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“If you fail to plan, you are planning to fail.” Benjamin Franklin
According to a 2020 Caring.com study, only 32% of American adults have one or more estate planning documents (such as a will, trust or power of attorney). If that finding is accurate, this means that at least 68% of Americans are running the risk that after they pass away their estate will have to be probated (meaning, their assets will have to be distributed through their local court system according to state law). What these individuals probably don't realize is how expensive that process is going to be.
There are several categories of expenses that are associated with probate, including costs of publication in a local newspaper, court costs, and attorney fees. In Missouri, the minimum amounts that attorneys can charge is set by statute (see, Section 473.153, RSMo.). These amounts are based on percentages of the total value of property passing through probate. According to the statute, attorney fees are established as follows:
If the estate is valued at less than $5,000, the attorney is entitled to 5%;
If the estate is valued between $5,001 and $25,000, the attorney is entitled to $250 plus an additional 4% of all amounts over $5,000;
If the estate is valued between $25,000 and $100,000, the attorney is entitled to $1,050 plus 3% of all amounts over $25,000;
If the estate is valued between $100,001 and $400,000, the attorney is entitled to $3,300 plus 2.75% of all amounts over $100,000;
If the estate is valued between $400,000 and $1,000,000, the attorney is entitled to $11,550 plus 2.5% of all amounts over $400,000; and
If the estate is valued over $1,000,000, the attorney is entitled to $26,550 plus 2% of all amounts over $1,000,000.
Here's an illustration of what these fees look like. If a person dies without having done any estate planning and has an estate valued at a total of $200,000 (including a house, car and other personal property), the attorney fees would amount to $6,050. And that's just the attorney fees. The publication costs and court fees would very realistically add on at least another $1,000. Also, under state law, the personal representative of the estate is also entitled to be reimbursed at the same rate as the attorney. So, under this example, the total expenses to the estate would be at least $13,100.
Unfortunately, what 68% of Americans seem to be missing is that probate is avoidable. With proper guidance from an estate planning attorney, the person in the example above would have spent FAR less putting a plan in place and would have left a much better inheritance to his or her children.
If you have been putting off estate planning, consider the actual cost of failing to plan. Using the fee chart above, it shouldn't be too difficult to get an idea of how expensive probating your estate (or your parents' estate) might be.
Keep in mind, this article only discusses the fees associated with probate. It doesn't touch on the other headaches that failing to plan can create (including tax consequences and delays in liquidating assets).
Call us today to schedule an appointment. We would love the opportunity to help you build a plan that accomplishes your wishes and avoids thousands of dollars in unnecessary expenses.
Disclaimer: This article is intended for informational purposes only and is not intended to be construed as legal advice. The choice of a lawyer is an important decision and should not be based solely upon advertisements.