Probate of an estate can be a complicated process, and an executor isn’t always up to the task of tackling it alone. It’s no reflection on their abilities, but rather the result of the numerous legal steps through which an estate must pass on its way to settlement.
Lawyers who assist with the probate process charge for their work in one of three ways: by the hour, as a percentage of the gross estate or by a single, flat fee that encompasses all work from start to finish. There are some pros and cons to each option, and an executor can usually request one arrangement over the others. It never hurts to ask for a different fee arrangement other than what the attorney normally charges, but fees can be governed by state rules and laws.
What an Estate Lawyer Does
Probate is required to move property and assets from the ownership of the deceased into the names of living beneficiaries, assuming that there’s no built-in mechanism in place to achieve this. For example, property held as joint tenants with rights of survivorship passes directly to the survivor by operation of law. The same applies to joint bank accounts, while “payable-on-death” accounts and assets with named beneficiaries are set up to go to the beneficiary upon the primary account holder’s death without the necessity of probate.
All other assets require probate, however, and it can be a legal minefield fraught with myriad requirements, from drafting deeds to filing various accountings with the court. Unless it’s a very small and simple estate and state law provides for summary or simplified administration, an executor can’t simply present the death certificate to a bank or other institution and expect them to automatically transfer ownership of assets or hand over cash.
Who Pays the Lawyer?
Executors should take a deep breath if they’ve been asked to administer an estate and they're panicking a little over how much it will cost them. Executors are not responsible for personally paying any professionals from whom they seek assistance during the probate process, including an attorney. Probate lawyer fees are always paid out of the estate.
Of course, the estate’s beneficiaries might feel a bit of a pinch because this depletes the value of the estate, leaving less available to transfer to the ownership of others.
Some states require that the probate court approve the amount of compensation an attorney receives unless all beneficiaries consent to the fee or it falls within statutory “reasonable” guidelines. What’s considered reasonable can vary by state.
Fees Paid by the Hour
Some attorneys charge an hourly rate for their services, which can range from $150 to upward of $300. It can depend on several factors, including the lawyer’s experience, whether they’re a general practitioner or a dedicated probate lawyer, whether they’re part of a firm or work on their own, as well as their location. Big city attorneys invariably charge more than their more rural counterparts, and probate lawyers’ fees tend to be steeper than those of general practitioners. After all, they’re experts when it comes to handling probate issues.
And the term “hourly” isn’t quite accurate. Most estate lawyers charge for their time in six-minute increments so the estate is billed for how many minutes they devote to working on it…day by day by day. The estate will pay for six minutes or one-tenth of their time if they take a phone call on the executor's behalf that lasts just three minutes. It will pay for 18 minutes if the attorney spends 15 minutes drafting a letter – and yes, they keep meticulous records of their time.
But there’s a bright side here. Attorneys often delegate some routine work to paralegals and young associates – under their supervision, of course – and the hourly rates of these individuals are usually less, sometimes significantly. The estate won’t have to pay $300 an hour for correspondence drafted by a paralegal. Even so, the executor won’t know what the total fee will end up costing the estate until the end of the road when all the legal work is complete, every minute is accounted for and the estate closes.
A Flat Fee for the Whole Probate Process
Another possibility is that the attorney will ask for one flat fee to handle everything from A to Z rather than microscopically keeping track of every six minutes spent on settling the estate. An experienced probate attorney will be able to gauge how much time they’ll have to dedicate to a case and can accurately round off their hourly rate to one overall number.
The fee will be based on some standard factors that predict how much time the attorney will likely have to invest. Think bickering beneficiaries, lots of complicated assets or significant estate value that could open up the possibility of estate taxes coming due. All these issues will demand the lawyer’s time.
The good news is that with a flat fee, the executor can call the attorney as often as is necessary without worrying that they're driving the bill sky high in six-minute increments.
A Percentage of the Gross Estate
A lawyer’s third option is to charge a percentage of the value of the estate, but executors should be wary here. This often racks up a pretty significant bill because it’s based on gross value, not the estate’s net value after debts, such as mortgage liens and the deceased’s credit card balances, have been paid and deducted.
If there’s any silver lining here, it’s that the percentage usually decreases as the value of the estate increases. For example, estates pay 4 percent of the first $100,000 of gross value in California, but just .5 percent of the portion of value that tops $15 million. Of course, .5 percent of that much value works out to a really significant bill.
Only a handful of states – Arkansas, California, Florida, Iowa, Missouri, Montana and Wyoming – allow this type of billing, however. And even in these jurisdictions, it’s not required. Attorneys can agree to accept an hourly rate or a flat fee instead, so it could be worth negotiating. Many attorneys offer free initial consultations so executors can find out where they stand during this first meeting before they're obligated to start paying legal fees.
Read More: What Monetary Percentage Does an Executor of a Will Get?
Costs Are Usually Separate
Keep in mind that none of these three fee options includes extras like court filing fees, recording fees and appraiser fees. They’re almost always extra. The estate is usually just paying for the lawyer’s time with these fee options, so executors should ask to be sure when they're negotiating a fee arrangement.
The Bottom Line
Whichever option an executor – or their chosen attorney – decides on, they should be sure to get all the details in writing. Reputable lawyers will be glad to sign a fee agreement, and some states even require it. The agreement should not only cite the payment arrangement, but also when the estate will be billed, when payment is due and in the case of hourly fees, how much the estate will pay each individual who performs work on it.
- NOLO: Probate Lawyers’ Fees and Billing
- AllLaw: Paying a Probate Lawyer – Costs & Types of Fees
- Gudorf Law Group: What Are Reasonable Attorney Fees in Estate Administration?
- American Wills & Estates: How Much Should Probate Administration Cost?
- Berg Bryant Elder Law Group: 3 Important Steps to Take Before Hiring a Probate Attorney
- Lawyers.com: How Much Do Lawyers Charge to Help With Probate or Settling an Estate?