Attorneys charge for settling an estate in different ways, including:
- hourly rates
- flat fees
- a percentage of the estate's value
The cost can vary greatly. It could be as little as $250 or $10,000+, depending on how you pay and how large and complex the estate is.
(For the most part, this guide focuses on the costs of hiring a lawyer to probate an estate. That’s because probate is usually the biggest cost of settling.
But it’s not the only one — even if you’re not going through probate, an attorney is still often important. There’s a section towards the end that covers the non-probate costs.
On the other hand, Attorneys aren’t the only probate cost you need to think about, either.)
Probate/estate attorneys typically charge an hourly rate, flat fee or percentage of the estate
When settling an estate, attorneys can use different ways to charge fees. Each type has its own benefits and challenges.
Hourly rate
Lawyers charge a set amount for each hour they work. Rates can vary based on the lawyer's experience and location. Hourly rates are transparent, but they can be costly if the case takes a long time.
Flat fee
A single fee is agreed for all services. This fee doesn’t change, making it easy to know your total costs upfront. It is best for simpler estates.
Percentage of the estate
Here, the fee is a percentage of the estate's total value. This rate might be set by state law or a typical rate used locally.
Percentage fees are clear and easy to figure out, especially for complex estates. But it can get very expensive — paying an attorney 2% of a $1,000,000 estate would cost you $20,000.
Whether or not a percentage fee makes sense for you might also depend on the kind of assets in the estate.
If most of the money is in, say, a single investment account, and you’re named as the beneficiary on that account, you probably wouldn’t want to pay a lawyer $10,000 just to double-check the paperwork.
Retainer
A retainer is an initial payment that covers future services. It is like a deposit. If the money isn’t fully used, the remainder might be returned to the client. This helps manage financial expectations.
Contingency
This fee type is uncommon in estate planning. The lawyer only gets paid if they achieve certain results. It is used more often in cases that go to court rather than in estate planning.
Choosing the right fee structure depends on the estate's size and complexity. Each option should be considered carefully.
Some states don’t allow attorneys to take a percentage of the estate, and others have rules about “reasonable” fees
Attorney fees for estate settlement can differ a lot from one state to another. The differences are often due to state laws and local practices.
State-specific regulations
Some states have laws about how much an attorney can charge. These laws might set a fee as a percentage of the estate's value. Other states allow lawyers to charge what they consider "reasonable" based on the work needed.
Average fees across states
In states with specific laws, fees are usually a percentage of the estate. This rate varies but is often around 1% to 4% of the estate’s total value. In states without fixed rates, fees depend more on local rates and the complexity of the estate.
Fees are typically higher in places with higher living costs. Knowing the typical fees in your state can help you budget for these costs.
Attorney fees in California
In California, for example, fees for settling an estate are based on the estate's total value. This can be up to 4% for the first $100,000, 3% for the next $100,000, decreasing as the value goes up. This makes fees easy to figure out, but they can be high for big estates.
Attorney fees in Florida
Florida also uses a system where fees are a percentage of the estate. For example, an attorney might charge 3% of the first $1 million. The exact fee can change based on how complex the case is and the lawyer's experience.
Attorney fees in New York
New York does not have fixed fees for estate settlement. Lawyers charge based on the time and work they put in. They might use an hourly rate, or set a single fee for the whole job if it’s a simple estate.
Attorney fees in Texas
Texas does not have strict rules for how lawyers should charge for estate settlement. They can charge a flat fee, by the hour, or a percentage of the estate's value. The fee should be fair. Sometimes it will have to be okayed by the court.
Attorney fees in Illinois
In Illinois, lawyers can charge a fee that matches the effort and time needed for the estate. This might be a percentage of the estate, a flat fee, or an hourly rate. The chosen method depends on the lawyer's usual practices.
The attorney’s fee can change depend on the size and value of the estate — and where you live
Size and value of the estate
A big estate or one with high value usually costs more to settle. This is because there's more to manage and assess.
Complexity of the estate
Estates with many types of assets, like businesses or properties in different states, are harder to handle. This complexity means more work for the lawyer.
Location
Where the estate is being settled can affect costs. In cities or areas with higher living costs, fees tend to be higher.
Lawyer's expertise and reputation
Experienced lawyers or those well-known in their field often charge more. Their expertise can be valuable, especially in complex cases.
Time needed
The more time it takes to settle the estate, the higher the fees can be. This is especially true if the lawyer charges by the hour.
Your attorney is typically paid out of the estate, before you’ve received your inheritance
The timing and method of paying attorney fees for estate settlement can vary. Here's a simple breakdown.
From the estate
Most of the time, the estate pays the attorney fees, not the executor using personal funds.
When are fees paid from the estate?
If you're going through probate: Once probate is open and the executor is appointed, the estate begins to pay legal costs.
Order of payments: Attorney fees are usually paid after necessary costs like court fees but before giving out inheritances.
Court approval: Sometimes, fees need the court's okay, especially if they are a percentage of the estate. This happens before the estate closes.
Before giving out the estate: All fees should be paid before the heirs get their shares.
After taxes: Fees are paid after any taxes the estate owes.
Up-front payments
Some lawyers ask for a retainer. This is money paid in advance that goes toward future bills. Any leftover money is returned.
Executor's role
The executor makes sure payments are made from the estate. They manage this part of taking care of the estate.
