HOW MUCH DOES IT COST TO PROBATE A HOUSE IN CALIFORNIA?
You did your own research and then checked with a qualified California attorney: probate cannot be avoided. For you to step into your parents’ shoes and become a rightful owner of the property, the house must go through the probate process at a local court.
The next question on every heir’s mind is usually the following: How much does it cost to probate a house in California? In this post, we will break down probate costs in California so, continue reading to find out what it takes to go through the probate process.
There are several different fees involved in California probate. First, is the attorney fee. The fee is set by the State of California and is paid once the judge signs the order for final distribution. In probate, the personal representative also receives compensation for his or her services to the estate. This is known as “statutory compensation,” and is also paid at the conclusion of the case.
Both the statutory attorney’s fees and the statutory compensation are calculated based on the value of the estate, in the same manner. The fee base is calculated pursuant to Probate Code §10810 as follows:
- 4% on the first one hundred thousand dollars ($100,000).
- 3% on the next one hundred thousand dollars ($100,000).
- 2% on the next eight hundred thousand dollars ($800,000).
- 1% on the next nine million dollars ($9,000,000).
- ½ of 1% on the next fifteen million dollars ($15,000,000).
For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.
For example, if the total value of the estate was $1,000,000, then the final petition would show the calculation as follows for attorney fees and personal representative fees:
- 4% * $100,000 = $ 4,000
- 3% * $100,000 = $ 3,000
- 2% * $800,000 = $16,000
For an estate with a value of $1,000,000, the statutory attorney’s fees are $23,000 and the personal representative’s compensation is also $23,000. Remember that both fees are calculated using the same guideline. This is important to understand since most other attorney fees in different areas of the law are not statutory so they may vary from one attorney to another and can be negotiable to a certain degree.
In California probate, every licensed attorney is going to charge their clients using the same formula. The upside of the statutory fee is that it costs the same to hire a certified, seasoned specialist as well as an inexperienced lawyer who only dabbles in probate.
Most of the attorney fees are paid after the probate process is over and the judge has signed the order of final distribution. However, while most of the attorney fees are paid by the estate (as opposed to out-of-pocket), some out-of-pocket expenses are necessary as well.
On average, the initial out-of-pocket probate expenses in California are about $2,500. Who pays the fees? Most of the time, the personal representative pays the $2,500 out of pocket to the attorney. This is used as a retainer for the court filing fees and other expenses. At the end of probate, the person who paid the $2,500 is reimbursed by the estate.
There are other costs disclosed on the final petition, which include court filing fees, the bond premium, the publication fee (which is mandatory), and the probate referee’s fee.
Below is an estimated breakdown of what you can expect to pay out of pocket in a California probate:
- Initial court filing fee: $465
- Publication: $205 – $1,000 (on average $250 – $500)
- Probate Referee: The fee is 1/10 of 1% of the estate value (i.e. if house is appraised at $500,000, then 1/10 of 1% is $500)
- Bond: Probate generally takes one year to complete; therefore, the court imposes a bond on the personal representative to ensure that the personal representative does not run away with the money. The fee will depend on the value of the estate (i.e., if the net value of the estate is $200,000, then bond costs might be $500 – $800 for the year depending on your credit score). Keep in mind that an experienced attorney might be able to convince the judge to waive the fee.
- Final petition court filing fee: $465
Although not as common, additional fees may include heir hunter fees. This is needed in situations when some of the heir whereabouts are unknown or the family suspects that there may be additional unnamed heirs (heirs whose names are not known to the family, but they are aware of their place in the family tree).
For instance, there are three siblings who stand to inherit the house, and they are aware that the late father had another child from a prior relationship, however, the family does not know the half-sibling’s name and current address.
In this case, the law firm may need to hire an heir hunter—a company that specializes in locating missing heirs. (By law, all heirs must be notified.) Heir hunter’s services may cost anywhere from $700 to thousands of dollars, depending on how complex the search is. For example, locating an heir whose name and approximate local address is known (even if it’s from a decade ago) will cost less than finding a nameless heir abroad.
The attorney’s statutory fees, personal representative’s compensation, and other costs are deducted from the estate’s cash on hand, and the remaining amount is what is distributed among the beneficiaries according to intestacy laws, or to the decedent’s will, if applicable.
For example, the estate has a total of $400,000, which is the sale proceeds from the sale of the decedent’s home. The attorney’s fees, personal representative’s compensation and costs are deducted from that $400,000, and the remaining amount is distributed among the beneficiaries accordingly.
The beneficiaries do not receive their distributive share until the judge signs the final order for final distribution, just like the attorney fees and the personal representative fees.
In probate, only the real estate professionals get paid at the close of escrow while creditors get paid prior to the final petition stage. Everyone else (attorney, personal representative, and heirs), is paid at the close of probate.
Is probate expensive? Yes, especially if compared to the cost of a living trust, which can be set up many years before the settlor (the maker of trust) passes away. To learn more about how living trusts work in California, visit this link and watch the video on the page.