WHY YOUR CHILDREN CAN'T AFFORD FOR YOU NOT TO HAVE AN ESTATE PLAN

By Sean P. Dougherty, Associate Attorney

A Behind-the-Curtains Look at the Enormous Price of a Probate in California

We bet you’ve heard that lawyers are expensive, right? For that reason, many people think they can’t afford an estate plan. But consider this – can your children afford for you not to have an estate plan?

The High Cost of the Probate Process

In the Bay Area, if you die without an estate plan, the following is a conservative estimate of the expenses that will be incurred by your children to go through a process called probate. Probate is legal process that manages the assets and liabilities left behind by a recently deceased person. Keep in mind, we’re not talking about lawyer’s fees – just expenses:

• ​Initiating a Probate proceeding in Court – $500
• Publication in newspaper – $500
• Probate Referee to appraise real estate – $300
• Other Court filings – $20 each
•  Petition for Final Distribution – $500

Think these prices are going down?  No way.  And we’re not even including stationery or mailing. That’s $1,820, at the very least.  But remember – that doesn’t include lawyers' fees.

The Legal Fees Associated with Probate

Probate Code Section 10810 details the lawyer’s fees that are set by California law:

• 4% of the first $100,000 of your estate
• 3% of the next $100,000
•  2% of the next $800,000
• 1% of the next $9,000,000
• 0.5% of the next $15,000,000
•  For all amounts above $25,000,000, a reasonable amount to be determined by the Court

And keep in mind that the above values are determined without reference to encumbrances or other obligations on estate property.

So, for example, if your only asset is a house worth $2,000,000 – a very reasonable assumption in the Bay Area – your children will pay at least $1,820 in expenses, and $33,000 in lawyer’s fees.

The Value of Having an Estate Plan

In contrast, lawyer’s fees for an estate plan are well below even the minimum cost of a Probate. And you’re getting so much more. An estate plan includes a Trust, Will, Power of Attorney, and Health Care Directive, which will give you the opportunity to, among other things:

• Choose where your assets will go after you die. 
• Select someone to oversee your assets and your health, in the event of your incapacity. 
• Determine who will look after minor children if you cannot. 
• Minimize taxes. 
• Reduce family stress and discord. 

We’re Here to Help Make the Estate Planning Process as Efficient as Possible

Most U.S. workers and retirees have enough financial assets, e.g., life insurance, annuities, 401K plans, and real estate or other property, to be considered an estate. Yet, according to Federal News Network, fewer than 50% of the people who should have an estate plan have one. ​

If you need help getting started with an estate plan, we’ve put together a helpful estate planning checklist. And we are always happy to meet with you in person or virtually to discuss your unique estate planning needs. Contact us today.