What are the costs of probate?
Probate in Florida can be a long and drawn out process. Some of the drawbacks are the fact that it can take years to settle an estate and it is all public record. However, the biggest drawback can be the costs and fees associated with probate. Some of the costs come from the filing fees, the publication fees, attorney’s fees and personal representative fees.
Florida Statute 733.6171 sets out the provisions for how much an attorney may be compensated in a probate proceeding. Probate work is a big money maker for attorneys. The statute sets out a table of what a presumed reasonable fee is. For instance, if the value of the estate is $1M, then the attorney’s fee is presumed reasonable at 3% or $30,000. However, the statute allows the attorney to receive more compensation. The first way is the if the attorney has to provide any “extraordinary” services, the attorney may be compensated more. Some examples of extraordinary services are if the attorney has to help sell any real estate, if there is a will contest or if the decedent had a business that is continued. The other way an attorney may receive additional compensation is through an agreement between the personal representative and the attorney. An agreement supersedes all the reasonable fees discussed above.
Florida Statute 733.617 sets out the provisions for how much a personal representative may be compensated. The presumed reasonable fees for a personal representative are the same as they are for attorneys. The personal representative may also receive additional compensation for extraordinary services. Further, if you have named more than one personal representative, each named representative gets a full share as if they were the only named personal representative.
It may seem like these are a lot in fees. However, we have not even discussed the costs associated with probate. The filing fees for opening a probate range from $150 to $500, depending on how much the estate is worth. These costs are continuing to increase due to cuts in court funding. The cost to publish the notice to creditors (the notice which gives creditors notice of the estate being open) can be several hundred dollars. You also have realtor fees, CPA fees, and many other fees that can quickly add up. Finally, if you have a taxable estate, your biggest fee will go to the IRS in the form of a tax check.
To illustrate the fees and costs of a probate, lets assume that Bob has a $9 million estate and he only left a Will where he named Sally and Kim as the personal representatives. Bob’s estate was large because he had a successful internet business. The presumed reasonable attorney’s fees, based upon the statute, are $180,000. However, since Bob has a business, the attorney may petition the court for additional fees. The resumed reasonable fees for Sally and Kim each is $210,000 each for a total of $420,000. By the time you add all the other costs, the probate of Bob’s estate could cost Bob’s estate (and his beneficiaries) a total of $700,000 or about 8% of the estate. Oh, did I forget to mention the check to the IRS for approximately $1.4 million. The costs can add up quickly.
Most of the above costs are easily avoidable with a proper estate plan in place to avoid the costs and taxes.
To learn how to minimize the costs and taxes involved in probate, consult our estate planning attorney at Wood, Atter & Wolf, P.A. in Jacksonville and Ponte Vedra Beach, Florida.
