What are reasonable fees for serving as Personal Representative (Executor) of an Estate in Massachusetts?

Clients frequently ask us:

What are appropriate Executor fees in Massachusetts? or What are appropriate fees for serving as Trustee of a Trust in Massachusetts?

Massachusetts has two laws on point providing that the person who serves as Personal Representative of an Estate (formerly called Executor) or as Trustee of a Trust is entitled to “reasonable compensation” for providing those fiduciary services.

1. The Massachusetts Uniform Probate Code (MUPC) G.L. ch. 190B, § 3-719
2. The Massachusetts Uniform Trust Code (MUTC) G.L. ch. 203E § 708(a)

So what’s “reasonable compensation” you ask? We know it when we see it. Or maybe when it’s clearly not. The best we can do is look to the still-relevant case law on point. In McMahon v. Krapf, 323 Mass. 118 (1948), the Massachusetts Supreme Judicial Court enumerated factors for consideration in determining exactly what constitutes fair and reasonable compensation for the services that individual provides as a fiduciary in that particular case. Those relevant factors include:

• the overall size of the estate;
• the marketable nature of the assets;
• the factual and legal questions and circumstances involved;
• the reasonable amount of time expended;
• the relative skills and abilities necessary to perform the various tasks;
• the amounts usually and customarily paid to others for similar work;
• and the results accomplished.

Of all the factors above, the “time expended” is the biggie, perhaps followed by the skills and abilities and amounts generally paid to others for doing similar work. The combination of those three is a good guideline, taking into account the size of the estate and the types of assets involved. One of the base line questions is whether the work was done because the person was serving as a fiduciary acting specifically in the best interests of the estate or whether it was just a nice thing to do as a human being.  The former is entitled to reasonable compensation.  The latter is not unless it also falls under the former. On the other hand, the person in charge of wrapping up a loved one’s final affairs may charge additional fees for services she provides that are beyond the ordinary sorts of tasks and responsibilities people normally undertake in that fiduciary role. In addition to receiving reasonable compensation for serving as and fulfilling the duties of the Executor / Personal Representative / Trustee, the fiduciary may also be reimbursed for reasonable out-of-pocket costs, fees, and expenses incurred in carrying out those duties.

How about some examples of what might or might not be considered reasonable compensation or a reimbursable expense?

• Cleaning out the person’s home after death is significant work and is entitled to reasonable compensation at a rate you might pay to a professional cleaner or organizer for doing the same work.
• Watering the grass on a grave for weeks or months after burial may be a nice thing a family member wants to do, especially if the cemetery is not able to keep up with the task, but it is not entitled to reasonable compensation from the estate.
• Making funeral and burial arrangements and contacting the lawyer, financial advisor, and accountant are entitled to reasonable compensation.
• Making travel arrangements for other family members not serving as Personal Representative of the estate to fly in from out of state to attend the funeral or memorial service is not entitled to reasonable compensation nor should the travel costs be paid by or reimbursable from the estate.
• Making routine repairs to a property prior to listing it for sale, such as repainting interior rooms would be entitled to reasonable compensation.
• Paying the customary, reasonable, market-rate costs for a casket, burial plot, and site preparation for burial, are entitled to reimbursement. (Keep all the receipts!)
• Paying for a casket-sized floral wreath to adorn the casket at the funeral services is not entitled to reimbursement. (This is true even if you kept the receipts.)
• A Personal Representative of Trustee who is a Trusts and Estates attorney who provides the legal services and prepares the necessary tax returns may be entitled to additional compensation for those tasks that she would have otherwise had to pay to another attorney.
• A Personal Representative of Trustee who is a Trusts and Estates attorney performing routine tasks that do not require an attorney’s professional expertise, such as travel to the post office to mail documents, would not be entitled to additional compensation at the attorney’s professional rate of pay.

Serving as Personal Representative of an Estate or as Trustee of a Trust is a big responsibility and it does involve a significant amount of work.  That is why compensation is possible.  That said, most people who could take fees for the challenging work of serving as Personal Representative (formerly called the Executor if a man or Executrix if a woman) or Trustee do not for 2 reasons:

1. they feel a moral obligation to do so or just want to do the work as a demonstration of love for the person who passed away
2. because that compensation constitutes taxable income to the person who receives it who would then have to report it on income tax returns.