Is an Estate Executor Entitled to Compensation? How and When is it Determined?
An executor is entitled to reasonable compensation for administering a probate estate. This is true even if the underlying will fails to provide for compensation. RCW 11.48.210. Adequate and contemporaneous time records must be kept.
RCW 11.48.210 provides in part:
“If testator by will makes provision for the compensation of his or her personal representative, that shall be taken as his or her full compensation unless he or she files in the court a written instrument renouncing all claim for the compensation provided by the will before qualifying as personal representative. The personal representative, when no compensation is provided in the will, or when he or she renounces all claim to the compensation provided in the will, shall be allowed such compensation for his or her services as the court shall deem just and reasonable. …If the court finds that the personal representative has failed to discharge his or her duties as such in any respect, it may deny him or her any compensation whatsoever or may reduce the compensation which would otherwise be allowed.”
In other words, yes, the executor may be compensated for his/her services in a probate matter. However, the executor is given a choice. The executor may opt for the compensation set forth in the will. If the executor does not wish to accept the compensation provided in the will (in which case a timely renunciation of such compensation must be made), or if the will provides for no compensation whatsoever, the executor may apply to the court for “just and reasonable compensation.”
If the court determines the executor did not fulfill any of his/her duties required by law, the court can deny compensation altogether or reduce compensation as it deems fit under the circumstances.
What’s “Just and Reasonable” Compensation?
Washington courts consider following in determining “just and reasonable” compensation:
“the amount and nature of the services rendered, the time required in performing them, the diligence with which they have been executed, the value of the estate, the novelty and difficulty of the legal questions involved, the skill and training required in handling them, the good faith in which the various legal steps in connection with the administration were taken, and all other matters which would aid the court in arriving at a fair and just allowance.”
In re Bailey's Estate, 56 Wn.2d 623, 627 (Wash. 1960) (internal citations omitted)
Moreover, the Washington Supreme Court cited with approval an Arizona decision that followed the Restatement of Trusts in determining “just and reasonable” compensation for a trust. In re Powell’s Trust Estate, 68 Wn.2d 38 (Wash. 1966). That case pointed to the following factors:
“The Arizona Supreme Court in In re Estate of Dunlap, 38 Ariz. 525, 2 P.2d 1045 (1931), states that the elements to be considered in fixing a proper fee are: (1) The amount of risk and responsibility involved, (2) the time actually required of the trustee in the performance of the trust, (3) the size of the estate, (4) the amount of income received, and (5) the manual and overall services performed. The elements which should be considered in arriving at a just and reasonable fee, as announced in the Arizona decision, are universally the standards.” Id. citing See Restatement (Second), Trusts § 242.
Moreover, a personal representative or administrator with nonintervention powers is given the powers of a trustee under RCW chapters 11.98, 11.100, and 11.102. RCW 11.68.090(1)(f). RCW 11.98.070(26) provides that the trustee can pay reasonable compensation to the trustee considering all circumstances, including time, effort, skill, and responsibility involved in the performance of services by the trustee…” (emphasis added)
When Is Just and Reasonable Compensation Determined?
For estates being administered with nonintervention powers, final approval of all fees paid to professionals, including the executor, is determined at time of closing the estate. To close the estate, the executor with nonintervention powers can either a) file a declaration of completion; or b) petition for a final decree closing the estate.
If the executor files a declaration of completion, the executor must provide the amount of fees paid or to be paid to professions, including the executor. RCW 11.68.110(1)(g). Unless a valid, written waiver is provided by all heirs and interested parties, the executor has 5 days by which to provide the declaration of completion to heirs and interested parties, as well as a notice that provides such heir or interested party has 30 days to object to the fees. If no timely objection is filed, the estate will close and the declaration of completion will be deemed a final decree approving the amount of the fees set forth in the declaration.
If the executor files a petition for a final declaration instead of a declaration of completion, the executor must “state the fees paid or proposed to be paid to the personal representative…”. RCW 11.68.100(2). The petition will be set for hearing, and advance notice of the hearing and the petition itself must be given to any heir or interested party who has an interest in an estate asset that may be reduced by the proposed fee. Id. The probate court will make a final determination of reasonable of compensation at the hearing.
Executors without nonintervention powers must petition the court for a final decree closing the estate. Such petition must include an accounting setting forth fees paid to executors and allow for an opportunity for objections.
Contact the law offices of Christopher R. Chicoine, PLLC to discuss these or other issues pertaining to estate planning or estate administration.
Attorney, Chris Chicoine
Christopher R. Chicoine, PLLC
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