Probate

In California, Probate fees are determined based on the value of the estate, which includes the property inventoried along with any gains or losses from sales and income during administration. Encumbrances or other obligations on the property are not considered.

Key points in calculating probate fees:

• Value of Estate: Fees are calculated on the appraised value of the property at the time of the decedent’s death, gains over the appraised value on sales, and receipts. Losses from sales reduce the value, but encumbrances or liens on the property are not deducted.
• Sales and Operations: If the principal assets are sold for less than half their appraised value, basing fees on the inventory appraisal is improper. However, profits from the decedent’s business that became part of the estate are considered in calculating fees.
• Deductions: Devises and expenses are not deducted before computing statutory fees and commissions. The calculation is based on how much of the estate the representative is responsible for.
• Collateral: If a bank holds property as collateral and the proceeds from its sale reduce the bank loan, fees cannot be based on such collateral.

Statutory Fee Schedule:

• 4% on the first $100,000
• 3% on the next $100,000
• 2% on the next $800,000
• 1% on the next $9 million
• 0.5% on the next $15 million
• A reasonable amount determined by the court for amounts over $25 million

Additional Considerations:

• Court Orders: Property included in the estate by court order, even if contested in good faith by the personal representative, is part of the estate for fee calculation.
• Exclusions: Properties excluded from the probate estate, such as joint tenancy property and spousal set-aside property, do not count in the statutory compensation calculation. Additionally, property not under the possession and control of the personal representative is excluded.

Courts adhere strictly to the statutory formula, even if it results in higher compensation relative to the work involved in administering the estate.

Yes, beyond the statutory fees, there may be additional costs such as court filing fees, appraisal fees, publication costs for notice of probate, and fees for other professional services like accountants or real estate agents. The estate typically covers these expenses.

While statutory fees are set by law, attorneys and clients can negotiate fees for extraordinary services that fall outside the scope of standard probate work. These services might include handling complex tax issues, litigating disputes, or managing business interests within the estate.

Yes, the court can award additional fees for extraordinary services provided by the attorney for the personal representative of an estate. However, this compensation is at the court’s discretion and must be deemed just and reasonable. There is no absolute right to extraordinary compensation; the court decides if such fees are warranted based on the specific circumstances. The Probate Code does not precisely define “extraordinary services,” but it includes tasks beyond the usual scope of probate administration. For instance, if the personal representative dies, becomes incapacitated, or absconds, the attorney may be compensated for preparing an account, and legal services provided by a paralegal under the attorney’s direction may also qualify.

When determining compensation for extraordinary services, the court considers factors such as the value of the estate, the time spent on the services, the skill required, and the results achieved. Even if there is a contract between the attorney and the personal representative regarding extraordinary services, the court is not bound by it, as the statutory rules for attorney compensation take precedence over any contractual agreements. Additionally, the court may deny extraordinary fees if it concludes that the statutory compensation for ordinary services is sufficient to cover both ordinary and extraordinary services rendered.

Attorneys can request compensation for extraordinary services at any time during the probate process, not just at its conclusion. If the estate administration is lengthy and complex, multiple requests can be made. For example, in one case, a court awarded $200,000 for extraordinary services in settling creditors’ claims, even though the fee agreement was for $1 million, as the larger fee would have depleted the estate’s assets available to creditors. It is advisable for attorneys to request compensation for extraordinary services early, especially if the estate’s closure is not imminent, to avoid the risk of the court denying the request.

In conclusion, the court has the discretion to award additional fees for extraordinary services, considering the specifics of each case. Attorneys should be prepared to justify their claims based on the value and complexity of the services rendered.

Probate attorney fees are typically paid from the estate after the court approves the final accounting. This usually occurs towards the end of the probate process. The fees are paid from the estate’s assets before distribution to beneficiaries, ensuring that the estate covers all legal and administrative costs.

In California, several types of property can avoid the probate process. These include:

1. Joint Tenancy Property: Property owned jointly with right of survivorship automatically passes to the surviving owner(s) upon death without going through probate.

2. Community Property with Right of Survivorship: Similar to joint tenancy, this type of ownership allows the surviving spouse to automatically inherit the property without probate.

3. Revocable Living Trusts: Property held in a living trust is not subject to probate. The trustee can distribute assets according to the trust’s terms.

4. Beneficiary Designations: Assets like life insurance policies, retirement accounts (IRAs, 401(k)s), and payable-on-death (POD) or transfer-on-death (TOD) accounts transfer directly to the named beneficiaries, bypassing probate.

5. Small Estates: If the total value of the estate is under $184,500 (as of 2023), it may qualify for a simplified probate process or may be transferred using a small estate affidavit, avoiding formal probate.

6. Gifts: Property given away before death is not part of the probate estate. However, proper legal and tax advice should be sought to avoid complications.

7. Spousal Property Petitions: Surviving spouses can use a spousal property petition to transfer property directly, simplifying the process and avoiding probate.

By utilizing these strategies, individuals can ensure a smoother transfer of their assets and minimize the complications and expenses associated with the probate process. It’s advisable to consult with an attorney to properly structure your estate plan to achieve these goals.