A father passes away and leaves everything to his two sons. The will designates that his best friend will serve as the executor. The will also states that the executor is only to be paid fees for incurred charges. What if the executor decides to write himself a check for $15,000 from the estate?
NJ.com recently posted an article, “Fight brewing over 'best friend's' executor fee.” As the article explains, the state statute stipulates that 6% commissions may be taken on all income received by an executor, like interest and dividends. In addition, the executor may take commissions on all "corpus,” which is all the assets controlled by the executor that’s equal to 5% on the first $200,000, 3.5% on the excess over $200,000 up to $1 million, and 2% over $1 million.
The executor and the decedent can agree on additional or lesser amounts. The judge can also increase commissions upon application by the executor or decrease the commissions upon application by a beneficiary. Another possibility is that the executor signed a fee agreement where he waived the fee. In that instance, the agreement may be binding against the executor and enforceable by the beneficiaries of the estate. However, the beneficiaries would have to pursue that claim on their own with their own attorney.
An attorney who’s representing the executor would have a conflict of interest representing the executor in his capacity as executor of the estate and the beneficiaries in their claim against the executor.
What if a beneficiary believes that the executor had no right to commissions, either based on a contract the executor signed with the testator or because the services the executor rendered were "materially deficient" or that the actual pain, trouble and risk in settling the estate were substantially less than generally required for an estate of a similar size? In that case you can ask the judge to reduce or eliminate the commissions.
However, it’s not likely that the executor will have to reimburse you or the estate the attorney fees incurred in bringing the action. The executor may also be allowed to pay his or her attorney fees in defending such a suit from the estate, which would decrease the share payable to the beneficiaries.
Reference: NJ.com (April 17, 2017) “Fight brewing over 'best friend's' executor fee”
Suggested Key Terms: Probate Court, Estate Planning Lawyer, Will Contest, Probate Attorney, Executor
If you are the executor or beneficiary of an estate and have questions about fees give our office a call at 801-438-7120 for a free consultation.