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Compensation & Fees for Personal Representatives, Trustees, and Attorneys in Florida Estates and Trusts

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September 15th, 2021

Posted in Estate & Personal Planning,IRS & Tax Information

Under Florida law, the personal representative of an estate (sometimes also called an executor) and the trustee of a trust are entitled to compensation, as are the attorneys who represent the personal representative and trustee.

Compensation of Personal Representative The personal representative is entitled to a commission from the estate assets, which can be calculated using a percentage of the inventory value of the probate estate assets and the income earned during administration. For a formal probate administration, the following table sets forth what amount is deemed to be reasonable compensation:

CompensationEstate Size
3.0%first $1,000,000
2.5%$1,000,001 to $5,000,000
2.0%$5,000,001 to $10,000,000
1.5%$10,000,001 +

In addition to the above table, a personal representative can receive additional compensation for extraordinary services, which includes tasks such as selling real property, participating in litigation on behalf of the estate, and carrying on the decedent’s business.

Examples:

  • On an estate with an inventory value of $500,000, fees to the personal representative up to $15,000 are reasonable.
  • On an estate with an inventory value of $2,000,000, fees to the personal representative up to $55,000 are reasonable ($30,000 on the first one million dollars and $25,000 on the second one million dollars).

If a decedent’s will provides for the personal representative’s compensation to be based upon specific criteria that differs from the statute, then that provision controls.

If the estate’s size (as determined for compensation purposes) is greater than $100,000 and there are two personal representatives serving, each personal representative is entitled to the full commission allowed to a single personal representative. If the estate’s size is greater than $100,000 and there are more than two personal representatives serving, the compensation to which two personal representatives would be entitled must be divided among all personal representatives.

Finally, any compensation that a personal representative receives is considered income to the personal representative and will be taxed accordingly. For this reason, it may make sense for the personal representative to forego the compensation, especially if that personal representative is also a beneficiary.

Compensation of Trustee

Absent language that specifies the terms of a trustee’s compensation, the Florida statutes state that the trustee is entitled to reasonable compensation. Unlike the personal representative fees, the statutes do not provide guidance as to what is deemed “reasonable compensation.” However, Florida case law has established a long list of factors that are to be used in calculating trustee fees, some of which are:

  1. the wages or salary customarily granted to agents for performing like work in the community
  2. any unusual skill or experience which the trustee in question may have brought to his or her work
  3. the amount of risk and responsibility assumed
  4. the time consumed in carrying out the trust
  5. the custom in the community as to allowances to trustees by settlors or courts and as to charges exacted by trust companies and banks
  6. the character of the work done in the course of administration, whether routine or involving skill and judgment
  7. any estimate which the trustee has given of the value of his or her own services

Case law further established that the “lodestar” method of determining fees (i.e., multiplying the number of hours reasonably expended by a reasonable hourly rate) and fees based on the percentage of the trust’s value are not to be used when calculating reasonable compensation for a trustee.

Like the personal representative, any compensation that a trustee receives is considered income to the trustee and will be taxed accordingly, and therefore the individual trustee will want to evaluate whether taking a trustee fee is a smart decision.

Compensation of Attorney for Personal Representative

Under the Florida Probate Rules, every personal representative (with little exception) must be represented by an attorney admitted to practice in Florida. Like the personal representative, the attorney for the personal representative is also entitled to reasonable compensation. The compensation to the attorney is payable out of the estate assets.

Also like the personal representative, the statutes once again provide guidance as to what is considered “reasonable compensation.” For ordinary services of attorneys in formal estate administration, the following table sets forth the amount of compensation that is presumed to be reasonable based on the inventory value of the probate estate assets and the income earned during administration:

CompensationEstate Size
$1,500$40,000 or less
+ $750$40,001 to $70,000
+ $750$70,001 to $100,000
+ 3.0%$100,001 to $1,000,000
+ 2.5%$1,000,001 to $3,000,000
+ 2.0%$3,000,001 to $5,000,000
+ 1.5%$5,000,001 to $10,000,000
+ 1.0%$10,000,001 +

The personal representative’s attorney may receive additional compensation for extraordinary services, which may include the involvement in a will contest, postmortem tax planning, review or preparation of an estate tax return, the purchase or sale of real property by the estate, and other services.

Some examples:

  • On an estate with an inventory value of $80,000, the attorney for the personal representative would be entitled to $3,000 in fees ($1,500 + $750 + $750).
  • On an estate with an inventory value of $500,000, the attorney for the personal representative would be entitled to $15,000 in fees ($3,000 for the first one hundred thousand dollars of inventory value plus 3% of the next four hundred thousand dollars of inventory value, or $12,000).
  • On an estate with an inventory value of $2,000,000, the attorney for the personal representative would be entitled to $55,000 in fees ($3,000 for the first one hundred thousand dollars of inventory value, plus 3% of the next nine hundred thousand dollars of inventory value, or $27,000, plus 2.5% of the next one million dollars of inventory value, or $25,000)

If a separate written agreement regarding compensation exists between the attorney and the decedent, the attorney must provide a copy to the personal representative prior to commencement of employment. Furthermore, if no such separate agreement exists, the personal representative and the attorney can enter a different fee arrangement than outlined above, such as an hourly rate or a fixed fee, which may work out to be less than the statutory rate.

Compensation of Attorney for Trustee

If the trustee of a trust retains an attorney to render legal services in connection with the initial administration of the trust, the attorney is entitled to reasonable compensation. The compensation to the attorney is payable out of the trust assets.

Here again, the statutes provide guidance as to what is considered “reasonable compensation,” and it mirrors that of the reasonable compensation of the personal representative’s attorney.  In fact, for the ordinary services of an attorney during the initial trust administration, the amount presumed to be reasonable, based on the value of the trust assets immediately following the settlor’s death and the income earned by the trust during initial administration, is 75% of the schedule provided in the statutes for compensation of the personal representative’s attorney. Accordingly, the following table sets forth the amount of compensation that is presumed to be reasonable:

CompensationEstate Size
$1,125$40,000 or less
+ $562.50$40,001 to $70,000
+ $562.50$70,001 to $100,000
+ 2.25%$100,001 to $1,000,000
+ 1.875%$1,000,001 to $3,000,000
+ 1.5%$3,000,001 to $5,000,000
+ 1.125%$5,000,001 to $10,000,000
+ 0.75%$10,000,001 +

Ordinary services during the initial trust administration include review of the trust instrument, implementation of the successor trustee, serving of notices, and other services.  The attorney for the trustee may receive additional compensation for extraordinary services, which may include the involvement in a trust contest, postmortem tax planning, review or preparation of an estate tax return, the purchase or sale of real property by the trustee, and other services.

Some examples:

  • On a trust with assets of $80,000, the attorney for the trustee would be entitled to $2,250 in fees ($1,125 + $562.50 + $562.50).
  • On a trust with assets of $500,000, the attorney for the trustee would be entitled to $11,250 in fees ($2,250 for the first one hundred thousand dollars of trust assets plus 2.25% of the next four hundred thousand dollars of trust assets, or $9,000).
  • On a trust with assets of $2,000,000, the attorney for the trustee would be entitle to $41,250 in fees ($2,250 for the first one hundred thousand dollars of trust assets, plus 2.25% of the next nine hundred thousand dollars of trust assets, or $20,250, plus 1.875% of the next one million dollars of trust assets, or $18,750)

If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney must provide a copy to the trustee prior to commencement of employment.  Furthermore, if no such separate agreement exists, the trustee and attorney may agree to compensation that is determined in a manner other than provided for above, such as an hourly rate or a fixed fee, which may cost less than the statutory rate.

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