Q: What is the administrator of an Estate allowed for compensation by law?

A: Compensation for either a Personal Representative (a/k/a “executor”) and a “Special Administrator” of an estate is capped by statute, but the amount actually approved by the court is based on a “reasonable” standard. The only time there is a special administrator is when there is no acting or approved Personal

Representative because the position is being challenged or contested by more than one applicant, or there’s a vacancy due to resignation or other removal of the PR.

Both the PR and any attorney hired by the PR to manage or advise the estate have a right to “reasonable compensation,” the total combined amount of which may not exceed $1,800 of the first $20,000 value of the estate, plus 3.6% of the gross value of the estate above $20,000.

There are two ways to obtain approval for the amount of the PR/attorney compensation: (1) signed consent of the PR and all legatees under the Will or all heirs at law in an intestate estate; or (2) by written petition to the court and service of the petition on all interested persons in the estate, which is then ruled upon by the court. In the absence of objection, the petition is routinely granted.

In either case, the amount of all compensation cannot exceed the statutory cap. In most estates, if you are using a standard hourly calculation and fixed dollar amount per hour, then the amount would probably not exceed the statutory cap except in small estates with few assets.

The value of the estate is the gross value without deductions for mortgages, loans, creditors claims, administrative expenses, etc. Again, both the PR’s and the estate lawyer’s fees combined may not exceed the statutory cap. By consent, signed by all interested persons (those who will actually inherit under the estate), any amount up to the cap will be allowed without question, so you don’t need to justify the amount by detailing the time and hourly rates charged. But that requires consent from all interested persons. It the absence of consent, you need to file a petition.

What hourly rate a PR should charge as a “reasonable” rate is not defined. In many cases the job is a thankless one with a lot of hassle and work. Opinions may vary, but $50 to $150 per hour and possibly more could be justified.

It should be noted that the PR is allowed to retain litigation counsel in the event they must litigate claims involving creditors or heirs, or pursue third party claims to recover money for the estate. Those legal fees are above and beyond the statutory compensation cap because they are considered outside the ordinary activities of the PR in the administration of the estate. Therefore, fees paid to litigation counsel do not count against the statutory compensation cap.

A: Commission must be approved by the court (or consented to by all heirs) before being paid out but Maryland law sets reasonable compensation as 3.6% of the probate assets over $20,000 (a different percentage applies to the first $20k).

Note that a commission is viewed as income for work (subject to income tax), so it is not unusual for a Personal Representative who is also a primary heir / legatee to opt to forego a commission and only receive their inheritance (which is not subject to income tax).

While not legal advice I hope this general information helps