There are several reasons why you might consider avoiding probate. The three main factors are 1) the cost 2) the time and 3) the lack of privacy.
Lets talk about costs. If you own a home or two and you have other investment devices like antiques, cars, jewelry, etc., all these items must go through probate if you have a will. The fees to pay an attorney to probate your estate are set by state law as follows:
- Four percent on the first one hundred thousand dollars ($100,000).
- Three percent on the next one hundred thousand dollars ($100,000).
- Two percent on the next eight hundred thousand dollars ($800,000).
- One percent on the next nine million dollars ($9,000,000).
- One-half of 1 percent on the next fifteen million dollars ($15,000,000).
- For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.
And if your estate has an executor, the executor gets paid based on the same formula. This means that probate costs start at nearly 5% of the value of assets for estates of $1,000,000 or less, and are as lightly lower percentage for larger estates. That means probate fees for the attorney and the executor may be more than $47,000 for an estate of $1 million and more than $125,000 for an estate of $5 million.
Now let’s talk about the second prong, time. The average California probate can last up to two years, though sometimes they last a lot longer. At East Bay Probate, we have contacts with many of the probate clerks throughout California which can be helpful in speeding your case through the court process. How long probate takes depends on the size of the estate, the type of holdings the estate has and the degree of conflict among the beneficiaries. For example, Howard Hughes didn’t have a trust. His estate took eleven years to settle, and $8.5 million in unnecessary attorneys’ fees.
Lack of privacy. This third prong is probably more important to those who are famous and well known. Where outside interests like the gossip magazines can’t wait to publish private financial information about estate assets and to whom they went, let alone if there is a fight and litigation among the beneficiaries, having your estate pass through probate can be a nightmare.
For example Milton Berle had a trust, so the details of his estate stayed private. In contrast, Jackie Onassis had a will that went through probate, and all her intimate financial details were on the Internet almost immediately. You can Google Jackie Onassis Estate and see what can be disclosed to the public in a probate proceeding.
Drafting a will that will lead to probate is oftentimes a cheaper alternative to creating an estate plan that includes a trust. Many young couples who don’t own a home but have children are best suited for using a will to address who gets their property, but more importantly, a will can create a framework if both parents should die, as to who will take care of the children and who will manage the children’s inherited wealth.
These decisions are not easy to make. However, we at East Bay Probate & Trust Administration have the knowledge, experience and understanding that can help you create the estate plan that best suits your needs.