Monday, November 16, 2009

Today's Probate Answers

How are probate fees calculated?

The way probate fees are calculated is exceedingly unfair to your family. State law sets the probate fees that attorneys and personal representatives can charge. Many states allow attorneys to charge any fee that the court considers reasonable, without any limitations. Other states limit the fees to a fixed percentage of the estate. Under either method, the fees can be very expensive.

Probate fees are often levied at each spouse’s death. Depending on how title was held on the date of death, a married couple could pay some form of probate fees on the death of each spouse.

Not only are these fees excessive, but the manner in which they arrive at the size of your estate bears little resemblance to its actual value. In states that use the percentage of the estate method, probate fees are calculated on your estate’s gross value without deductions for liens or encumbrances. This means that if you have property worth $100,000 but owe $90,000 to a bank or some other financial institution, your probate fees will be based on the full $100,000, not the $10,000 equity interest you actually own. As you can see, this valuation method unfairly increases the size of your estate and results in the payment of larger fees.

How much does Probate cost?

Despite what probate lawyers say, probate can be very expensive. A recent national survey revealed that the average cost is between two and three percent of the gross value of the estate. A full sixty percent of the cost goes to lawyers and forty percent to personal representatives and others. One legal scholar who urges a reform in the probate system remarked that “the cost of probate expands to consume the money available.” Small estates are particularly vulnerable because even reasonable fees can eat up a large percentage of an estate’s assets. There just isn’t that much to go around. Remember, every dollar that goes to pay probate costs is a dollar that could benefit your family.

How long does Probate take?

The slow progress of your estate through probate can be very frustrating for the family. Although this complex process usually takes at least one and a half years to complete, many estates take years. Most people assume that their estates are simple and will glide through the system. Regardless of how simple an estate appears, it’s very difficult to close a full probate in less than a year. That’s because of all the steps that must be completed to the satisfaction of the court.

Are the details of the estate kept private in Probate court?

No. All probate proceedings are open to the public. Anyone who has an interest can pull your probate file and examine every detail of your financial life. The file will disclose an inventory and appraisal of every asset you owned at death. It reveals the name of all your creditors and amount owed to each. It lays out the names of all your beneficiaries and the amount and conditions of their inheritances. This information is often compiled and sold to those who use the information to sell products and services to vulnerable surviving family members. It can be particularly damaging if you owned a business. Your competitors will have a treasure trove of confidential business information at their fingertips in the probate file.

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