Compensation of Personal Representatives
Clients appointed as Personal Representatives (formerly called “executors” or “administrators”) often find the position requires more time and effort than expected. While some estates require only a few hours’ work, others can take dozens, if not hundreds, of hours. Frequently, then, the question arises for our busy clients: can I be compensated for my efforts?
The short answer is yes: In Massachusetts, a Personal Representative is entitled to reasonable compensation for his or her services. The law recognizes that the tasks required of a Personal Representative are enormously important yet potentially burdensome. It therefore seeks to compensate Personal Representatives for the value of their time so qualified individuals are not discouraged from serving. For these same reasons, many testators (i.e. those leaving Wills) include provisions in their Will directing that the Personal Representative (typically a loved or trusted friend or family member) be paid. Personal Representatives appointed under Wills silent on the question of compensation, and those appointed for intestate estates (i.e. where the decedent died without a Will) are likewise entitled to reasonable compensation.
What constitutes reasonable compensation? That’s the $64,000 question. Personal Representatives have some discretion when determining their fees. What is reasonable will depend on the circumstances of any particular estate. Massachusetts courts assessing the reasonableness of certain fees have considered factors including the size of the estate, the complexity of administration, the skill and attention employed by the Personal Representative, and the nature of the Personal Representative’s work, including the cost usually charged by others for that work. A Personal Representative may also want to consider his or her average hourly employment compensation in determining the value of his or her time for estate purposes.
We advise clients on a number of strategies that will aid in the determination of their fee and in general record keeping. These strategies include developing a clear idea of how the Personal Representative’s time will be spent and billed, creating a system for documenting estate expenses, and, most importantly, creating detailed contemporaneous time records for all tasks. That means memorializing each activity, particularly communications, whether by telephone, meeting, or email. Time spent by a Personal Representative on the phone, corresponding with, or completing forms for banks, insurance companies, etc., adds up quickly.
Of course, a Personal Representative may renounce in whole or in part any compensation provided for by a Will or by law. And any necessary expenses incurred by a Personal Representative in connection with the estate should be reimbursed as a cost of administration.
If you are a Personal Representative with questions about fees or other aspects of administration, or if you’re an heir with concerns about fees, please call us today.