A recent trend I have noticed is that people, both attorneys and clients, are discussing probate fees. Attorneys are discussing whether it’s ethical to charge the statutory probate fees regardless of the situation. Clients are wondering whether attorneys should charge for accounts designating a beneficiary- accounts like Transfer on Death or Pay on Death accounts.
How is the cost of probate in Florida calculated?
Say Grandma survived Grandpa. Grandpa left Grandma with the home worth $100,000.00, and a $100,000.00 investment account. Grandma passes away not too long after Grandpa, and probate has to be opened to figure out who’s entitled to what. The cost to administer this estate could be as high as $6,000. I can think of some ways to avoid probate altogether if these are the only assets- with a few hundred dollars worth of estate planning I could save someone $6,000.
If we change one fact, the problem becomes readily apparent. The only thing different in this second scenario is that Grandpa left Grandma with the home worth $100,000.00, and an investment account worth $1,000,000.00 (Grandpa was a savvy investor). Even though the probate process would include nearly identical assets, the cost would be $30,000.00 to probate the estate of this second Grandma. The probate process would not be any more complex or difficult for the attorney when only the balance of the investment account is different.
Is it ethical for the attorney handling the second probate to earn $24,000.00 more than the first attorney for the same amount of work? Under the statute, that’s the presumption. There is an argument that the presumptively valid fee is meant to predict the difficulties that often pop up in probate estates of a certain value. Although, I think a carefully drafted fee agreement can provide for these problems as they pop up.
The number of beneficiaries, the nature of the assets, all of these things should be taken into account when figuring out the attorney’s fees. Regardless, I could’ve helped all these people for fraction of the cost (not to mention avoiding the delays inherent in judicial process).
Expensive probate costs can be avoided with a good estate plan.
Some attorneys will even count pay on death, or transfer on death accounts! These types of beneficiary designations are one of the techniques used to avoid probate. A good attorney can tell you how to handle these types of accounts in just a few minutes. They shouldn’t be counted when calculating the probate estate. If you need a better reason to exclude this from the calculation, the statute says the fee is determined by the value of the probate estate- POD and TOD accounts are specifically non-probate transfers.
These accounts are a great way to provide funds for those surviving a decedent to pay for final costs. Determining whether these assets should be used to satisfy debts of the decedent are certainly questions to ask your probate attorney- which may be why some attorneys count theses assets when calculating fees.
If you’re looking to talk about your probate issues, or how we can help you avoid the expensive and time consuming probate process, you should contact us to schedule a free consultation. During our consultation, one of our attorneys will review your current estate plan and provide some recommendations on estate planning strategies for you to use to help avoid probate and save your beneficiaries money.