One of the rituals of American society is to “probate a will” whenever somebody dies. The way our society has determined that property will be transferred after the death of the property owner is to probate a will. It is assumed that the probate will be of the will the decedent (dead person) had prepared. However, if the decedent didn’t leave a will, then the state will provide a will to probate. When the decedent doesn’t leave a will, the property is said to pass intestate.
In most cases, the last thing a family wants to do when one of their loved ones dies is probate a will. Probate is expensive, time consuming and extremely frustrating for a family. I remember sitting next to a man on an airplane, and he kept talking about probating his father’s estate. He was in the middle of probating the estate, and he commented that the expense was horrid, but the worst thing was the time it was taking out of his professional life. He talked about a “probate tax.”
When you probate a will there isn’t a probate tax. Having said that, I need to point out that Virginia actually has a “probate tax.” They tax all of the assets that go through probate. The charge is ten cents for every $100 of assets that go through the probate court. They are simply adding salt to the wounds of those families that have to probate a will. Obviously, the tax is easy to avoid. Just use a living trust and make sure that there isn’t anything in the estate to probate. If there aren’t any assets that need probating, then there isn’t any reason to ever probate a will.
Generally, when people use the term “probate tax,” they are confusing probate fees with estate taxes or inheritance taxes. Probate fees are what you pay the lawyers. Estate taxes are monies you pay the government. Probate and estate taxes basically have nothing to do with each other. Estate taxes are payable whether or not you have to probate a will. Probate fees and probate taxes are two totally separate ideas.
Probate fees vary from state to state. Some states, such as California, even set statutory limits on probate fees charged by lawyers. Statutory limits on probate fees are basically a joke. The attorney can contract for any probate fees he wants. Statutory probate fees are only applicable when the court is awarding the probate fees. Even if the court is awarding the probate fees, the attorney can submit a bill for additional probate fees. How many times do you think the courts turn down requests for additional probate fees? Courts almost never turn down a request for more probate fees.
Probate fees eat up somewhere between about 3% and 7% of the estate assets when you have to probate a will. In the book, Protecting Your Financial Future, I go through the probate process in detail. I explain the probate process and show you how to cut time and money off the process. If you already have to probate a will, you need to know about the probate process and not just blindly trust your attorney. You can cut the probate fees, by just knowing what can be done and not letting the attorney pull the wool over your eyes.