Probate, just as any other court proceedings, involves a variety of expenses. Probate expenses are divided into two categories: costs and fees.
Costs include court filing fees, postages, fees of appraiser, and other incidental costs. In a probate process with minimal contention and no litigation, the average total costs are usually less than $3,000.
Fees are paid for services provided by court appointed fiduciary commonly known as executor, administrator, or personal representative, and the fiduciary’s attorney(s). The laws impose great responsibilities on a fiduciary, and his or her attorney(s), equivalent to a part-time job. In return, the laws compensate them for their services. At first glance the fees may seem high, but those who have assumed the responsibilities and performed the work of a fiduciary understand the extraordinary time commitment and stress involved in performing the law imposed duties. Fees of the fiduciary and his or her attorney fall within two categories: routine or ordinary services and extraordinary services.
FEES FOR ORDINARY SERVICES
Routine services include starting the probate process, finding and appraising assets, paying debts, reporting to the court, and distributing the assets. The maximum fees for these ordinary services, also known as ordinary or statutory compensation, are calculated using the below formula created by laws. Assuming that the value of assets is $1,000,000, the statutory fee is $23,000.
ORDINARY FEE CALCULATION
$100,000 @ 4%
$100,000 @ 3%
$800,000 @ 2%
$9,000,000 @ 1%
$15,000,000 @ ½%
$25,000,000 @ **
The fiduciary and his or her attorney each is entitled to the maximum statutory fees of $23,000. Paying the maximum statutory fees is the norm.
FEES FOR EXTRAORDINARY SERVICES
In addition to statutory fees, the fiduciary and his or her attorney may be compensated for extraordinary services, which range from selling real properties, to running a decedent’s business, to litigation. Fees for extraordinary services are based on the hourly fee of the attorney and the fiduciary. A court has broad discretion and evaluates many factors in determining the amount of fees for extraordinary services.
FEES ARE SUBJECT TO COURT APPROVAL
Fees for ordinary and extraordinary services must be approved by the court before the fees can be paid from funds administered in the probate process.
MINIMIZING FEES, COSTS, AND LIABILITIES
The fiduciary and beneficiaries both benefit from resolving disagreements as quickly as possible to prevent escalation into protracted litigation. Working diligently to resolve disagreements in an expeditious manner will result in the reduction of exposure to liabilities by a fiduciary, while minimizing fees and costs to be paid by the beneficiaries.
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- Family Disputes Become Public Gossips
- Making WAR or PEACE When Resolving Family Conflicts