How are fees for the personal representative and attorney determined?

In California, the personal representative and the attorney for the personal representative are allowed to take a statutory fee for ordinary services. The fee is calculated as a percentage of the appraised value of the estate property and is computed as follows:

4% of the first one hundred thousand dollars, plus

3% of the next one hundred thousand dollars, plus

2% of the next eight hundred thousand dollars, plus

1% of the next nine million dollars, plus

½ of 1% of the next fifteen million dollars.

For amounts above twenty-five million dollars, a reasonable amount to be determined by the court.

The fee base used to calculate the statutory fee also includes all income received and gains realized during administration, minus any actual losses from the appraised value. Debt or expense payments are not included in the calculation.

As the name implies, statutory fees are set by statute and the Court has no discretion to reduce the amount of fees, unless the personal representative mismanaged the estate, in which case, a penalty can be imposed on the personal representative.

Any fee paid to a personal representative must be reported on his or her income tax return as ordinary income. It may thus be prudent for a personal representative not to take a fee if he or she will be receiving property from the estate as an inheritance (which is not counted as income to the beneficiary).

A court order is required before any fees can be paid to either the personal representative or the attorney. However, reimbursement for expenses advanced by the personal representative or the attorney may be made without a court order.

*This blog entry was not written by an Attorney and should not be construed as professional legal advice.

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