Probate can be more expensive than making an estate plan.

People elect to avoid creating an estate plan for a variety of reasons.

Some believe it is not important for them to take the time to do it.

Others see the cost and consider it to be too expensive.

According to a recent Nasdaq.com article titled “How Much Does Probate Cost?,” failing to create an estate plan will make probate more difficult and expensive.

Poor estate planning can leave you with a greater probate bill.

Probate is the process for setting a decedent estate.

Estates of those who died with a last will and testament and those who died without an estate plan all go through probate, when there are assets subject to probate.

Those who create a last will provide directions regarding their choice of executor (also known as the personal representative) and how their assets are to be distributed.

If there is no last will, then the decedent is said to have died "intestate" and the court will appoint an administrator of its choosing to settle the estate.

Prior to distributing estate assets, settling the estate involves inventorying assets and paying outstanding debts.

If no one objects to the last will, then the estate can be closed once all debts, taxes, and expenses are satisfied.

When objections exist, the judge must settle the disputes prior to the final estate settlement.

Probate can take quite a bit of time.

Even a modest estate can take two years to settle, especially when the estate is subject to intestate administration.

Larger and more complex estates can take even longer.

If beneficiaries are difficult to find or if the last will is contested, then time can increase exponentially.

In 2021, probate costs averaged between 3 percent and 8 percent of the estate value.

What accounts for these probate costs?

Court Costs. 

It costs money to file documents with a court.

Some states charge the same fee for all estates.

Other states charge fees depending on the size of the estate.

Executor Costs. 

The executor puts both time and up front expenses into settling an estate.

Fees are typically governed by state law.

There is an exception if the last will specifies a fee.

Fees for an executor vary by state.

Some require a graduated fee like Missouri, others like Kansas have a "reasonable fee" standard, and still others have a flat fee.

Graduated fees typically involve a percentage of the estate that decreases as the estate value increases.

If the fee is not indicated in the last will, then the probate court will apply the state statutory default fee (Missouri) or determine the "reasonable fee" (Kansas).

Accounting Fees.

When estates are complex, more accounting is required to sort out stocks, securities, and business affairs.

Final estate and federal taxes will need to be filed as well.

Attorney Fees. 

Some estates benefit from the help of an attorney and most

An executor may choose to retain an attorney and make the payments from the estate.

Fees for an attorney may be set by the probate court or set by the attorney.

In Missouri, the executor and attorney are eligible for the same default state statutory fee.

Estate Administration Fees. 

The tasks associated with settling an estate all cost money.

These include valuing property, hiring real estate agents to sell property or businesses, and managing a property until it can be sold.

While some probate costs are unavoidable, others can be significantly decreased with proper estate planning.

One thing is certain: the better your financial record keeping and the more current your last will, the simpler the settlement of your probate estate.

Reference: Nasdaq.com (Feb. 2, 2023) “How Much Does Probate Cost?”