On a $500,000 probate case, fees paid to attorneys, the court, and third parties would probably add up to between $13,890 and $26,890. Probate is often more complex, more stressful, and more time consuming in cases involving large estates (say $5M or more).
“Probate” comes from one of those Latin words that lawyers love to use. Basically it means “to prove.” When you leave a will, someone has to prove to a court that the will is valid. (It’s possible to avoid probate by putting your estate into a living trust. But I discussed that in several 2010 and 2011 blog articles.)
There are three key ways a California probate attorney like me helps clients:
- By consulting with family members
- By going to court with clients or on their behalf (and preparing all of the necessary court paperwork and consulting with the executor on a range of issues that may arise)
- By providing administrative help such as arranging for maintenance or sale of a property (note: this is not one of our “duties” so we bill extra for this service)
Some fees in probate cases are paid to us, some are paid to the court, and some are paid to outsiders. Here is a breakdown:
Fees paid to the Court
- There is a $395 fee payable to the Court for each petition you have to file. In simple probate cases you only have to file two petitions: the initial “Petition to Probate” the estate and a Petition for Final Distribution.
- For more complex cases, you may have to file additional petitions.
- You’ll also have to file a Notice of Probate in a newspaper. You are required to use only certain newspapers, and their charges will vary. Expect the notice to cost anywhere from $100 to $450.
Fees paid to the attorney
Our ordinary attorney’s fee -- called a “statutory” fee -- is based on the fair market value of the assets in the estate. The fee doesn’t take liabilities into account. The probate code establishes a sliding scale:
- 4% of the first $100,000
- 3% of the next $100,000
- 2% of the next $800,000
- 1% on the next $9,000,000
- 0.5% on the next $15,000,000
- A reasonable fee thereafter
Say the only asset in an estate is a $500,000 house, and there is a $400,000 mortgage on it. The statutory fee would be $13,000 based on the full $500,000 value:
- 4% of the first $100k = $4,000
- + 3% of the next $100k = $3,000
- + 2% of the remaining $300,000 = $6,000
- Total: $13,000
Fees paid to the executor
The executor is entitled to charge the same fee as the probate lawyer charges. Often the executor is a family member who will waive the fee. (Most family members start out saying “it’s my family; I’m not going to charge." But in many cases they change their minds after they see how much work is involved and that no one else is helping.)
All of the assets that the decedent owned need to be “inventoried” and “appraised”. The Court appoints the appraiser, whose fees are 0.1% of the value of the appraised assets (so in a $500,000 estate the appraisal fee would be $500).
Here’s how the fees would add up on a simple $500,000 probate case.
- $395 Court filing fee
- $100 publication fee
- $500 appraisal fee
- $395 fee to file Petition for Final Distribution
- $13,000 attorney's statutory fee (see above example under "statutory fee")
- Possibly a
$13,000 executor’s statutory fee
- Total: $14,390 to $27,390
Special circumstances or needs
The above example assumes that everything goes smoothly. If problems pop up, it will take extra money to deal with them. For example, it may turn out that the decedent hadn’t filed any tax returns in years. Or it may be necessary to sell the real estate. For dealing with extra matters, the attorney and the executor are allowed to each charge “extraordinary fees.”
(The difference between “ordinary” services and “extraordinary” services is that the court gets to decide whether the “extraordinary” services were necessary or not and also whether the proposed fee for them is reasonable or not.).
Hiring an experienced probate attorney
If you need probate legal services, consider hiring my firm. Please ring my office at 650.325.8276, or get started here at this website.
If you need free resources, check out the answers I post on Avvo, the items in our Resource Room, and more articles on probate at this blog.
All the best,
Q: What is the best way for my parents in China to give me money for buying a house in the United States?
My parents in China are ready to transfer $20,000 to me as a gift because my boyfriend and I plan to buy a house together. So far though, I'm just in the U.S. on a visitor's visa. How should I handle this to minimize tax on the gift? Should I ask them to transfer it into my boyfriend's bank account?
