How much does it cost when a loved one dies?
This is not as much of a loaded question as “How much does it cost to have an Estate Plan?” but the answer is not as quick and straightforward as most would probably like because there are many variables that must be taken into account. The variables can be categorized within typically three (3) costs when a loved one dies. The cost is also contingent upon whether or not the assets go through Probate or not.
The first cost is the most challenging is your time. The more effective planning done before death equals less time needed to administer an estate. And the inversion is also true. The less effective planning done before death equals more time required to administer an estate. A lot of things always have to be done at the time of death, such as working with medical providers, carrying out funeral arrangements, filling out forms (i.e. death certificate application), paying final medical expenses, as well as notifying many institutions like the Social Security Administration, employers, utility companies, banks and credit unions, and the county tax department. Most time spent administering the estate is going through Probate. A time saver is having a good plan for private administration by avoiding Probate through a Trust and beneficiary designations. Another potential time consuming task of Estate Administration is discovering and gathering assets. However, if this information was properly planned, it won’t take much time at all. If the estate is small or it’s all or mostly in trust, administration may not take much time or cost that much. If the estate is relatively large or complex it will take longer, especially if it is going through Probate. Going through Probate also must mostly occur doing regular business hours.
The second cost is government fees and taxes. If an estate was not properly planned there could be unnecessary taxes that are owed. If there is no trust and the assets go through Probate, the government requires payment and several fees. Click Here to read more about Probate fees. If you have to sell property, there are also additional taxes and fees associated with the sell or transfer.
The third cost is professional fees. I have seen some very helpful Accountants (CPAs) and Financial Advisors try to assist people fill out court forms for Probate for little or not cost, but they did it wrong and caused unnecessary fees and expenses because they are not attorneys who administer estates. Attorneys fees are a common expense or cost when administering an estate, especially if it’s going through Probate. Probate fees are done by the hour. Attorneys bill to consult, gather information, draft documents, execute documents, and file documents. North Carolina has begun transitioning to online filings (or eFile) for Probate. And the online system is not intuitive. This means it’ll take more time to figure it out by yourself, but less time for attorneys who routinely administer estates and have done so online already. Rates vary from $200/hr to $350/hr. And the worst part is the court is in control of how long it takes. We never know exactly how many hours it will take. However, if the estate was properly planned, attorneys fees can be eliminated or reduced drastically.
Our typical approach to estate administration fees is to help people only with what they cannot do or do not want to do. Our services are to help and aid you in your role. So, we always discuss what has to be done, who can do it, and how to do it. Whenever someone has the time and ability, I simply advise. If someone needs more, we figure out how to do it quickly and effectively.
To summarize and simplify, our experience has been similar to what many studies show. Going through Probate can cost between 5% to 10% of the estate assets. Avoiding Probate can cost much less than 1% of the estate assets.
If you need help administering an estate or if you want to learn how to avoid and/or reduce the cost of estate administration, click here or scroll down and fill out the attached form to request or complimentary consultation, or give us a call!