01Did the decedent leave a valid Last Will and Testament?
If the decedent died leaving a valid Last Will and Testament, then the Last Will must be carefully reviewed to look for any guidance as to what the Personal Representative should be paid. Some people choose to limit the fees to a specific dollar amount, while others opt for allowing the payment of reasonable fees based upon applicable state law. Still, others leave their Personal Representative a specific bequest instead of allowing them to collect a fee, which provides an income tax benefit for the Personal Representative since a bequest is nontaxable but fees are taxed as ordinary income. If the decedent died without leaving a Last Will, then state law will govern the fee that the Personal Representative will be entitled to receive.
02What type of Personal Representative's fee does state law provide for?
Some states provide specific rules for the fee to be paid to a Personal Representative. In these states, the fee is calculated by multiplying the gross value of the probate estate by a specific percent, and as the gross value increases the percent decreases. For example, in California the fee is equal to 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, 1/2% of the next $15 million, and a reasonable amount determined by the court for estates over $25 million. In other states, the entire fee is left to be determined in the discretion of the probate court as to what is a "reasonable fee." In these states, probate courts usually issue local guidelines for reasonable fees.
03Is the Personal Representative entitled to an "extraordinary fee?"
In states where the Personal Representative's fee is set by state law at a specific percentage of the value of the gross estate, nonetheless, the Personal Representative or Executor will be entitled to receive an additional fee for services that are rendered above and beyond ordinary services. Extraordinary services may include overseeing the sale of the decedent's real estate and personal property; conducting litigation on behalf of the estate; defending litigation against the estate; being involved in tax disputes and proceedings; and continuing the decedent's business.
04Is there more than one Personal Representative?
If there's more than one Personal Representative and the Last Will is silent as to how each is to be paid, then state law will dictate the fees paid to each fiduciary. In some states, the laws require that multiple fiduciaries must divide the fee equally, while in other states each fiduciary can collect the full fee that one fiduciary would be entitled to receive.
05Is the Personal Representative an institution?
If the Personal Representative is an institution such as a bank or a trust company, look to see if the Last Will specifies that an institutional fiduciary is entitled to receive compensation in accordance with it's published fee schedule in effect on the date of the decedent's death. These fee schedules are similar to state laws that calculate the Personal Representative's fee as a percentage of the value of the gross estate. If the Last Will is silent on this issue, then state law will dictate the institution's fee.
06Is the Personal Representative also the attorney for the estate?
In these situations, look to see if the Last Will addresses the fees to be paid to the attorney who is also acting as the Personal Representative. Sometimes the Testator and the attorney will enter into a written agreement when the Last Will is made as to what compensation the attorney will be entitled to receive. If the Last Will is silent on this issue, then state law will dictate whether or not the attorney can collect fees as both the Personal Representative and as the attorney for the estate.
07Have the Beneficiaries Agreed on the Personal Representative's Fee?
Regardless of what the Last Will and Testament says or what state law provides, sometimes the estate beneficiaries and the Personal Representative will reach a mutual agreement on how much and when the Personal Representative will be paid. This can occur early on in the probate administration or towards the end when the estate is about ready to be closed.
08What has the Personal Representative paid out of pocket?
If the Personal Representative has paid for anything out of his or her own pocket, then the Personal Representative will be entitled to be reimbursed for these expenses. Out of pocket expenses may include expenses that had to be paid before the estate could be opened, such as doctor and funeral bills, utilities, property taxes, insurance, and storage fees. Aside from this, travel expenses and mileage incurred while administering the estate as well as office supplies and postage will also be reimbursed.
09When will the Personal Representative receive payment?
Out of pocket expenses are reimbursed during the course of the estate administration. In some states, fees paid to the Personal Representative, both ordinary and extraordinary, can be paid at any time during the administration without a court order. But even in these states, the beneficiaries can request a decrease in the fees already paid if the probate judge determines that the fees were not reasonable for the services rendered. In other states, the Personal Representative's fee can only be paid after a court hearing. However, the requirement for a hearing can be waived if all of the beneficiaries are informed of the fees to be paid and sign consents that authorize payment without a judge's approval.
How Much Does a Personal Representative Get Paid?
Getting Paid for Services Rendered
If you've been appointed to serve as the Personal Representative, also called the Administrator or Executor or Executrix, of an estate, then in most cases, you'll be entitled to get paid for the services you provide on behalf of the estate. How much you'll receive and when you'll receive it depends on many factors.