Why Avoid Probate?
We’ve all heard it is a smart idea to avoid probate, but why? Most people want to spare their family a prolonged, expensive process after their death and this is just what probate will get you. Generally, probate is the court-supervised process of authenticating a last will and testament and includes determining the value of the decedent's assets, paying final bills and taxes, then distributing the remainder of the estate to the rightful heirs or beneficiaries.
The average California probate can last up to two years. How long probate takes will depend on the size of the estate and the type of property to be probated. Most of what takes place during the probate procedural is clerical. The attorney handling the matter will prepare the proper paperwork and make a few routine court appearances but most of the process is handled through the mail and that takes time.
Both the attorney and executor will be entitled to fees from your gross estate. If you own a home worth $1,000,000 and still owe $600,000, the fees are based on the gross value of $1,000,000 and not your equity value of $4,000,000. Here are the current rates:
4% of the first $100,000 of the gross value of the probate estate
3% of the next $100,000
2% of the next $800,000
1% of the next $9 million
.5% of the next $15 million
Those rates apply to both the attorney and the executor so your estate could end up paying about 5% of the its value. Probate fees for an estate worth $1,000,000 could total around $50,000. That is a big chunk of money! But there are times when drafting a will that will lead to probate makes sense. 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, it 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.
Everyone has specific estate planning goals and estate values vary greatly so of course one size does not fit all. Generally, it’s a good idea to lay out your wishes with the comprehensive estate plan essentials: Will, Revocable Trust, Durable Power of Attorney, and Advance Health Care Directive.