Q: I read the article about trusts, which are used to avoid probate. How much would a simple probate cost...no real estate, just cash and IRA? My son processed his divorce papers through court with all the online resources, so I'm inclined to think that person with a duplex doesn't need a trust. How many of us die in our residences? -- Linda, Folsom, CA
A: In California, no probate is necessary for estates consisting of only personal property with a total value of less than $150,000. This threshold amount excludes certain vehicles, payable-on-death accounts, and joint tenancy assets. If beneficiaries are named on your IRA, those retirement assets would not need to be probated, but would pass directly to the named beneficiaries set forth on the beneficiary form.
If a probate is opened, the personal representative and the attorney are each entitled to fees of 4% on the first $100,000 of assets (whether personal or real property assets) transferred in the probate; 2% on the next $800,000; 1% on the next $9,000,000; 0.5% on the next $15,000,000; and a reasonable amount (as determined by the court) for all amounts above $25,000,000. The personal representative and the attorney may also be entitled to "extraordinary fees" for certain other services they provide.
Additionally, certain fees are required in probates. For Sacramento County, there is a $435 filing fee, plus a $25 fee for each certified copy of the Letters of Administration for the personal representative. The personal representative must publish death notices, and this generally costs several hundred dollars. The cost varies by publisher, and each county maintains a list of approved publishers. If there were non-cash assets in the estate, California law requires the use of a probate referee to appraise those assets, and the probate referee fee is 0.001% of the value of the appraised assets, with a minimum fee of $75.
Most of us don't know when we will die, or what the circumstances will be at that time. Many people choose to create revocable living trusts to avoid probate and plan for incapacity. Since probates are public proceedings, some people prefer the privacy offered by the use of a trust; others want to avoid what they see as greater inconvenience and cost required by the probate proceeding. On the other hand, some people want the court to supervise their estate administration, or they like the creditor protection features of a probate, so they do not want to create a revocable trust.