What is Probate?
A probate is simply the process of transferring property from the estate of a deceased person to the heirs or legatees of the decedent. A probate is necessary if a person dies testate (with a will) or intestate (without a will), or fails to completely fund a Revocable Trust (a/k/a Living Trust).
How Long Does It Take?
The time it takes to complete a probate depends on the complexity of the estate and the level of organization of the decedent. The process can be completed in a matter of days, or it can take much longer if complications arise, such as a dispute among the heirs or legatees. If the deceased left his or her affairs in disarray requiring someone to rummage through boxes and piles of paper to gather necessary information, this will delay matters. However, if the affairs of the deceased are in order, then the probate or succession can be completed fairly quickly.
How Much Does a Probate Cost?
The cost of probate will vary with the level of complexity of the estate. Generally, the greater the value of an estate, the more a probate will cost. However, this is not always the case as a high net worth estate that is well organized estate may cost less to probate than a small estate that is in disarray.
The various costs involved with a probate will include court costs, attorney fees, Executor fees, accounting fees, appraisal or valuation fees, bond fees and other miscellaneous expenses.
Court costs will vary from Parish to Parish, but generally range from $250.00 to 400.00.
On average, most probates should be completed for under $5,000.00. Many attorneys charge by the hour. However, a flat fee can often be negotiated, which will fix attorney fees at an agreed price. If you wish to negotiate a flat fee, be prepared to identify the assets involved in the estate, as well as the identity and location of the heirs, as this will assist the attorney in making a fee proposal.
Executor or Administrator Fees
An executor or administrator is the person named in the Last Will and Testament of the deceased to administer the estate. If the decedent had no will (i.e., died intestate), any interested person can petition to become the administrator.
Normally, executors or administrators are family members and, for this reason, rarely charge for their services. Oft times, the Last Will and Testament of the deceased will specify that the executor is to serve without compensation. If executor fees have not been waived in the will, Louisiana law provides that an executor or administrator may charge up to 2.5% of the net value of the estate. As such it is best to execute a will that provides the executor or administrator will serve without compensation.
The court may require that the executor post a bond as a condition of appointment, unless the will waives the bond requirement. The bond, if required, is returned upon completion of the succession, so this really should not be considered a cost.
Appraisal or Valuation Costs
The assets of the estate must be appraised to establish a value on the date of death, which becomes the new tax basis. Appraisal costs for personal property, such as household effects, coins or jewelry are typically a few hundred dollars. Real estate appraisal costs may range from $250 for a broker’s opinion to $500 for a standard appraisal of residential property to several thousand dollars for an appraisal of commercial real estate. Business valuations may cost as little as a few hundred dollars to several thousand dollars depending on the nature of the business.
An accountant is sometimes required to prepare income tax returns for the estate of the deceased. The fee can be negotiated in advance. This cost would likely be incurred in any event because income tax reporting is always required, whether the taxpayer is a living person, an estate or a trust.
Miscellaneous costs may include abstractor fees for real estate title research, survey fees if real estate must be divided, postage, insurance, storage costs and moving expenses.
Total Estimated Costs
In conclusion, the total cost of an uncontested simple succession (i.e., the Louisiana term for probate) rarely exceeds $5,000 and often falls within the following range:
Attorney Fees: $3,000 – $5,000 (typically; Times 2 for married couple)
Court Costs: $500
Executor Fees: $0.00 (usually if a family member)
Bond Fees: Refundable (Generally, so not a “cost”)
Appraisal Fees: $250 – $500
Accounting Fees: $500 (or as negotiated for income tax return preparation and filing)
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Relative Cost of a Revocable Trust
There is a lot of misinformation circulating about the probate process. Contrary to the claims of many promoters, a probate does not always cost more than a revocable trust and in many respects can be much simpler and straightforward because the conveyance of property is by operation of law rather than piecemeal manual transfers required with funding and distributions from a revocable trust. However, there are advantages of a revocable trust, such as (1) segregating assets (held in trust), (2) retaining privacy (no public inventory of assets need be filed in the public records), (3) facilitating changes in control of assets (which can also be accomplished with a power of attorney), or (4) reducing the challenge to survivors of identifying all assets of the decedent (which is usually the most difficult part of the probate process). A revocable trust also introduces some challenges in proper funding and administering the trust. Failure to fully and properly fund a revocable trust defeats the purpose of avoiding probate.
All that being said, a revocable trust can be a useful tool and the decision to utilize the tool should be based on factors such as the need or desire for privacy, compartmentalizing assets or facilitating changes in control (by naming successor trustees). The decision to obtain a revocable trust should not be based on the cost of probate in Louisiana.
Theus Law Offices provides a complete range of estate planning services, including wills, trust, probate, successions, estate administration and probate litigation. If you are facing an estate planning issue or will contest and need a Louisiana estate planning attorney, estate lawyer or probate attorney in Alexandria, Lafayette, Lake Charles, Baton Rouge, New Orleans, Shreveport, Monroe, Central Louisiana or elsewhere, let our estate planning lawyers and probate attorneys help you.