It's important for executors to understand these payments. This helps avoid surprises and keeps things clear for everyone involved.
Attorney fees can affect estate taxes
Understanding how attorney fees affect taxes is important when settling an estate. These costs impact both estate and income taxes.
Deductibility of attorney fees
Attorney fees can lower the amount of tax an estate has to pay:
Estate tax: These fees can be taken off the estate's total value before taxes are calculated. This lowers the estate tax bill.
Income tax: Whether these fees can lower income tax varies. It's best to ask a tax expert about this since recent tax law changes affect deductions.
When to deduct fees
The timing for these deductions depends on the type of tax form:
Estate tax returns: Deduct fees when you file the estate tax return. This is usually due nine months after death.
Income tax returns: If deductible, claim these fees in the year they were paid.
Impact on inheritance: Deducting fees means the estate’s final value is less. This might reduce what heirs receive directly:
Net estate value: The total value left after fees and taxes may be lower.
Tax savings: However, saving on taxes might offset this reduction. In the end, heirs could get more because of lower taxes.
State and federal rules
Federal taxes: Follow IRS guidelines for federal taxes. They tell you how to handle these deductions.
State taxes: Each state has its own rules for estate taxes and deductions. It's important to check these.
Planning ahead
Given the complex rules about taxes and deductions, working with a tax professional is wise. They can guide you based on the estate’s specifics.
By managing these tax details well, executors can maximize the estate's value and simplify the process for everyone involved.
Probate isn't the only cost of settling an estate — even without probate, an attorney is important
Settling an estate means more than just probate. Probate is just one part of the process. Even when probate isn't needed, you still might need a lawyer.
Some assets, like life insurance or retirement accounts, go directly to beneficiaries. But these transfers can be tricky. A lawyer can make sure everything is done right.
Even without probate, estates might owe taxes. A lawyer can help figure out these taxes and reduce them.
Estates also need to pay the deceased's debts. A lawyer can check if claims are valid and make sure debts are paid correctly.
Sometimes, family members may not agree on the estate. A lawyer can help solve these disputes and represent the estate in court if needed.
Plus, dividing up the stuff of the person who has died can cause arguments. A lawyer can help make a fair plan that follows the wishes of the deceased.
You can negotiate your attorney’s fee
You can negotiate attorney fees for estate settlement to manage costs better. Here's how to do it effectively.
Know the fee types
Start by understanding the common fee structures: hourly, flat fee, percentage of the estate. This knowledge helps during negotiations.
Evaluate the estate's complexity
Assess how complex the estate is. Simple estates might not need high fees. But complex ones, with businesses or multiple assets, may cost more.
Learn local rates
Find out the typical rates for estate settlement in your area. This gives you a starting point for discussions.
Discuss the attorney's expertise
Talk about what the attorney offers. Consider their experience and what unique services they provide. This helps justify their fees or gives you a reason to ask for adjustments.
Flexible payment options
Suggest different ways to pay:
Phased payments: Pay in parts as work progresses.
Capped fees: Set a limit on total fees for hourly rates.
Mixed fees: Combine different fee structures to keep costs predictable.
Define the services
Make sure you know what services you're paying for. Sometimes you can lower the cost by not including unnecessary services.
Compare offers
Get fee proposals from different attorneys. Comparing these can help you negotiate better terms.
Agreements in writing
Once you agree on fees, get everything written down. This contract should list all details about fees, services, and payment plans.
Negotiating isn't just about lowering the cost. It's about finding a payment plan that fits the estate's needs and your budget.
There are lower-cost options, like legal aid
Finding affordable legal help for estate settlement can make things easier if money’s tight.
Legal aid societies
Local legal aid groups offer free or low-cost services for those who qualify. This help is often for people with low incomes.
Pro bono services
Some lawyers work for free if you can't afford to pay. Local bar associations or legal aid clinics can connect you with these lawyers.
Law school clinics
Law students, supervised by licensed lawyers, provide help at reduced rates through school clinics. They handle many legal tasks, including estate settlements.
Sliding scale fees
Some lawyers adjust their fees based on your income. This makes their services more affordable if you earn less.
Community legal workshops
Look for local workshops or clinics. They sometimes offer free advice on how to manage estate settlements.
Online legal services
Online platforms may offer estate planning services at lower costs than traditional lawyers. These are best for straightforward estate plans.
Attorney fees aren’t the only cost of probate
Probate is usually the most expensive part of settling an estate. And attorney fees are often the most expensive part of the probate. Still, settling an estate involves several costs besides attorney fees. Here’s a breakdown of other expenses you might face during probate, if you do go through it.
Court fees
These are charges for filing documents and other legal actions in court. The cost depends on the state and the estate's size.
Appraisal fees
You might need to assess the value of estate assets like houses or art. Professionals charge for these appraisal services.
Executor fees
The person managing the estate, called the executor, is paid for their work. This payment could be a percentage of the estate or a flat fee, as the law or will dictates.
Taxes
There are several taxes to consider: estate taxes, inheritance taxes, and income taxes on money the estate makes.
Bond fees
Executors sometimes need to buy a bond before they can give out the estate's assets. This bond protects the heirs if the estate is not handled correctly.
Miscellaneous fees
Other costs can include paying for accounting, notary services, and keeping up property until it’s handed over to heirs.
Knowing these costs helps plan the probate process better. It’s useful to talk about these with your attorney early to prevent surprises.