Probate is the legal process of administering a deceased person’s estate, and in California, probate fees can add up quickly. These fees cover court costs, executor compensation, attorney fees, and other administrative expenses. If you’re an executor, beneficiary, or heir, it’s essential to understand who is responsible for paying these fees and how they can impact the estate. Here’s a comprehensive guide to probate fees in California, who pays them, and how they’re calculated.
What Are Probate Fees?
Probate fees encompass several costs associated with managing and settling an estate. In California, these fees generally include:
Court Filing Fees: Costs to file the initial petition and subsequent paperwork in probate court.
Executor Fees: Compensation for the executor (or administrator) responsible for overseeing the estate.
Attorney Fees: Legal fees for any attorney retained to assist with the probate process.
Appraisal Fees: Fees for a probate referee to appraise assets in the estate.
Miscellaneous Costs: Additional expenses such as publication fees, mailing fees, or bond premiums if the court requires a bond.
Who Pays Probate Fees in California?
In California, probate fees are paid out of the estate itself. This means that the estate’s assets are used to cover all probate-related expenses before any distribution is made to beneficiaries or heirs. Here’s a breakdown of how each type of fee is handled:
1. Court Filing Fees
The probate court charges fees for filing documents and other administrative tasks, including opening the probate case, submitting petitions, and closing the case. These filing fees can vary by county but generally range from $435 to $1,000.
Who Pays: The estate pays these fees, typically at the beginning of probate when the petition is filed. The executor may need to use estate funds or reimburse these fees from the estate if they initially paid out of pocket.
2. Executor (or Administrator) Fees
Executors and administrators are entitled to a fee for their work managing the estate. California law sets a standard fee schedule for executors, which is based on a percentage of the estate’s total value:
4% of the first $100,000
3% of the next $100,000
2% of the next $800,000
1% of the next $9 million
0.5% of the next $15 million
For estates over $25 million, the court may approve additional fees.
Who Pays: Executor fees are paid from the estate. However, executors can choose to waive their fee if they wish, often to reduce the cost to the estate or if they are also beneficiaries.
3. Attorney Fees
Many executors hire a probate attorney to help navigate California’s complex probate laws. Like executor fees, attorney fees in California probate cases are based on a statutory fee schedule tied to the estate’s value:
4% of the first $100,000
3% of the next $100,000
2% of the next $800,000
1% of the next $9 million
0.5% of the next $15 million
The court can approve additional fees for estates over $25 million or for complex cases that require extra legal work.
Who Pays: The estate pays attorney fees, using funds from the estate before any distributions are made to heirs or beneficiaries. In cases involving additional legal complexities, the attorney may petition the court for extra compensation, which the estate also pays.
4. Appraisal Fees
A probate referee, appointed by the court, assesses the fair market value of the estate’s assets. In California, the probate referee’s fee is generally 0.1% of the total value of the assets appraised.
Who Pays: Appraisal fees are also paid out of the estate. The executor typically pays the probate referee after the appraisal is completed.
5. Miscellaneous Costs
These expenses include fees for required newspaper publications (which notify creditors and heirs), mailing notices, and, if required, the cost of a surety bond (which protects against losses due to the executor’s actions). Costs vary but can add up depending on the complexity and size of the estate.
Who Pays: All miscellaneous costs are paid from estate funds. The executor typically arranges for these payments as part of their duties.
How Probate Fees Are Calculated in California
The amount of probate fees in California is often based on the gross value of the estate, not the net value after debts and expenses. This means that assets like real estate are appraised at their full market value, even if there is a mortgage or other debt attached to them. As a result, larger estates with high-value assets may face higher probate fees.
Example: If an estate includes a home appraised at $1 million, an investment portfolio worth $500,000, and various personal assets totaling $200,000, the gross value of the estate is $1.7 million. Executor and attorney fees would be calculated on this full amount, even if there is an outstanding mortgage on the home.
Can Probate Fees Be Reduced?
Since probate fees are paid from the estate, there are ways to reduce or avoid these costs through careful estate planning:
1. Establish a Living Trust: Assets held in a living trust bypass probate, allowing heirs to receive them directly without court involvement. This avoids executor and attorney fees associated with probate.
2. Designate Beneficiaries: Retirement accounts, life insurance policies, and other payable-on-death accounts pass directly to named beneficiaries, bypassing probate and associated fees.
3. Joint Ownership: Jointly owned property with rights of survivorship transfers automatically to the surviving owner, avoiding probate and reducing estate fees.
By reducing the need for probate, these estate planning tools can significantly decrease probate fees and preserve more of the estate’s value for beneficiaries.
What Happens If the Estate Doesn’t Have Enough to Cover Probate Fees?
If the estate doesn’t have sufficient assets to cover probate fees and debts, California’s probate court follows a priority order to pay debts. Secured debts (like mortgages) are typically paid first, followed by fees and administrative expenses, including executor and attorney fees. If there isn’t enough to cover all debts and fees, the executor may need to sell estate assets to raise funds. Unfortunately, if assets are depleted, heirs or beneficiaries may receive a reduced inheritance, or in some cases, nothing at all.
Final Thoughts
In California, probate fees are an essential consideration in estate administration. Since they are paid from the estate’s assets, they reduce the total amount available for distribution to heirs and beneficiaries. By understanding how probate fees work and who pays them, families can better prepare for the process and explore strategies to reduce costs.
For those looking to minimize probate fees, consulting an estate planning attorney is a wise step. An attorney can help you develop a plan that minimizes probate involvement, reduces costs, and preserves the estate’s value for your loved ones.
Contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney today to schedule a telephonic consultation. Have questions, call (626) 460-1763 or email LV@MoravecsLaw.com.
Southern California Probate Lawyer Serving all counties in California, including Los Angeles, Riverside, San Bernardino, Sacramento, Santa Cruz & Beyond.
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