Hourly v. Statutory Fee in a California Probate

I find myself a little frustrated by a potential new client that has decided not to hire me… at least not at this time. Not everybody hires the best probate attorney and that’s fine. They don’t know what they don’t know. However, YOU know because you are reading this blog. So I got their voice mail at about 5:15 PM Friday afternoon and I called back within 2 minutes. That’s how I roll!  Do most attorneys do that?

We had a good talk, I got the information I needed, and told her I would get started Monday morning. A man of my word I called her in the 9:00 hour Monday morning to get one last bit of information. I actually got a jump start and reached out to the attorney in the home state (or domiciliary state) over the weekend just to touch bases as the client had asked me to when we spoke Friday.  I already had traded emails with him and set up a call for Tuesday morning.  I strongly believe in starting probates fast, in most situations, as the sooner you start the sooner you can sell real estate and the sooner you can be DONE!

In this case it was going to be an ancillary probate as the decedent lived in another state but had recently bought a piece of land in Riverside county, California.  So a $200,000 – $250,000 piece of land would be the only asset in the California probate.  There would be some other assets in the other state probate but they would be handled in the home state and not part of our ancillary probate here in California.

First of all an ancillary probate is the same as a full probate in basically all regards. It is not a mini probate or partial probate. It is a full probate of the asset, or assets, held in California. This surprises some people who think it’s only a partial probate. The confusion is that sometimes the ancillary asset is worth under $150,000 and thus a small estate procedure is often utilized. In fact, I would say the most common ancillary petition I file is the under $50k affidavit which is usually for a piece of desert land in Kern, Riverside, San Bernardino, etc… or a timeshare.  Another common one is the under $150,000. However, if the property is worth over $150,000 then it is a full probate but with the word “ancillary” added to the petition.  That’s the only difference from a regular probate – one word on the initial petition! You still need to publish in the newspaper, notify creditors, make sure taxes are paid, make sure you have the right beneficiary, etc….

As you know from other posts I have made California has a probate code statute for the payment of normal, or “ordinary” probate attorney fees. It starts at California probate code section 10810 et seq. There it states:

“10810 (a) Subject to the provisions of this part, for ordinary services the attorney for the personal representative shall receive compensation based on the value of the estate accounted for by the personal representative, as follows:

(1) Four percent on the first one hundred thousand dollars ($100,000).

(2) Three percent on the next one hundred thousand dollars ($100,000).

(3) Two percent on the next eight hundred thousand dollars ($800,000).

(4) One percent on the next nine million dollars ($9,000,000).

(5) One-half of 1 percent on the next fifteen million dollars ($15,000,000).

(6) For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court.

(b) For the purposes of this section, the value of the estate accounted for by the personal representative is the total amount of the appraisal of property in the inventory, plus gains over the appraisal value on sales, plus receipts, less losses from the appraisal value on sales, without reference to encumbrances or other obligations on estate property.

(Amended by Stats. 2001, Ch. 699, Sec. 4. Effective January 1, 2002.)”

This particular case is interesting, and really this is the focus of my blog post, as the potential client mentioned they wanted to pay hourly rather than percentage based.  I only charge statutory (or percentage) as, to me, it’s fair to both sides.  Let me explain.  The percentage based fee is calculated as follows.  I will assume the California real property (a vacant lot in a nice area) is worth $225k. The fee is calculated as follows:

4% of the first $100,000 = $4,000

3% of the next $100,000 = $3,000

2% of the next $25,000 = $500

Total fee: $7,500

I explained to this potential client that I think she will have a hard time finding an experienced probate attorney who would do the fee hourly as, in my opinion, it’s only rookies and general practitioners who might do that. However, any experienced probate attorneys (I have done approximately 1,500 probate cases myself) in California charges the statutory fee. It’s simple and it’s fair.

Anyway, I explained that if she found someone who would do this case hourly due to it’s modest size I doubt she would save any money. If she found an attorney with a low hourly rate, if no surprises happened, and if everything went perfect perhaps she would save a $1,000 or $2,000.  I explained to her that if anything went wrong, or if any surprises come up, or if there are any complications with the real estate sale or a foreclosure started, then I could easily see the hourly attorney fee being MORE than the statutory fee.  Plus, I said it depends on if the attorney she finds is honest with his or her timekeeping. I hate to say that but I know a lot of clients are concerned about that. Charging by the statutory, or percentage, method we take away that dishonesty concern.  Let’s say the average probate attorney in California charges $350 per hour.  At $350 an hour the break even point is 21.4 hours of work.  At my hourly rate ($495/hour) the break even point is 15.15 hours. Of course some attorneys charge much more than me so the break even point will be even lower.

A full probate takes time as there are a lot of steps to get it done properly, efficiently and in a timely fashion.  We try to plan ahead so that as each deadline approaches we are ready to handle it and move on to the next. I say it is similar to a high hurdles race. We gracefully approach each event, or hurdle, glide over it, and move on to the next….

If you are looking for an honest, efficient, hard-working California probate attorney please reach out to me. I would love to see if we can help you navigate the California probate process!

-John

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