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Executor Fee

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I think you should probably hit the probate court and ask the clerk to see a representative sample of small estates to get an idea of what a court has rubber-stamped as "reasonable" given the size and complexity of the estate.  It'd be nice if state legislatures would fix a given percentage range when it comes to small estates where there isn't a ton of things to do (whether contested or uncontested isn't necessarily meaningful), but most go by the "reasonable" standard.  If the other heir doesn't have a problem with a given amount, you can usually depend on the court to say "ok" unless it's truly outrageous (say, the person wants $2,000 as compensation to deal with a simple estate worth $10k overall and there weren't a lot of bills or claims or things to sell, etc.)

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What is a fair fee for the personal representative of a simple, uncontested estate, involving two close family members?

 

I don't know what you mean by "fair fee."  A fair is a place where you eat crappy food and then throw it up on vomit-inducing rides, so I suppose a "fair fee" would be the cost of admission to a fair.

 

Needless to say, no one on a message board can opine intelligently, in the abstract, about what two or more unknown people will or won't consider to be "fair" -- particularly when we have no relevant facts whatsoever (your characterization of the estate as "simple" tells us nothing, and the fact that the estate is "uncontested" (by which I assume you mean that no one contested the validity of the deceased's will since "uncontested estate" has no meaning otherwise) doesn't tell anyone anything about how much work is involved in the administration).

 

Alabama has no fixed schedule for compensation, but somewhere between 1-4% of the estate's gross value (with the total percentage and the value of the estate being inversely proportional) is typically considered to be "reasonable."

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The will is uncontested. The executor wrote 19 checks for bills. There will be no inventory or auctions. The only beneficiaries are my brother the executor, his son and myself.The will has named all items and how they are to be distributed. John, the executor is asking for 5%. This executor fee seems excessive. Code of Alabama Section 43-2-848 reads... A personal representative is entitled to reasonable compensation for services as may appear to the court to be fair considering such factors that may include, but are not limited to, the novelty and difficulty of the administrative process, the skill requisite to perform the service, the likelihood that the acceptance of the particular employment will preclude other employment, the fee customarily charged in the locality for similar services, the amount involved and the results obtained, the requirements imposed by the circumstances and condition of the estate...which shall no exceed two and one-half percent of the value of all property received and under the possession and control of the personal representative and two and one-half percent of all disbursements. Does that mean two and one half percent of the value of the estate?

If I ask for a review of the compensation of the personal representative by the Judge, what would I be required to do next?

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If I ask for a review of the compensation of the personal representative by the Judge, what would I be required to do next?

 

Do you mean what you do after the judge reviews the fee or do you mean what you do after you get your question answered here?

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Thank you for asking! I guess my question is more like, where do I start? I guess maybe, I need to contact the attorney who is handling probate to set a hearing for a review of the executor fee. Not real sure of that since, at this point, we are trying to handle this estate without going to court. Am I right in thinking that once the judge reviews the fee, we would be obligated to accept whatever fee the Judge sees as fair?

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John, the executor is asking for 5%.

 

Five percent of what?  How much in $$ is 5%?  Whom is he asking for this?

 

 

 

If I ask for a review of the compensation of the personal representative by the Judge, what would I be required to do next?

 

I'm not sure what you mean by this.  Typically, the PR requests a particular amount of compensation from the court and supports the request with a detailed inventory and accounting and, where applicable, legal argument.  You said there "will be no inventory."  Does that mean no inventory was ever done?  If so, why wasn't one done?  An inventory of assets is one of the first things a PR is supposed to do.  In any event, it doesn't make much sense for a beneficiary to ask the court to conduct "a review of the compensation of the personal representative" because that process is typically initiated by the PR him/herself.

 

 

 

we are trying to handle this estate without going to court. Am I right in thinking that once the judge reviews the fee, we would be obligated to accept whatever fee the Judge sees as fair?

 

If the person in question has never been appointed by the court to serve as PR, then he likely isn't truly the PR.  While it may be possible to "handle [the] estate without going to court," it's pretty much a crap shoot how things will turn out (unless there's some sort of small estate administration process that allows for non-supervised administration).  If I were you, I would consult with an independent attorney.

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Letters of Testamentary have been issued to the chosen executor named in the will. The PR is also one of the beneficiaries of the will.  The will states that personal property inside any of the homes, or structures being willed belong to the named beneficiaries who were awarded these buildings and properties. The PR is asking for a full five percent of the estate, across the board for both tangible and liquid assets. Please help!

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The PR is asking for a full five percent of the estate, across the board for both tangible and liquid assets.

 

First, I'm not sure what you're implying by referring to "both tangible and liquid assets."  Second, and once again:  How much in $$ is 5%?  Whom is he asking for this?

 

 

 

Please help!

 

I certainly hope you understand that you're simply posting on a public message board and that the only way folks here can "help" you is by answering your questions.  As I wrote previously, if I were you, I would consult with an independent attorney.

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I wonder if he knows that he will have to pay income tax on his fee, whereas, there is no income tax on his inheritance.  While it may affect what the beneficiaries receive, it is taken off the top like all other expenses of administration.  It used to be that 5% was a standard fee for an executor for a routine estate in many states..  I don't know the practice is Alabama, but you should at least call around to some probate attorneys and ask what the typical fee is for a routine estate of $XXX.00.

