What Does Probate Cost?
Probate cost varies from estate to estate. An often-quoted average is between 3% to 7% of the total estate. Most people think of estate taxes when they think of the cost of probate. While the estate tax does apply to qualifying estates (estates of over $1 million for the MN estate tax, as of the date of this post), this particular post focuses on costs often overlooked when determining the cost of probate – Administrative Costs.
The first administrative cost that comes to mind for most people is attorney fees. Minnesota no longer uses a statutory fee schedule for probates. Instead, the fees that attorneys charge must be “just and reasonable” for services rendered to the personal representative. This standard encompasses several factors, but “the value of the estate shall not be the controlling factor.” The factors for determining if the fee is “just and reasonable” include: (1) the time and labor required; (2) the experience and knowledge of the attorney; (3) the complexity and novelty of the problems involved; (4) the extent of the responsibilities assumed and the results obtained; and (5) the sufficiency of the assets properly available to pay for services. Note that the Personal Representative usually pays the attorney fees out of the probate estate.
Attorney fees are just one of the administrative costs to be considered. The Personal Representative needs to be aware of the costs for filing documents with the court and for publishing notice. There are transfer costs – that is, costs of actually changing property titles from the decedent to the beneficiaries. There are also tax costs – not the taxes paid by the estate, but the actual costs of dealing with the tax authorities and preparing the necessary tax returns. Other costs include appraisal costs, personal representative fees, and costs associated with surety bonds.
Depending on the size and complexity of the decedent's estate, these costs can be minimal or significant. A probate attorney will be able to assist the Personal Representative in carrying out these administrative duties in an efficient and cost-effective manner.