Compensating Personal Representatives in Alabama

I’m a Personal Representative of an Estate.  Do I Get Paid for My Work?

Administering a deceased person’s estate can be a lot of work, and you may wonder whether you’ll get paid for your efforts.  The answer is: Yes.

A personal representative is entitled to reasonable compensation for services, as determined by the court.

A personal representative of an estate in Alabama can pay himself compensation for his services only after approval by the probate court, unless the decedent’s last will and testament expressly authorizes compensation to be paid without court approval.

Many wills do not provide for compensation without court approval, especially where the will maker’s estate is not expected to be particularly valuable, complex, or take a long time to administer. So, if the personal representative decides he should be paid for his services he likely will have to ask the probate court to award compensation.

How Much Can I Ask For?

Alabama law provides for a cap on compensation of 2.5% of the value of all property received and under possession and control of the personal representative and 2.5% of all disbursements.  (Note that some assets, such as proceeds from a wrongful death action, are not counted in the value for purposes of calculating the 2   & 1/2 percent).

But, depending on the circumstances of the estate, compensation of the full 2.5% of receipts and 2.5% of disbursements may not be reasonable.  The court will look at many factors in determining what compensation is reasonable, including:

• the novelty and difficulty of the administrative process,
• the skill requisite to perform the service,
• the likelihood that the acceptance of the particular employment will preclude other employment,
• the fee customarily charged in the locality for similar services,
• the amount involved and the results obtained,
• the requirements imposed by the circumstances and condition of the estate,
• the nature and length of the professional relationship with the decedent,
• the experience, reputation, diligence, and ability of the person performing the services,
• The liability, financial or otherwise, of the personal representative, or the risk and responsibility involved.

The probate court may also award a personal representative additional compensation for extraordinary services performed for the estate.

What Are Extraordinary Services?

Extra compensation might be warranted in an estate with a lot of ongoing business for the personal representative to deal with, when the estate involves a high risk to the personal representative, when a complex tax return must be filed, when the estate is involved in litigation, when the personal representative settles claims against the estate, or when a lot of estate property must be liquidated.  The amount of extra compensation is determined in the court’s discretion.

What About What the Will Says?

The decedent’s will might provide for a certain amount of compensation, or may provide that the personal representative should receive no compensation.  If that’s the case and the personal representative does not want to serve for the specified compensation (or lack thereof), then a successor or alternate named in the will may serve instead.  If none of the named alternates will serve for the compensation specified in the will, then the personal representative can serve for “reasonable compensation.”

Alabama law also allows people to contract for personal representative compensation.  So, if a decedent agreed in writing about the compensation before his death, or if all the beneficiaries agree in writing with the personal representative as to the amount or the method of determining the personal representative’s compensation, then that agreement is binding (assuming the agreement is not “unconscionable”).

What If I Don’t Want to be Compensated?

There is no rule that a personal representative must receive compensation.  So, if you want to serve out of the goodness of your heart you can renounce the statutory reasonable compensation and/or the compensation specified in the will and serve for free.

An Alabama Probate Attorney Can Help

If you are the personal representative of an estate a probate attorney can help you determine how much compensation you are entitled to.  Call Lewis, Lewis & Falkner today at 205-553-5353 to discuss your options, or visit us at our Tuscaloosa, Alabama office.