The Costs of Probate
If a deceased person failed to take action and died without an estate plan in place, it’s likely that the deceased person’s heirs may be cleaning up a messy probate.
This might not matter much to the deceased person; however, it usually matters a great deal to the heirs of the estate. Beyond being time-consuming, bureaucratic, and complex, a probate can also be expensive. And who gets stuck paying the bill? The heirs. The assets that you left behind are diminished to cover the costs associated with the probate process, leaving less to distribute among the heirs.
Probate Fees and Court Costs
First, let’s make an important point about the costs of probate: everything is relative. Though some fees apply across the board, such as court costs and publication fees, the cost of attorney fees varies depending on the size and issues involved with the estate. Often, the greater the value of the probated property, the more expensive probate will be.
Personal Representative Fees
The next big category of expense is personal representative fees. These fees are dictated by state law. In some places, like Florida, all personal representatives are entitled to a flat 3 percent of the value of the estate. In Minnesota, things aren’t so simple. Minnesota law (Minnesota Statute Section 524.3-719) says that personal representatives are entitled to a “reasonable” fee for their work. How much that amounts to depends on how much time and energy the probate case takes. The size and complexity of the estate will likely figure into this calculation. If it’s a large estate that requires a significant commitment of time (which isn’t unusual), then the personal representative’s fee may prove costly. If your personal representative is feeling generous, he or she is also allowed to waive the fee.
Costs of Administration
Beyond the personal representative, probate attorneys and accountants can also request a share of the estate to help pay for their work. In both cases, the amount of the fee will depend on the value of the estate and the complexity of the estate management and distribution. Lawyers will keep track of their time and submit bills to the court asking for reimbursement of their work from the estate.
A final category of fees paid out during probate falls under the “miscellaneous” heading. You need to keep in mind the cost of mailing notices and other documents to the court and to heirs of the estate. There’s the cost of moving, storing and insuring probated property to make sure it isn’t damaged while waiting for the estate to be administered. If a house is involved, the costs can really start to add up, because the personal representative often will need to use estate funds to pay for home upkeep and repair as well as any bills associated with keeping the property in good condition.
Though the amount of money varies widely, experts say that if your estate ends up in probate court it is possible that between 3 and 8 percent of the total value of the estate could be lost due to payment of fees. Though it may not sound like much, adding up all the money that won’t be going to your heirs, but will instead go to paying courts, accountants and attorneys, might be enough to make you rethink creating an estate plan.
Minnesota Probate Lawyers
An experienced Minnesota estate-planning lawyer can help walk you through the complicated process of establishing a workable estate plan. For more information on estate planning in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 424-0398.
Source: “How Much Does it Cost to Settle a Trust After the Trustmaker Dies?”, by Julie Garber, published at TheBalance.com.
