At Surprenant & Beneski, P.C., our clients often ask questions about the role of personal representatives (aka executors or PRs) in the process of estate planning. Many of our clients also want to know whether PRs must be paid for their services and, if so, whether they must be paid a specific amount.
While the state of Massachusetts recognizes that PRs are entitled to reasonable compensation, and their fees must be approved by the court, no particular amount of compensation is required. This can make arriving at the “reasonable” fee the state prescribes challenging. Let’s explore in detail the duties of PRs and how their fees are calculated.
Whether you are ready to plan your own estate or considering taking on the position of personal representative for a close friend or relative, it is essential to understand what the role involves and how PR fees are determined.
Tasks a Personal Representative Is Required To Perform
It is important to realize the complexity of the tasks a personal representative is expected to complete and how time-consuming those tasks may be. As you would expect, high-net-worth estates and complicated holdings, such as real estate in various states or countries, make the job of a PR all the more difficult and therefore are usually presumed to be worth more in PR fees.
As you read the following, note that a personal representative is a fiduciary, held accountable for all transactions and decisions. The steps that must be taken include:
- Obtain the death certificate with copies to distribute to various agencies.
- Locate and file the Will with Massachusetts Probate Court.
- Distribute the estate according to state laws of intestacy if there is no will.
- Notify heirs and other beneficiaries of the death.
- Identify and inventory all estate assets, including real estate, investments, bank accounts, fine art, heirlooms, vehicles, collectibles, and digital assets.
- Have professional appraisals of necessary items to prove their value for insurance and tax purposes.
- Open a bank account for the estate to pay bills and deposit incoming funds
- Pay outstanding debts and expenses, including any final medical bills,
funeral costs, owed tax bills, and outstanding loans.
- File taxes, including (if necessary) an estate tax return and the deceased’s final income tax return.
- Distribute remaining estate assets to beneficiaries as stated in the will or according to intestacy laws.
- Seek court approval to close the estate once all of the previous tasks have been completed.
How Personal Representative Fees Are Calculated and Paid
Now that you have a better idea of the multiple steps involved in being a personal representative, you no doubt have a clearer understanding that executing an estate is not only an honorary post, but a demanding and serious undertaking. Because the state does not set a standard fee or percentage for PR fees, compensation is variable.
How Massachusetts Courts Define “Reasonable Fees”
Massachusetts courts, when assessing whether fees for a personal representative are reasonable, consider the following factors:
- Size of the estate
- Complexity of administration
- Skill and attention employed by the personal representative
- Nature of the work done
- Costs typically charged by others
In most cases, the decedent’s last will and testament states either what the personal representative’s fees should be or how they should be calculated. While some testators choose to assign a specific dollar amount, others opt for a percentage of the estate. It is also of consequence whether the decedent decides to authorize a payment to the executor or bequeaths a “gift”, since the former is taxable as income and the latter is not.
In cases in which the testator has not made provisions to pay their personal representative or in which the deceased without a will, the PR may bill for their time, taking into account:
- Their average hourly rate at employment
- The time they spend on PR tasks
- The expenses they accrue while serving as PR
Of course, a personal representative may decide to assume the role without compensation and simply request reimbursement for related costs.
Contact Our Experienced Attorneys To Discuss PR Fees Today
If you are thinking of creating an estate plan, have taken on the role of personal representative or are thinking of doing so, or are an heir concerned about how the PR will be paid, get in touch with the knowledgeable estate planning attorneys at Surprenant & Beneski. We have the answers to all of your questions and will give you the personal attention you deserve.