A: Having your parents transfer $20,000 to a bank account inside the U.S. is not necessarily a good idea from a gift tax standpoint. If you are here in the US on a visa (rather than a green card), it might be a better idea for them to transfer the money to you in China (for example, to your bank account in China, assuming you have one). That way the entire gift takes place "offshore", and would not be subject to US gift taxes.
Here is a sketch of three possible scenarios:
- Scenario 1: Having your parents make one $20,000 transfer to a bank account inside the U.S. -- since gift tax limit is $13,000, your parents would owe gift tax on the remaining $7,000. They would need to file a gift tax return (Form 709) and if the cumulative amount of the gifts exceeded $60,000 then they would have to write a check to the IRS.
- Scenario 2: Having each of your parents transfer $10,000 to a bank account inside the U.S. -- since each transfer is under the $13,000 limit, your parents would not owe gift tax.
- Scenario 3: Having your parents make the transfer to your bank account in China -- there is no limit on the transfer amount, but you may have to report the existence of the account under the "FBAR" rules if you are required to file a US income tax return
An FBAR is a Report of Foreign Bank and Financial Accounts. U.S. tax law requires that this report be filed by "any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year."
Even though your parents are non-resident aliens for US tax purposes, if they make the gift in the U.S. (by depositing it to a U.S. bank, for example) they are subject to the $13,000 annual gift tax exclusion -- they would also have to pay gift tax on the difference. Therefore, another suggestion would be for your father to gift $10,000 to you and then for your mother to separately gift $10,000 to you. That way, each gift would qualify for the gift tax exclusion under US laws.
New Guide: Buying U.S. Real Estate When Your Child Studies in America
International Estate Planning and Structuring Real Estate Ownership
Risks and Rewards of Buying U.S. Real Estate as a Non Resident Alien
The Sasakis Learn Risks of Online Legal Forms: An International Estate Planning Example
All the best,
Everyone with a high net worth should put together an estate plan. Here is an example showing how people with complex financial circumstances benefit from finding the right legal advisor. For more examples, see my latest guide and checklist.
Meet Sanjay and Ling, U.S. residents with young children born in the U.S.
Meet Sanjay and Ling, young, bright, hard working professionals. They don’t think of themselves as rich, but they have substantial savings. They want to make sure their two young children are cared for if anything bad happened. They are not U.S. citizens, but their children were born in the U.S.
An experienced estate planning attorney will know which laws apply. And by establishing a long-term relationship, the attorney can help Sanjay and Ling update their plan as their family grows, as their finances change, and as they move to new places. They will also counsel fiduciaries in connection with carrying out legal responsibilities - whether they are personal representatives, trustees, or guardians.
If their proposed guardians don’t live in the U.S., the kids are at risk of having the Court not permit them to be taken out of the U.S. – or at least there might be a protracted guardianship dispute/case. There are also issues with making sure the kids have passports that permit them to travel with someone other than their parents.
How does the attorney know what Sanjay and Lin want?
First he or she works with the couple to gather personal data and financial information. This is their estate plan, so the attorney needs to review personal data and financial information, and discuss a potential plan to meet their goals and objectives. The attorney needs to learn about their family and how the various members handle money. This is sensitive information, something not always easy to talk about. But an experienced estate planning attorney won't be shocked by any characters lurking in the family tree – everyone has them!
Both spouses meet a few times with the attorney to discuss goals, values, and -- maybe most importantly -- what they want to avoid. In the process, Sanjay and Ling discover that they have very specific wishes they want someone to carry out were something to happen. The attorney listens carefully and prepares the appropriate strategy and documents.
Few estate planning lawyers have the knowledge and expertise to avoid the pitfalls in these situations
Sanjay and Ling are made up people. But if your circumstances are anything like their, I do recommend that you retain an attorney familiar with helping non citizens and non residents.
Also, here are guides I've published that might help you:
All the best,