As the personal and business accountant, didn’t you have an idea of their net worth when you agreed to be the executor? Wouldn’t the decedents have been aware of the executor fees? It never came up in conversation?
I think he’s just asking if it is fair to charge what the statute allows, and I think it is. This is OP’s job, and I’m sure he likes many of his clients and can’t do all the work for free.
Do the work expecting to receive the (double) fee. Keep track of your hours. In the end, bill each estate what you think is fair. I think you’ll be surprised when you look at the final number of hours and see how much time it took. Big estate, lots of work. Don’t promise the clients anything, but in the end discount the fees if you think it is fair after the work is done.
I don’t think it’s necessarily a “double” fee, as in two x $X, if some assets passed directly to the wife. The actual work can be less complicated on some matters.
Personally, if it’s my biz/livelihood, I would charge per what’s accepted in the state. But if they are friends, I would offer a discount (as some professionals do.) And, I would let them know soon what the estimates are, per the formula, as part of good practice and good faith.
My guess is that the decedents probably named you as executor because they valued your professional judment. And just maybe, they intended to provide you with a bequest of sorts by engaging your professional services one last time. Unless there was an explicit discussion to the contrary, I would charge the statutory rate, perhaps (but not necessarily) with a professional discount.
One question to consider: Did you provide them with free or discounted professsional services when they were alive? If not, I certainly wouldn’t start now that they are dead. If so, perhaps you could apply the customary discount you applied when they were alive. But you don’t have to.
I really think there is something to the idea of their naming you as executor in order to provide you with business as a way to honor you and provide a little something for you. Accepting the fee might be the best way to fulfill their wishes. As executor, you are honor-bound to fulfill their wishes anyway.
Question:
People keep referring to the massive amount of work involved in a large estate. If you have done extensive estate planning (setting up trusts, very specific bequeaths,etc.), have you lessened the work of the executor at all?
Our estate was a lot of work because the deceased owned a bunch real estate in multiple states and even in Canada. Consolidating financial assets into fewer accounts and with fewer investment companies could definitely reduce the executors work, too. Litigious heirs are something else to consider; my dad wrote someone out of his will specifically who caused us a lot of legal headaches so when we handle his estate we won’t bump into that.
Is there a will? What does the will specifically say one is entitled to receive as compensation? Does it really say you’re entitled to a “hefty” fee? Or does it say something more like “reasonable” compensation. Is the law you refer to state you are absolutely entitled to receive a hefty fee? Or is the law more discretionary in its wording (eg executor “could/may be entitled to ???”)
If the will says reasonable, reasonable is a question of fact, how much time and energy you expended as executor. Did you just sign documents professional (eg attorneys) put in front of you, or were you much more actively involved (eg making phone calls, driving here/there, read/write letters/documents, gathering info for attorneys, interacting with realtors, selling personal property, etc). Did you keep very good records of your activity? Did you keep heirs informed? Nobody likes to be surprised, especially heirs. 1-2% (maybe 3%) of total estate might be a reasonable number. Why are you asking internet strangers, have you talked to the estate attorney? Maybe it would be better to speak with an attorney other than the estate’s attorney as he/she is acting in estate’s best interest, not necessarily yours.
Of course all executor out of pocket expenses should be reimbursed before any monies are distributed to heirs. You also have a fiduciary duty to act in best interest of estate, not yourself. You’re an executor, not an heir, don’t get piggish. I suspect in probate heirs will have a chance to object to all money expenditures before a judge signs off. You should be very well prepared (eg documentation) to justify your sought after “hefty” compensation, and as mentioned you might consider seeking guidance from an attorney other than estate attorney on this matter in order to CYA before taking “hefty” compensation. Heirs can fight over littlest of things.
Wills don’t set the executor’s fee, statutes do.
A large estate could be fairly simple to setting if it is just one big asset that has to be sold - a house or something like that. More often it is a lot of smaller accounts, personal property. A lot depends on how reasonable the heirs are too, and whether they will fight over an asset or just want everything sold and split.
I realize that technically there are 2 estates, but if the second estate is simply assets that passed to the surviving spouse, then a certain amount of the work will already have been done in the course of settling the first estate: identifying assets and accounts, appraisals, etc. I suppose it depends how complicated each will is.
I assume you are asking this question because you feel uneasy about take the same percentage twice in the course of a short period of time, especially in light of the relationship. I think that applying a courtesy discount is the right and honorable thing to do in the circumstances.
As long as there is plenty left for the benes, I don’t know why you shouldn’t take your fee (the 100% min).
Your clients own a business that you have served for a long time. You also are the personal accountant for the heirs apparently. I’d tread carefully when using terms like “entitled” as the law applies them. The heirs will be entitled to fire you and bad-mouth you if they’re not happy, and it’s their viewpoint that prevails here. Not ours. Figure out some way to have them make a decision on compensation. Then you can decide whether to live with it or sue and move on. Fees arising from deaths carry a lot more strong feelings than normal business transactions.
@zeesie, upon rereading your first post, I’m wondering how far along you are in this process. Are you almost done, or actually done? If so, you already know how much time you have put it in, which should make it easier to determine a fee that you can live with.
The heirs presumably know how much you charge them per hour for your professional services. It seems to me that presenting them with an accounting of the hours and expenses involved in settling the estates, also showing a courtesy discount–possibly a substantial one-- would be the way to go, over taking a set fee. Especially taking a set fee twice.
I gather from what you have said that applying your hourly rate would likely be a lower amount than taking the state-determined fee on both estates.
After reading the OP’s second post at #19 I understand the double dip better. The husband had significant assets and the wife did not. The husband passed first and the estate passed to the wife. The OP wants the CC community to agree that he is due a percentage of the full estate twice. If the wife had passed first the OP would receive a single percentage of the estate.
I am not a lawyer but would a probate court really approve that?
Depending on the size of your community and the level of chatter would you really want the rest of your clients to hear that you double dipped?
Again, it is entirely appropriate to charge your hourly rate for professional services.
I guess the state in question is not a community property state. We just did a bunch of estate planning. By law, when my DH passes, half of the estate is mine by virtue of community property status.It’s not an inheritance. The other half is DH’s to do with as he pleases, whether that means leaving it all to me, to our kids, or other persons. He chose to bequeath a little bit to family, and the rest goes into trust for me (and ultimately down the line, to our kids). When I go, my estate goes into the trust established at DH’s death. So in our case, there would only be one estate no matter what…I think that’s how to describe it.
I guess there are many possible scenarios, though. DH came into the marriage with significant assets that wouldn’t be considered community property…there is additional community property…there is a prenup where wife gave up claims to DH’s property, before and after the marriage, etc. I can see how these things can get very complicated.
I think that MaterS may have nailed it in post #32