If you are thinking about probate court, you have probably heard that you should do all you can to avoid it. Proponents of this view cite compounding costs and the emotional toll that probate takes. There is genuine merit to this perspective, and yet a proper evaluation means talking about the real, not imagined, costs of probate.
No fixed rate exists for probating an estate. Cost depends on the size and complexity of the estate, details of the will, whether or not there are any disputes to be resolved or debts to be paid, and where probate is undertaken. Probate fees can be broken down into filing fees and court costs, the estate executor’s fee, attorney fees, professional fees for accountants or other necessary services, and surety bonds. The following breakdown explains how each of these is calculated.
Filing Fees
Filing fees vary from county to county. In Baldwin County, you can expect to pay around $58.00, while in Mobile County you are looking at $50.00. In Calhoun County, where our firm is located, the fee is $65.00.
Estate Executor’s Fee
Under Alabama law, the executor of an estate can file a request with the court for an executor fee of up to 5% of the value of the estate. This includes up to 2.5% of assets received, and 2.5% of disbursements. In order to reduce the cost of probate, an executor may choose to waive their right to this fee. In addition, when a person drafts their will, they may also waive the requirement that the executor post a surety bond before assuming their appointment.
Attorney Fees
Attorney fees vary widely, making even a ballpark figure difficult to provide without some basic information about the estate. In the simplest of cases, an individual may pay a few thousand dollars, but this number can quickly grow as complications arise. To gain a clear estimate of potential costs, it is important to talk to a trusted attorney about the specifics of your case. We charge flat fees for probate and the amount of the fee depends on the complexity of the estate, while other attorneys charge by the hour.
Professional Fees
Once more, these fees depend on the size and complexity of the estate. Accounting will vary based not only on the amount but on the types of assets owned as well as whether the estate is subject to federal taxes (there are no state-level taxes in Alabama). Appraisal fees will likewise be a function of assets held. If a business owned by the deceased forms a part of the estate, all of these fees increase substantially.
Bond Fees
Before your estate’s executor may be appointed, they will have to post a bond in an amount determined by the probate judge. As mentioned earlier, you may waive this requirement in your will, but a judge may overrule your wishes, especially when minor children are involved in the estate.
Miscellaneous Fees
Miscellaneous fees range from insuring and storing personal property to shipping and disposal costs. In cases of complex estates that take months or years to administer, these small costs can pile up—and if your spouse or loved ones have no income of their own, they can become an immense burden as your personal assets will remain out of reach until the probate process is complete.
How to Avoid Probate in Alabama
Probate can be expensive, time-consuming, and emotional. Fortunately, there are steps you can take to avoid the process all-together.
Own Assets Jointly with Someone Else
Many house deeds and joint bank accounts have a right of survivorship. The right of survivorship basically says that when one owner passes away, the remaining assets are transferred to the surviving owner. This right of survivorship is not automatic. The co-owners would need to request that it be put in place.
Beneficiary Designation
Beneficiary designations are typically used in life insurance, IRAs, 401Ks, and other financial accounts. By naming a person as the beneficiary on the account, when you pass away, the beneficiary would just need to send in a death certificate to the company, and the proceeds would be paid directly to the beneficiary. Thus, avoiding the probate process.
However, it is important to remember that assets with beneficiary designations are not governed by the will. So, for example, if you want all of your assets (including those with beneficiary designations) split between numerous people, then you would need to name numerous beneficiaries on those assets and not rely on the will.
Create a Trust
If assets are owned by a trust, and the trust says which beneficiary is to receive which of the trust’s assets upon your death, then these assets will not pass through probate. There are many options when it comes to setting up trusts, including revocable and irrevocable trusts to name a few. It is recommended that you speak with an experienced estate attorney about your needs and goals to learn more about the options that are available to you.
Contact Us
Miller Estate and Elder Law can assist you with every step of probate and, if you act early, can help you determine whether going through probate even makes sense in the first place. After all, trusts and other such legal tools allow you to build an estate plan that skirts the need for probate—an option that is often cheaper in the long run for those with complex assets.
To learn more, join us for a free estate planning workshop and discover the steps needed to protect yourself, your loved ones, and your legacy. Or give us a call at (256) 251-2137 to speak with a member of our legal team, or contact us by filling out the brief form below.
