PERSONAL REPRESENTATIVE FEES IN A FLORIDA PROBATE – ESTABLISHING ENTITLEMENT AND OBJECTIONS

The Varying Role of a Personal Representative

Sometimes being a Personal Representative in a Florida probate proceeding is quite easy. These are the cases where the administration is uncontested, and the Client is simply executing the documents prepared by our office.

In other instances the job can be quite difficult. We have had Clients forced to step in and wrap up businesses, transfer ownership shares of businesses, sell property, evict squatters, clean out properties, defend foreclosures, be deposed, continue or defend litigation etc.

So obviously the role of the Personal Representative can vary. A part of the probate process is determining the reasonable and appropriate fee or commission of the administrator of the Estate.

How Is the Personal Representative Commission Determined?

The Florida courts recognize that there must be compensation for the Personal Representative. To determine the appropriate compensation, they have published a presumed reasonable scale of compensation found in Fla. Stat. 733.617.

Florida Statute 733.617: Compensation of Personal Representative

733.617. Compensation of personal representative

(1) A personal representative shall be entitled to a commission payable from the estate assets without court order as compensation for ordinary services. The commission shall be based on the compensable value of the estate, which is the inventory value of the probate estate assets and the income earned by the estate during administration.

(2) A commission computed on the compensable value of the estate is presumed to be reasonable compensation for a personal representative in formal administration as follows:

• At the rate of 3 percent for the first $1 million
• At the rate of 2.5 percent for all above $1 million and not exceeding $5 million
• At the rate of 2 percent for all above $5 million and not exceeding $10 million
• At the rate of 1.5 percent for all above $10 million

So the presumed reasonable rates are simply a mathematical formula that applies to the total value of the estate (inventory value x .03 for first 1 million dollars in assets).

Extraordinary Services That Justify Additional Compensation

The fee schedule specifically allows for a Personal Representative to deviate from the formula if he/she has done any of the following:

(3) In addition to the previously described commission, a personal representative shall be allowed further compensation as is reasonable for any extraordinary services including, but not limited to:

• The sale of real or personal property
• The conduct of litigation on behalf of or against the estate
• Involvement in proceedings for the adjustment or payment of any taxes
• The carrying on of the decedent’s business
• Dealing with protected homestead
• Any other special services which may be necessary for the personal representative to perform

We often deviate upward from the mathematical formula for our clients if they have had to perform any of the above referenced activities for the Estate. Understand that a Personal Representative commission is not required to be taken under Florida law. It can be waived.

Priority Order for Estate Asset Distribution

Notably the payment of a personal representative commission is sometimes the subject of close scrutiny as it can be the difference between creditors and beneficiaries receiving distribution. Fla. Stat. 733.707 provides the order in which allocation of estate assets get paid out as follows:

Florida Statute 733.707: Order of Payment of Expenses and Obligations

733.707. Order of payment of expenses and obligations

(1) The personal representative shall pay the expenses of the administration and obligations of the decedent’s estate in the following order:

• Class 1: Costs, expenses of administration, and compensation of personal representatives and their attorneys fees and attorneys fees awarded under s. 733.106(3)
• Class 2: Reasonable funeral, interment, and grave marker expenses, whether paid by a guardian, the personal representative, or any other person, not to exceed the aggregate of $6,000
• Class 3: Debts and taxes with preference under federal law, claims pursuant to ss. 409.9101 and 414.28, and claims in favor of the state for unpaid court costs, fees, or fines
• Class 4: Reasonable and necessary medical and hospital expenses of the last 60 days of the last illness of the decedent, including compensation of persons attending the decedent
• Class 5: Family allowance
• Class 6: Arrearage from court-ordered child support
• Class 7: Debts acquired after death by the continuation of the decedent’s business, in accordance with s. 733.612(22), but only to the extent of the assets of that business
• Class 8: All other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime, and any excess over the sums allowed in paragraphs (b) and (d)

So as a class one expense the Personal Representative commission gets paid back first. This is critical for estates with significant creditor claims and low assets.

By placing the recovery of the Personal Representative commission as a class 1 expense, the Personal Representative gets the first opportunity of recovery from the assets of the estate for his or her work performed. This can often mean that the Personal Representative commission can be paid from the remaining assets to the exclusion of creditors or beneficiaries so properly establishing entitlement to the proposed fee can be very important.

As a practical matter the proposed personal representative fee is not typically presented until the Petition for Discharge is filed and served. Once that occurs the interested parties have the opportunity to object if the proposed amount appears unreasonably high.

Objections to the Proposed Personal Representative Fee

Florida law provides the opportunity for creditors and beneficiaries to object to the proposed personal representative fee. Typically, these objections are lodged when a Personal Representative seeks a windfall by applying the above referenced presumed reasonable formula to the estate value in a large estate.

Court Factors for Determining Reasonable Compensation

Fla. Stat. 733.617 provides:

(7) Upon petition of any interested person, the court may increase or decrease the compensation for ordinary services of the personal representative or award compensation for extraordinary services if the facts and circumstances of the particular administration warrant. In determining reasonable compensation, the court shall consider all of the following factors, giving weight to each as it determines to be appropriate:

• The promptness, efficiency, and skill with which the administration was handled by the personal representative
• The responsibilities assumed by and the potential liabilities of the personal representative
• The nature and value of the assets that are affected by the decedent’s death
• The benefits or detriments resulting to the estate or interested persons from the personal representative’s services
• The complexity or simplicity of the administration and the novelty of the issues presented
• The personal representative’s participation in tax planning for the estate and the estate’s beneficiaries and in tax return preparation, review, or approval
• The nature of the probate, nonprobate, and exempt assets, the expenses of administration, the liabilities of the decedent, and the compensation paid to other professionals and fiduciaries
• Any delay in payment of the compensation after the services were furnished
• Any other relevant factors

Legal Procedures for Fee Disputes

So the Florida probate courts give interested parties the ability to object and have an evidentiary hearing to determine the appropriateness of a proposed Personal Representative commission. Fla. Stat. 733.617 outlines the relevant areas of inquiry for the Court to determine.

There is a specific procedure for the filing of the objection, and it must be set for a hearing timely or it may be deemed abandoned by the Courts. Our office litigates probate disputes throughout the state of Florida and we offer free no obligation consultations.

If you need help with a Personal Representative fee issue in a Florida probate give us a call.