Whether you start a business or sell a home, you need to ensure that you’re following the laws at all times. And managing your estate is no different. Often people think a will can suffice. However, settling an estate is not as simple as selling a home or closing a bank account. It involves distributing all of the deceased assets in accordance with their last wishes.
This requires estate planning.
You need to draft a plan stating precisely how your assets should be managed and distributed after your death. By leaving clear instructions for heirs and relatives on how to handle the estate, you envision the best financial and family implications. More importantly, proper estate planning can save money, time, and relationships.
What does estate settlement entail?
Before any matters can be settled, all information about a person’s estate must be found and compiled. This includes:
- Identifying all assets included in the estate and where they are located
- Declaring whether there are any outstanding dues, debts, bills, etc.
- Recognizing any minor or disabled dependents that need to be cared for
- Calculating all applicable tax claims
- Deducting the cost of the burial expenses
But other complex issues may surface. What if the deceased did not draw up a will or estate plan? That means heirs will need to probate some or all of the assets.
What happens if a will is available, but family, friends, or associates challenge it, particularly if there are doubts about the validity of the will, close dependents were left out of the will, or if someone makes a claim on the estate.
This is where probate specialists can be helpful. They are hired to resolve disputes and settle claims before the inheritance is distributed and the estate is closed. Furthermore, some estate settlements are not that straightforward. For example, an estate that is part of joint property with the right of survivorship may not become a part of the estate, but rather it could be passed directly to the joint tenant. Other cases include properties that have a mortgage or taxes that have not been paid.
How much does it cost to settle an estate?
There is no straightforward answer or number. The cost of hiring a probate lawyer can vary from city to city and state to state. Moreover, the cost of estate settlement depends upon several factors, such as:
- the nature of the estate
- how complicated the estate is
- the value of the estate’s property
- location of the estate
- the professionals involved in estate settlement
- the number of miscellaneous expenses, including court filing fees, the publication of legal notices in the newspaper, property appraisals, recording fees for real estate deeds, etc.
As a general rule, the greater the value of the estate, the more the probate will cost. But you can expect a price tag, anywhere from 4% to 7% of an estate, sometimes even more.
How do probate lawyers charge fees?
There are a couple of ways that probate solicitors can charge for probate work. Let’s take a look at some of them:
- By the Hour
This is often the most common way for probate specialists to charge their clients. But it puts a considerable strain on the relationship when you’re always thinking about the meter running.
On average, probate attorneys typically charge between $250 and $310 per hour. However, as mentioned previously, these rates can vary. The hourly bill vastly varies from state to state. For example, states with a relatively high cost of living, like New York and California, often charge more. But your area of residence and how experienced the probate lawyer also matters. So you can expect higher fees from a specialist working in a high-profile law firm based in a metropolitan area than a paralegal working in a rural area.
- Flat Fee
This is a popular billing method that doesn’t press attorneys in keeping watch of how their assistants and paralegals are spending their time. Moreover, often clients feel more relaxed while paying a flat fee. And there is a little more room to bargain the prices.
However, it’s very important to make sure you understand what services are being covered. More importantly, inquire about any additional costs associated with extra services such as court filing costs, appraisal fees, contesting a will, filing an estate tax return, etc.
- Percentage of the Estate
Probate lawyers practicing in a few states are legally authorized to charge fees based on a percentage of the value of the estate. Following is a list of states that allow this:
- Arkansas
- California
- Florida
- Iowa
- Missouri
- Montana
- Wyoming
For instance, if your estate is worth $500,000, but there is a house with $100,000 left on the mortgage, the fee will be calculated from the $500,000, not on the $400,000 of equity. However, you can negotiate an hourly rate or flat fee.
Final thoughts
Before hiring a potential lawyer, ask for a free consultation. Many offer a free 30-minute session. This will help you gauge whether you and your probate lawyer meet on the same page. Moreover, don’t rush into an agreement. You should consider meeting more than one solicitor before you find the right one.
Author Bio:
Evie harrison is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs.
Find her on Twitter:@iamevieharrison