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adjusterjack and pg1067,

 

I think I have answered your questions, and am waiting for a reply.

 

I'm trying to figure out what question you've asked that still requires a response.  I also can't remember if you've clearly said who you are in this scenario, but it appears you're not the executor, so I'll assume you're one of the other beneficiaries.  In any event, you've said that this person is seeking $25k, which is 5% of the estate value, so we're talking about a $500k estate.  If the executor were to get the $25k he is seeking, this means your share of the estate would be reduced by $8,333.33, as compared with a $0 executor fee.  You're certainly free to tell the executor you don't agree to the fee and either that you would be OK with $X (i.e., some lesser amount) or to force him to go seek court approval.  I suggest you carefully consider how much a fight over this might affect your bottom line.  If you force the estate to spend $10k in attorney fees and the court approves $20k, you lose money in the long run.

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Please see my July 8 and July 11th posts stating whom the blog is from pg1067. Please read and then give an answer please.

 

Your July 11 post asked no questions (that was the one in which you simply wrote, "Please help!"), and your July 8 post appears to ask only procedural questions that only a local attorney is going to be able to answer.  I suggest you consult with a local probate attorney.

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Letters of Testamentary have been issued to the chosen executor named in the will. The PR is also one of the beneficiaries of the will.  The will states that personal property inside any of the homes, or structures being willed belong to the named beneficiaries who were awarded these buildings and properties. The PR is asking for a full five percent of the estate, across the board for both tangible and liquid assets. Please help!

 

He is charging his mothers estate over twenty-five thousand dollars. Each of the three beneficiares in the will would pay one third of this amount. The three beneficiares consist of the PR, his son and brother.

 

Nope, you didn't ask any questions on 11 July (and it's odd that you'd keep saying you did, and yet fail to quote it/them).

 

At any rate, the statute says what it says.  We cannot know what property he had possession and control over (no more than 2.5%), and what the amount of disbursements is (no more than 2.5%).  There are things that he'd never have control over as such, e.g., accounts or assets that contractually designate particular individual(s) as pay/transfer on death beneficiary(ies), which passes outside the probate estate.  As has been noted, if no inventory has been done as the statutes doubtless require in a scenario with an estate of this value, then it's unclear how someone arrives at a $$ for compensation.

 

No, you wouldn't ask the estate attorney about what to do (that person works for executor).  You will need to notify this person by certificate of service on anything you file because this person is representative of the estate. 

 

"Does that mean two and one half percent of the value of the estate?"

No.  If it did, the legislature would've said so.  (It may wind UP being that, but that isn't a given.)

 

As to the reference in a prior post that you would "pay" the executor this money, that's not how it'd work.  The compensation would come from estate assets v. you writing this person a check.  (It is unclear that you'd want to co-own assets with this person going forward, and it's also unclear what assets, if any, may need to be sold to cover estate debt.) 

If brother is asking co-heirs for this much, then I'd ignore him.  I'd like to think one needn't file an objection to someone "asking" the court to approve more than the statutes allow, but you may need to do that when the time comes.  Keep on top of what's being filed in the probate case; do not expect the estate attorney to follow rules and keep you notified (even though, technically speaking, (s)he's ethically and legally obligated to worry about things to benefit the estate and thus the heirs instead of one heir).

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At no point have you mentioned the dollar value of this estate.  Has the executor submitted any type of document that states how he calculated this fee? 5% of what assets, exactly?  What is the total value of this estate?  So this estate will be paying an executor fee in addition to what the attorney is billing?

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At no point have you mentioned the dollar value of this estate.

 

Well...the OP did say that the "executor" is seeking 5% of the estate, which amounts to $25k, so it's hardly a stretch to figure out the estate value is $500k.

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The estate is worth about 600,000. The family is trying to make an agreement out of court. My question is; What is a common fee for an executor in a case of this nature? The will states that assets contained on or in properties and structures go with that property to the person who has been awarded the said property and structure. For example, To my son I leave the homestead including contents.

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You'd have to do some poking around in the probate court records in question to find out what's "common"/usual, after looking at cases with similar issues (if there is not a lot of estate debt to address in terms of paperwork; nothing in the way of having to sell most of the estate property to cover estate debt, etc.).

 

You don't say when the person died, but mentioning only that there's a letter of testamentary issued and that there's no inventory filed indicates it's early days. Most states will have a six-month deadline for creditors after notice to file claims.

Since he's asking for more than is allowed, I'd just point him to the statute (and whatever info you dig up on other cases).   From what I can tell, he'd have had to pay out $400k in disbursements to earn $10k compensation, and $15k on the rest indicates he's assessing 2.5% on the ENTIRE value of the estate (which may or may not include stuff that passes outside the estate by virtue of contractual pay/transfer on death designation). 

It isn't as though he has to fiddle around with selling the house and such, correct?  Were it me, I'd tell him that $12k is a rough guess at "reasonable" for the amount of time he'll have to spend, subject to change depending on what comes up.  (He's not having to take unpaid time off work to address writing some checks, etc., and the lawyer can handle most of it.)  At any rate, the notion if it is indeed early days v. near the end of probate and he's decided what he will receive before it's over is kinda nonsensical. 

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