How are Estate Executor Fees Calculated in Pennsylvania?
The job of serving as an estate executor is a difficult one. Executors have the responsibility to manage the legal and financial affairs of the estate. Some of these responsibilities include sending notices to beneficiaries, protecting estate assets, settling debts and expenses and filing income and estate tax returns.
The weight of these responsibilities are often compounded by family dynamics. Beneficiaries want to receive their inheritance and be assured that the administration process is handled fairly. If any beneficiaries do not agree with a proposed distribution, the executor becomes the focal point for the dispute.
With the burden of all these responsibilities falling to the executor, some might assume that the executor is protected from legal and financial liability for mistakes. But that is not the case – executors have fiduciary duties to the estate’s beneficiaries and can be held personally liable for improper management of the estate.
Because executors take on legal responsibilities and personal risks, it is very important that they be paid for their services. Pennsylvania law entitles executors to reasonable compensation for their services. But Pennsylvania does not have an official fee schedule. Instead, the law states that a court shall allow compensation that is reasonable and just under the circumstances. There is no specific standard of what is reasonable and just. The amount of compensation is determined by the court under the facts and circumstances of each individual estate matter.
As a general rule of thumb, attorneys and judges often refer to a court decision which set guidelines for what may considered “reasonable”. See Johnson Estate, 4 Fid.Rep.2d 6,8 (1983). The cited case included a fee schedule of what is considered prima facie reasonable rates at which estate representatives could be compensated.
Below is the fee schedule which was referenced in the Johnson case:
Estate Value | Per Col. | Per Total | ||
$0.01 | to $100,000.00 | 5% | $5,000.00 | $5,000.00 |
$100,000.01 | to $200,000.00 | 4% | $4,000.00 | $9,000.00 |
$200,000.01 | to $1,000,000.00 | 3% | $24,000.00 | $33,000.00 |
$1,000,000.01 | to $2,000,000.00 | 2% | $20,000.00 | $53,000.00 |
$2,000,000.01 | to $3,000,000.00 | 1.5% | $15,000.00 | $68,000.00 |
$3,000,000.01 | to $4,000,000.00 | 1% | $10,000.00 | $78,000.00 |
$4,000,000.01 | to $5,000,000.00 | 0.5% | $5,000.00 | $83,000.00 |
Joint Accounts | 1% |
P.O.D. Bonds | 1% |
Trust Funds | 1% |
Real Estate Converted with Aid of Broker | 3% |
Real Estate: Non-Converted | 5% |
Real Estate: Specific Devise | 1% |
As the fee schedule demonstrates, the compensation is based on the value of the estate. The percentage is subject to a graduated schedule, meaning that the compensation as a percentage of the estate’s value declines for each tier of estate value. Each tier is subject to its own rate, which is cumulative towards the total executor fee.
The guidelines should not be considered a mandatory rule. Estates which involve a great deal of work or disputes between beneficiaries may be charged at a higher rate. Estates with very little work but a large value may be adjusted downward from the guidelines.
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