Settling an estate can be a complicated obligation for a personal representative or executor. The list of administrative, financial, and legal tasks they are expected to complete is immense. On top of that, they must navigate their own wellbeing and the heightened emotional state that comes with grieving the loss of a loved one.
Fortunately, personal representatives are generally permitted to receive compensation for their efforts. Below we will look why and how personal representatives are compensated and set out some aspects to consider when approaching a role as a personal representative.
What’s Involved in Settling an Estate?
Estates can range anywhere from under $10,000 to over $10,000,000. Regardless of the size, there are certain tasks that every personal representative must complete and certain timeframes in which they must complete them.
We won’t go into an extensive list, but even a summary list could soon get overwhelming.
- Notifications: Inform friends, other relatives, employers, life insurance company, and other beneficiary accounts of the passing.
- Last Rights: Make funeral and burial arrangements.
- Assets: Inventory the estate’s assets and liabilities.
- Protection: Keep assets safe and secure from theft or disrepair.
- Will: Locate the will and give a copy to the court.
- Probate: Initiate the probate process for any probate assets.
- Cancellations: Cancel unneeded services, subscriptions, and utilities.
- Estate: Open the “estate” by obtaining an EIN and bank account.
- Debts: Pay any debts and property, income, or estate taxes owed by the estate, including filing tax returns.
- Distribution: Sell unwanted or unused assets or distribute assets to heirs.
The full list of tasks and the exact process by which they are completed will depend heavily on the size of the estate in question. But we do have estimates on the length of time the estate administration process will take and how much time the personal representative will have to put in.
Personal Representative’s Workload
A large 2018 survey found that on average it takes a personal representative 16 months and 570 hours of work to settle an estate. Roughly 80% of estates are settled within 18 months and with less than 800 hours of personal representative effort.
However, the more valuable the estate and the more assets involved, the more effort is required. For estates above $5 million, the average time to settle the estate is 42 months with 1,167 hours of work on the part of the personal representative.
All in all, the role of a personal representative is a stressful one. Fortunately, personal representatives are generally entitled to compensation for their time and effort, which may offset some of that stress.
Pro Tip: The personal representative can also be reimbursed for administrative fees and costs (e.g. funeral-related costs, document notarization, and filing fees). But you should set up an estate banking account as soon as possible to pay for costs to avoid any added hassles.
The process and amount of the personal representative’s compensation is generally determined in one of two ways: the will or state law.
Compensation Detailed in a Will
If the will provides that a personal representative’s compensation shall be based upon specific criteria, other than a general reference to commissions allowed by law or words of similar import, including, but not limited to, rates, amounts, commissions, or reference to the personal representative’s regularly published schedule of fees in effect at the decedent’s date of death, or words of similar import, then a personal representative shall be entitled to compensation in accordance with that provision.
A personal representative may renounce the provisions contained in the will and be entitled to the compensation schedule laid out in the Florida statutes. A personal representative may also renounce the right to all or any part of the compensation.
Compensation in Florida Statutes
Florida law outlines the amount of compensation available to personal representatives when the will does not specify. The compensation schedule in the relevant statutes is based on the total value of the estate, i.e. the inventory value of the probate assets and the income earned by the estate during administration.
According to §733.617(2), Fl. Stat., the following are the graduated reasonable compensation levels for a personal representative:
- 3% of estates valued up to $1 million.
- 2.5% of estates valued $1 million–$5 million.
- 2% of estates valued $5 million–$10 million.
- 1.5% of estates valued over $10 million.
On top of these set percentages, a personal representative may be allowed additional compensation if they have taken any extraordinary services including:
- The sale of real or personal property.
- The conduct of litigation on behalf of or against the estate.
- Involvement in proceedings for the adjustment or payment of any taxes.
- The carrying on of the decedent’s business.
- Dealing with protected homestead.
- Any other special services needed to be performed.
Ways to Change the Compensation
Should an interested party petition the court to review the amounts, the court has leeway over the total amount of compensation to be paid to the personal representative.
For example, if a personal representative does not complete their duties in a timely fashion, another heir could request the court decrease the compensation. On the other hand, the personal representative themselves could petition for increased compensation for administering a uniquely complex estate.
In determining what counts as reasonable compensation, the court considers and weighs an array of factors they may pertain to the estate in question:
- The promptness, efficiency, and skill with which the personal representative administered the estate,
- The responsibilities and potential liabilities taken on by the personal representative,
- The nature and value of the assets that are affected by the decedent’s death,
- The effects on the estate or interested persons from the personal representative’s services,
- The relative complexity and unique issues involved in the estate administration,
- Participation in tax planning and in preparation, review, or approval of the estate’s tax returns,
- The nature of the estate’s various asset classes, the expenses of administration, the liabilities of the decedent, and the compensation paid to other professionals and fiduciaries, and
- Any delay in payment of the compensation after the services were furnished.
Help with Estate Administration
If you have been chosen as a personal representative for an estate, it’s important to approach the task systematically so you don’t overlook any critical steps. We understand that your life has now become much more convoluted, and we are here to help.