When a person dies resident in Florida, a formal probate estate is often required. In a formal probate, the probate court appoints a “Personal Representative.” Some people refer to this person as the “Executor” but the correct name in Florida is Personal Representative (“PR”). In essence, the PR is the person in charge of the estate.
Once the PR has been appointed, the probate court issues Letters of Administration to the PR. The Letters of Administration allow the PR to carry out the necessary duties to administer the estate assets, deal with creditors, pay taxes, make distributions, etc. Serving as PR can entail a significant amount of time and effort. Some people serving as PR say that given the work to be done (and often the bickering that occurs with beneficiaries), the job of being PR is a “thankless one.”
Notwithstanding that, under Florida law, a PR is entitled to be compensated for his or her services. Florida Statutes Section 733.617 , entitled “Compensation of personal representative,” sets forth the allowable compensation which a PR may receive. That statutory section provides that a PR may receive a “commission” payable from the estate assets.
The amount of the commission is determined based on the value of the estate assets. Those assets are as set forth on the Inventory filed by the PR in the probate. This is important because not all assets owned by a deceased person are included on the Inventory. Some assets which name a beneficiary, such as life insurance or an IRA, pass outside the probate estate and are not listed on the Inventory. The same is true for exempt homestead property; it passes outside of probate and is not taken into account in calculating the PR commission or PR fee.
Section 733.617 sets forth how the commission is to be determined, as follows:
(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:
(a) At the rate of 3 percent for the first $1 million.
(b) At the rate of 2.5 percent for all above $1 million and not exceeding $5 million.
(c) At the rate of 2 percent for all above $5 million and not exceeding $10 million.
(d) At the rate of 1.5 percent for all above $10 million.
In addition to the previously described commission, a PR shall be allowed further compensation as is reasonable for certain extraordinary services including, but not limited to:
(a) The sale of real or personal property.
(b) The conduct of litigation on behalf of or against the estate.
(c) Involvement in proceedings for the adjustment or payment of any taxes.
(d) The carrying on of the decedent’s business.
(e) Dealing with protected homestead.
(f) Any other special services which may be necessary for the personal representative to perform.
As with many aspects of the law, a real life example may be of help in understanding how this works. For example, if a PR is appointed and administers an estate which lists estate assets on the Inventory as $1,100,000, then the PR would be entitled to a PR commission or fee in the amount of $32,500 [.03 X $1,000,000 plus .025 X $100,000]. However, if the PR also was required to sell a rental property and also had to deal with a litigated matter, the PR’s fee could be increased by the probate court based on the amount of work performed. Unless the PR and the beneficiaries can agree on this additional amount, the probate court would have to conduct a hearing to determine the additional work and to place a value on that work.
One thing to note about Section 733.617 is that it sets forth what fees are “presumed to be reasonable.” While this creates a presumption, it is one that can be rebutted. A probate court could be asked to modify the amount up or down depending on the circumstances. However, for this to occur, an interested party (such as a beneficiary) would have to file a court paper raising this with the probate court.