What is “Reasonable Compensation” for the Personal Representative of a Will in Massachusetts?

If you’ve been named as a Personal Representative in a Will, you might be wondering: Do I get paid for this? And if so, then you are surely asking yourself, how much?

In Massachusetts, the person that serves as Personal Representative of an Estate is entitled to compensation for the services rendered in their capacity as a fiduciary of the estate. How much is a Personal Representative entitled to receive? As codified in Massachusetts General Laws c.190B Article III § 3-719, a Personal Representative is entitled to reasonable compensation. However, the term “reasonable” can vary depending on the complexity of the estate, the responsibilities involved, and what’s outlined in any previously executed estate planning documents.

What Is a Personal Representative Responsible For?

The job of the Personal Representative (formerly known as Executor) is to administer your estate and handle the probate of your estate (if necessary), often assisted by an attorney. For a detailed overview of the Massachusetts Probate Process, click here to read more. The Personal Representative is a fiduciary and must act in the best interests of the estate beneficiaries at all times. The Personal Representative is responsible for a wide range of duties, including:

• Locating, collecting, and inventorying estate assets
• Paying debts and any estate taxes
• Distributing property according to the Will (or via intestate succession if the Decedent dies without a Will)
• Coordinating with beneficiaries, attorneys, and financial institutions
• Filing probate paperwork with the court

These responsibilities often span months, or potentially even years. Depending on the size of the estate and the number of beneficiaries involved, the probate process can be lengthy and at times feel like a full-time job.

What Counts as “Reasonable” Compensation?

Massachusetts does not have a fixed statutory fee schedule. The only statutory requirement is that compensation be “reasonable.” In making a determination of what is reasonable, Massachusetts case law has specified several factors that a court will use in its analysis. Namely, the Massachusetts Supreme Judicial Court has set out the following factors that it will incorporate in its analysis as to whether compensation is fair and reasonable in a particular case:

• Time and effort involved
• Size and complexity of the estate
• Relative skills and abilities necessary to adequately perform (and whether professional skills are required)
• Marketability of the estate assets
• Whether the Will specifies a fee
• What amount of compensation is “customary” for similar work

For simple estates, a small flat fee or hourly rate may be appropriate. For larger or more involved estates, fees might equal a percentage of the estate, which could range anywhere from 1% - 3% of the total value. Any fee or compensation for a fiduciary role, such as the Personal Representative, that is expressly mentioned in the Will itself will be controlling.

Does the Will Specify a Fee?

Sometimes, the Will explicitly states a dollar amount or formula for compensation. That amount is controlling unless it is clearly unfair. If the Will is silent, the Personal Representative can still petition the court for reasonable payment to be paid from estate funds.

Can a Personal Representative Waive Their Fee?

Yes. It’s not uncommon for family members serving as Personal Representatives to waive compensation, especially if they’re also beneficiaries of the estate. However, it’s wise to document that decision clearly to avoid disputes or confusion. A written renunciation of compensation can be filed directly with the probate court.

Tax Implications to Keep in Mind

Any compensation received as a Personal Representative is considered taxable income by the IRS. If you waive the fee, there’s no tax liability, but if you take the payment, you’ll need to report it on your tax return.

Why Legal Guidance From an Experienced Probate Attorney Matters

Serving as a Personal Representative is a serious legal role that brings with it the highest of fiduciary duties. Whether you’re looking to create your estate plan or you have recently been appointed as Personal Representative, working with an experienced probate attorney ensures that compensation, accounting, and tax issues are handled with the utmost care. And most importantly, it ensures that all procedural aspects of the probate process are done correctly and timely.

At Lane, Lane & Kelly, our probate attorneys are here to support Personal Representatives with every step of the legal process. From filing the initial paperwork to distributing assets and closing the estate, our attorneys have you covered. Contact us today to ensure your responsibilities are carried out properly, and that you are compensated fairly for your time and effort.