000
Reasonable amount above $25 million
The information above is for general information and should not be construed as legal advice or legal opinion. You are urged to consult with your own attorney on any specific legal questions you may have.
Cost of Doing It Yourself May InvalidateYour Trust
It may be tempting for a “do it yourself” kind of person to dive in and attempt to write all the documents yourself. Beware this temptation! The risk of inadvertently invalidating your estate plan is great. The cost to correct an innocent mistake is high. You may end up paying an attorney more than the cost of setting up an initial trust in order to correct any mistakes. A living trust is a legal document which should be prepared by a qualified lawyer.
Save Money During Your Lifetime With An Estate Plan In Place
An estate plan consists of more than just a will or trust. A comprehensive plan will also include a Durable Power of Attorney for Finance. This document is valid only during your lifetime and allows you to nominate an agent to be your alter ego, in the event that you become incapacitated. Without this document in place, a conservator may be required to act on your behalf where there is a medical finding of mental incapacity. The cost to file a conservatorship petition in court can be thousands of dollars more than the cost of establishing a complete trust and estate plan.
In addition, your living trust may include an incapacity provision, which allows your successor trustee to take over trust administration in the event of your incapacity during your lifetime. The cost to establish a trust after a diagnosis of mental incapacity can be thousands of dollars more than the cost of establishing a trust when you are healthy and well.
Most of us do not want to have that conversation with our spouse, partner or children. However, it is often the most treasured gift that you can leave to your loved ones. A well planned set of legal documents that provide detailed instructions on how you want various aspects of your life handled both during your lifetime and after your death is invaluable. Consult with an estate planning attorney. Your family will thank you both now and later.