The Costs to Probate an Estate in California

The cost of probate is not something that one typically takes into consideration until the time actually comes to set up a probate. One would assume that the fee would be the same as a standard estate attorney fee like setting up a standard will and so forth. However, the state of California statutory provisions determine attorney fees when it comes to the probate process.

What is probate?

Probate is the name given to the legal process of distribution of assets to the designated beneficiaries after the death of the heir. This process also will validate any existing last will and testament. If there is no will, the estate will be disbursed under the intestate succession laws of the state of California.

What factors are involved in the cost of a probate in CA?

When you are paying for the probate process in California, you are paying for more than just your attorney. Your attorney is responsible for the following (among others, depending on the specifics of the probate):

  • Consultations with the executor of the estate
  • Court representation
  • Paperwork preparation
  • Any Consultations with family members of the deceased
  • Tax return preparations for the estate
  • Property maintenance costs
  • Any fees if the property is for sale

 

Other fees involved in the probate process are as follows:

  • CPA/tax attorney
  • Real estate appraiser
  • Any advertising costs
  • Probate court costs
  • Surety bond

Every case is different and might involve additional costs. These are just the most common factors that can contribute to the overall cost of the probate process.

 

What is the cost of probate process in the state of CA?

Following is the breakdown of the state statute percentages according to the state of California for the probate process:

  • 4% of the first $100,000 of the gross value of the probate estate
  • 3% of the next $100,000
  • 2% of the next $800,000
  • 1% of the next $9 million
  • .5% of the next $15 million

The estate attorney will receive one half of the lump sum and the other half will go to the executor of the will.

The following is a reference for estimated probate costs based on the above:

 

PROBATE ESTATE VALUES TOTAL ATTORNEY AND EXECUTOR FEES*
$100,000 $8,000
$200,000 $14,000
$300,000 $18,000
$400,000 $22,000
$500,000 $26,000
$600,000 $30,000
$700,000 $34,000
$800,000 $38,000
$900,000 $42,000
$1,000,000 $46,000
$2,000,000 $66,000
$3,000,000 $86,000
$4,000,000 $106,000
$5,000,000 $126,000

 

 

Is there a way to avoid or reduce these costs?

The best way to avoid these exuberant fees is to set a plan now, so your family can avoid these fees after your death.  One alternative is to opt for a living trust instead of, or in addition to, a will. A living trust is not subject to probate. All your assets and property will be disbursed to your designated beneficiaries via your appointed trustee. There are no court fees and the entire process only takes a few weeks as opposed to the long drawn out probate process. Once the property has been disbursed according the living will, it is null and void and therefore cannot be contested.

 

At Titanium Asset Protection, we understand that you want to make the probate process as smooth and cost-effective as possible for your loved ones. Your family has enough to handle in dealing with their loss, so we will do everything in our power to help make this process less intimidating. Please contact us at (714)-827-9955 for a free consultation. A member of our experienced team will gladly answer any questions or concerns you might have regarding the probate process.

 

Transitioning or Converting Your California Business from A Sole Proprietor To S-Corp & the Tax Savings in Self-Employment Taxes

If your business is suffering as a result of recent changes in the economy and you are considering converting to an S-Corp, there are some things you need to take into consideration. There are advantages to switching off, such as tax benefits. In this article, we’ll discuss what is involved in switching over from a sole proprietor an S-Corp and the advantages involved with that.

Advantages of Converting a Sole Proprietorship to a Corporation

●     As a corporation, you will have limited liability protection. This means that in the event that you are involved in a lawsuit, the corporation’s assets are at risk rather than your personal assets.

●       It will be easier to split your profits and income with your staff through the use of dividends.

●       The tax rate is lower for a corporation that it is a sole proprietor.

As you can see, there are advantages of switching to an S-corporation. Following we will give you a brief guide as to how to make the transition.

●       Adding “LLC” or “Inc” to your company name can greatly increase your credibility as a reputable business.

●       As a corporation, you are eligible for more tax reductions than you would be as sole proprietor.

●       You will have more stock options as an S-Corp than as a sole proprietor.

The Transition Process

It is advised that you seek legal counsel to ensure that the transition is a smooth one, and that everything is done legally. Following are the steps you need to take to make the transition from a sole proprietor to an S-corporation for the purpose of tax reductions.

First, you need to file for corporate status. Make sure you adhere to the proper guidelines. You need to form a board of directors, file the necessary paperwork with the California Secretary of State, draft your company by-laws and establish a corporate bank account. Also, you should check to see if your chosen name of your corporation is available for use in the state of California.

Next, you need to apply for an Employer Identification Number or EIN. This will be your number for federal tax identification for tax filing purposes.  It will also be used for payroll purposes and banking such as obtaining a line of credit for your business or opening a business account. You can apply for your EIN on the IRS websit, or call the IRS 800 number (1-800-829-3993). In addition, you a mail in or fax your completed Form SS-4 to the Internal Revenue Service.

Third, you will need to file with the IRS for S-corporation status by completing Form 2253 within 2 months and 15 days prior to the beginning of the first business day as an S-Corporation.

Next, you would need to transfer your assets from your sole proprietorship to your S-Corporation. This includes both tangible and intangible assets. Tangible assets include company vehicles, office machinery, furniture and equipment and so forth. Intangible assets are those assets that are not psychical in nature such as trademarks, patents, and copyrights.  Essentially intangible assets are the estimated value of the company’s brand and reputation.

Make sure that you have filed for the necessary permits and licenses required by the state and county government such as re-sellers permit, health permit and any other required professional certifications, permits or licenses. You might have to reapply for the aforementioned when you are making the switch from a sole proprietor to an S-Corporation. Check to make sure that all of your permits, and so forth are up to date with your city, county and state government to ensure that you do not incur any fines in the future.

If you have any questions or need assistance during your transition from a sole proprietor to an S-Corporation, please contact us at (714)-827-9955. Our staff will assist you with any concerns you may have. We have years of experience and expertise in dealing with corporate law and asset protection. You can count on us for expert legal advice!