probate fees

By Robert Moore, Attorney and Research Specialist, Agricultural & Resource Law Program

Anyone who has ever been an Executor of an estate knows how much paperwork is involved with administering an estate.  The county probate court, which oversees the estate process, requires many filings to verify the assets the deceased person owned, determine the value of those estates and to ensure that the correct beneficiaries receive the assets.  Typically, administering an estate requires the assistance of an attorney familiar with probate rules and forms.

Like any professional providing services, attorneys will expect to be paid for their estate administration services.  Legal fees charged by an attorney for an estate must be approved by the probate court.  Many probate courts have established a schedule of fees that provides a benchmark for attorneys.  Basically, if the attorney’s legal fees are no more than the schedule of fees, the court will approve the fees.  The approved probate fees vary from county to county but are usually between 1% to 6% of the value of the estate. 

It is important to note that the court approved probate fees are a benchmark, not a requirement.  That is, the court is not requiring an attorney to charge those rates.  Instead, the court is merely stating that fees that do not exceed the benchmark will likely be approved.  It is up to each attorney to determine the fee structure to implement for their services.  Some attorneys may use the probate rates for fees while other attorneys may bill based on an hourly basis.

Before hiring an attorney, Executors should have a thorough discussion regarding the attorney’s fee structure.  The Executor should ask if the attorney charges on an hourly basis, flat rate basis or uses the county probate rates.  Based on the fee structure used, the attorney should be able to provide a good estimate of legal costs for the estate administration.  If the Executor has reason to believe the fees charged by the attorney may be too high, it’s helpful to consult with other attorneys who use a different fee structure and compare. 

Consider the following examples:

• The county probate court allows a 2% legal fee rate for real estate that is not sold.  Joe passes away owning a $100,000 house.  Joe’s Will directs the house to be inherited by his daughter.  The attorney assisting with the estate administration uses fees based on the county rate.  The attorney will be entitled to $2,000 in legal fees.
• Let’s change the scenario so that Joe owned a $1,000,000 farm when he passed away.  The attorney will be entitled to $20,000 in legal fees.

The above examples illustrate how probate rates work and also illustrates why executors should not automatically agree to pay the probate rates.  In the examples, the attorney basically does the same work – transfers one parcel of real estate to the daughter.  However, because the farm was worth ten times more in value, the attorney received ten times more in legal fees.

Let’s continue the scenario. 

• The Executor thinks $20,000 in legal fees to transfer the farm may be too much.  The executor finds an attorney that charges hourly for estate administration, rather than using the county rates.  The attorney charges $200/hour and thinks it will take about 15 hours of work to have the farm transferred to Joe’s daughter.  Executor quickly decides to hire the second attorney and saves $17,000 in legal fees.

Often, probate rates can result in reasonable legal fees.  Charging $2,000 to transfer a $100,000 house is probably reasonable.  In some situations, particularly for smaller estates, the probate rates may be inadequate, and the attorney may seek permission from the court to charge in excess of the rates.  However, for farm estates, the county rates can result in excessive legal fees.  Due to the capital-intensive nature of farming, farm estates will tend to have a much higher value than typical, non-farm estates.  A modest farm estate of $5 million, at a 2% probate fee rate, will result in $100,000 of legal fees.  An attorney charging $250/hour would have to bill 400 hours to make those same legal fees.  A $5 million farm estate is not going to take 400 hours to administer.

Executors administering farm estates should carefully evaluate legal fees charged by the estate attorney.  Applying county probate rates to farm estates can result in very large legal fees.  Before agreeing to accept the probate rates as the fee structure, Executors should also inquire as to what legal fees would be if charged on an hourly basis.  After getting an estimate of legal fees for both fee structures, the Executor can then make an informed decision as to how best to proceed with legal counsel.