Q: Hello, I was named as an executor of a will for a friend in Ca. How much should I get paid for my services?
My friend passed away and named me along with her brother as co-executors of her trust. She named her brother as 100% beneficiary (unless he was deceased which then the estate named me as half beneficiary). He passed during the process of liquidating everything in her estate. He named his girlfriend as beneficiary of his trust. I’m now acting as sole executor of my friend’s will and under the impression that I should get paid a percentage of value of her estate. Her attorney is trying to say I’m not entitled to this because we didn’t go to probate court. Who is correct? Thank you so much!
A: You might try this web reference: http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB§ionNum=10810.
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I am a little confused because you are mixing up the terminology. The person who manages a probate estate is called an administrator or an executor, depending if there was a will involved or not. However, the person who manages a Trust is called a Trustee.
While and administrator, executor, and trustee all perform basically the same function, they rules under which they operate and how their fees are set are different.
Executors and administrators, appointed by the court to manage an probate estate (no trust) are paid a percentage based on a fee base. The fee base is the value of the estate as shown in the Inventory and Appraisal, plus gains, receipts and additional property received and less losses. No reduction is made for any liens or encumbrances. (So if the estate has only a piece of real property worth $500,000 but with a mortgage of $300,000, the fee base is $500,000 because we do not reduce for the mortgage, which is an encumbrance.)
Once the fee base is established, the fee is calculated as 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, and a reasonable fee for the amounts over $9 million. (And, the executor or administrator is entitled to an extra fee if they perform any services out of the ordinary.)
Trustee's fees are figured differently. First, you need to look at the Trust, which should have a provision stating how the Trustee's fee is calculated. If it does not then the Trustee is entitled to a "reasonable fee." Also, many Trust agreements will state only that the Trustee is entitled to a "reasonable" fee.
How is a "reasonable fee" determined? Good question, and it can vary by the area in which the Trust is administered. Sometimes, the local rules of court provide a guideline. Another guideline is the amount charged by corporate trustees, which is normally and charge annual fee of 1% - 1.5% of the value of the Trust property at the start of the accounting year. I have also seen the statutory fee in a probate case used and then appropriately discounted to take into consideration that a Trust is easier to administer (in theory) than a probate matter.
In the end, the trustee's fee should provide reasonable compensation in light of the work involved and time spent on the matter. (And, if that leaves you scratching your head, don't worry, it does the same to me as well.)
Your best plan may be to discuss the matter with an attorney and ask them to render an opinion on what a reasonable fee would be. (Obviously, not the beneficiary's attorney who is required to try to get you to take the lowest fee possible as their duty is owed to the beneficiary, not you.)
If you don't know where to find an attorney, you may wish to try your local county bar association. Most California county bar associations run a lawyer referral service, which entitles you to a consultation with an attorney for a small or no fee. The attorney may charge an hour or two of time to provide you with an opinion letter, but that is a charge the Trust should pay. In fact, you may wish to have an attorney generally review your work to see if you made an errors, as the fiduciary duty any executor, administrator or trustee is under is, as they say, a "tough Mistress" and penalty for errors can be severe.
Best of luck.
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