A am a very close friend of the family and their personal and business accountant. Both parents died within the same year I was very close to the father who taught me everything I know about the Real Estate business. This estate is large and according to law I am "entitled " to a hefty fee- a double one. I really want to do right by the family. I did a lot of work on this.
You can either charge nothing or exactly what you are entitled to by the law. Reasonable charge would be at least your professional hourly times the number of hours spent. From experience, the number of hours x min wage would settle around six figures for my efforts on my dad’s estate. The entitled fee is about 1/4 of that figure. Really depends on how much you personally did - and whether you feel you would gift your professional svcs to the decendents.
@amandakayak are you saying Number of hours x minimum wage= $100,000 minimum?
The formula for the way executors are paid is generally set by law and the court has the right to approve or disapprove the billing. If this is your business, charge what you would have charged a client and give a professional discount if that is what you would have done. If this is not your business and you undertook the work as a friend, find out what the rate in your state is and charge accordingly. If it’s not your business, you may have had a learning curve or had to devote more time to it so you might want to adjust your hours accordingly. If it wasn’t a huge amount of work for you or if the estate is small and the family isn’t well off, consider waiving the fee unless you need the money. You should be keeping detailed time and expense records to support your fee submissions.
@sax yes - ok maybe a huge exaggeration but spent about 30hrs a wk for about 4 months and then scattered hours for the next two years…huge amount of time and effort to clean out a home of 60 yrs, fix up and deal with contractors on required fixes, deal with real estate, attorney, court, work to consolidate the assets, file tax returns (personal, estate, inheritance…), appraisals of jewelry, etc.
Whether your state allows compensation by percentage of the estate or an hourly rate I think they both have flaws I think California has one of the most equitable laws about executor fees. .http://info.legalzoom.com/monetary-percentage-executor-california-4635.html
It is reasonable to charge your professional rate for the hours you work as a professional. Since the father was valuable to your career I would take either the entitled amount or the California amount, which ever is less, and then deduct a 20 or 10 percent courtesy.
The law varies by state. We couldn’t get our estate attorneys to give us an exact figure or even a range. We ended up taking $25/hour. This estate was very complex; it took 9 years to close (lots of real estate involved). I spent over 1,500 hours on it, and my co-executor spent about half that.
We tracked hours carefully as we went along and kept a log of all our activities. Our estate was court supervised with one very litigious heir, so we were really careful so we had the documentation to uphold the expense.
$25/hour is much less than I make in my consulting practice, and I definitely worked less at my job during the early years of the estate. It was no windfall. But you do what you need to for family.
I don’t understand what you mean by a “double” fee. Are you saying that law entitles you to a percentage of the estate, and that you could apply this percentage to the same estate twice? That sounds like very poor form to me, especially in the circumstances.
Did you charge them your usual hourly rate for your accounting services?
I think that others have given good advice about how to calculate a reasonable fee and discount.
If I were close to the deceased, I would either charge a token fee far below what I was entitled to, or not charge a fee at all.
I say this as the non-executor for my elderly mother, but the adult child who has spent tens of thousands of hours caring for her and taking care of her business over the last 7 years, without ever charging a penny. And yes, it will take some work for my brother to settle the estate (calling the attorney = the work he has to do?), but it will not come anywhere close to the hours and effort I have spent driving my mom to appointments, making calls to the cable company, straightening out insurance tangles, dealing with banking matters, shopping for necessities, sitting in the ER with her, tending to her accounting and bill paying, dealing with home help problems, etc etc etc etc. I do not do these things expecting compensation, but because that’s what families do. They take care of each other. They do not view loved ones as profit centers.
A close friend is a bit different. You’re not family, but you seem to have genuine feelings of gratitude and affection. You could honor that relationship by not using your privileged position to wring maximum money out of it.
Consolation - if there are two deceased, there are two estates (it does not matter if they were married to each other)… I think OP meant a fee per each estate.
Did you not discuss fees when you agreed to be executor? It would seem to me that would be the norm, unless you were considered such a close friend you would be volunteering your services. What do you think the understanding was at that point in time?
I think the question is useful to many of us as we try to think about the best way to plan. I prefer to work things like this out before the work is done. Then each party still has the option to make other arrangements if they don’t agree about fees.
I am also interested in whether you charged for your accounting services and, if you did, whether it was a discounted rate.
I did just about everything for both of my parents’ estates, plus living local, caring for them. There is definitely a learning curve.After my mom died, I began to get my dad’s affairs in order. I took the 20 stocks and mutual funds and consolidated everything with Fidelity. I changed his bank account and security box to include me. Shortly before he died, he signed real estate agreement to sell condo. Re titled his car for son. I have no idea how much time this took, plus a daily visit to dad.
I didn’t charge my sibling anything.
I think it’s different if you are a child of the deceased and the beneficiaries are you and a sib vs a friend and not a beneficiary. It also matters if it is your livelihood and took time from your regular job and livelihood. Charging s regular fee with a professional discount sounds reasonable, as long as its within the statutory allowable amount. Ideally, it IS best to get this all agreed to BEFORE starting the work. It always takes MUCH longer than anticipated!
For my SisIL, it took over 3 years to fully wind everything down with everyone’s full cooperation. We paid the estate attorney and the family friend (who is a paralegal who graduated from law school and has served as executor of several estates. We just paid whatever both of them submitted periodically to the estate and were grateful for their services.
You were their “personal and business accountant” so I expect you know what fees you are legally entitled to charge. I think it depends on who the beneficiaries/heirs are (presumably family members) and your relationship to them. Your friends are gone, so all your work from this point on doesn’t really help them. Seems to me you should get paid for your work. My only caveat is that if the fee is a pct of the estate, or if you charge an hourly rate, charging double for the same work - if it is the same work - seems chintzy to me.
How much IS this estate? Will your whole fee be a huge %age of the total estate?
I mean really…you say basically you did this as a full time job. depending on the amount of the estate, that could be a large portion…or small portion of it.
We never charged a fee for H’s dad, H’s aunt, and my mother.
I think you are entitled to the fee as they would have to pay it to another executor, and you’ll probably do a better and more honest job than a stranger. If the work is the same for both estates, you may want to waive the second fee, but I don’t think you have to ethically. The fees you are entitled to are set by law so that executors don’t take advantage of the heirs, but it works both ways. They should expect to pay the statutory fee.
If you find that the work was much easier and faster than you thought, you could discount it to your hourly wage, but start the project with the understanding that you’ll get the statutory fee.
My brothers and I were the sole beneficiaries of my mom’s estate. I was the named executor. Fortunately, I had the time to deal with it and understood her finances very well. I felt that any fees I received would be coming out of my brothers’ pockets so I charged the estate my actual out of pocket expenses, nothing more. Had they been in my position I expect my brothers would have done the same.
I’m not suggesting that what was right for us would apply to any other family.
The OP is not a family member. I think it is fair to keep track of hours spent and then reduce a fee. The OP may find him/herself getting phone calls from Family members that are time-consuming. I would think this method is fairer than 6% for each estate. Then again, I have no idea the size of the estate nor the time involved.
a) This was not my full time job, by a long shot. I have many accounting clients . b) They are not related to me but I have done business with them for over 30 years and as I said I was very close to the deceased. c) yes, the law entitles me to charge for the husband a huge fee and then the same fee for the wife who died 11 months later. ( who had nothing of her own but what she inherited from her husband) d) at the same time I continue to charge the business accounting fees, given I am the business accountant. I am also the personal accountant for each of the descendants.
e) settling this estate is lot of work. But given in the state we live I am entitled to a percentage of the estate, it comes out to A LOT of money. And as I said I am entitled to this twice.