Paying the Personal Representative
The decedent’s estate is generally required to reimburse expenses the personal representative incurred for the estate and pay compensation to the personal representative.
The Terms of the Will
While not common, a will may say that the personal representative is not to receive compensation. In other cases, the will may set out a specific amount or directions for computing these amounts. The courts will generally uphold these types of compensation terms, but not for the reimbursement of expenses. The Texas Estates Code allows the personal representative to be reimbursed for reasonable expenses incurred for the estate.
It is more common for a will to adopt a “reasonableness” standard for reimbursement and compensation. This “reasonable” standard is flexible and allows payment and compensation based on the nature and scope of services that are provided. It may be necessary to obtain an expert opinion as to what fees are reasonable. The personal representative may insist on a written agreement with the heirs about what is reasonable and when and how payment is to be made, to avoid future misunderstandings.
If the Will is Silent or There is No Will
As noted above, Texas law allows the personal representative to be reimbursed for reasonable expenses incurred for the estate. This is true if the will is silent on the issue or if there is no will.
Texas law also includes several rules for compensating the personal representative when the sill is silent on the topic or there is no will. Specifically, Texas law allows the personal representative a five percent commission on all amounts the representative actually receives or pays out in cash in administering the estate, limited to 5% of the gross fair market value of the estate. Cash means money or its equivalent. It does not include other types of property. It does not include taking possession of the cash on hand or in the decedent’s accounts at the time of death.
The court may allow additional compensation if the estate administration is more involved or complex. This often comes up if the decedent owned an operating business, farm, or complex investment portfolio that has to be administered.
With a dependent administration, the personal representative generally has to file an application with the court to request reimbursement or compensation.
With a dependent administration, the personal representative can pay himself from the probate funds. The personal representative should file an application with the court if additional compensation is sought in excess of the 5-and-5 commission.
Disputes Over Reimbursements or Compensation
Texas law provides a number of remedies for those who question the reimbursements or compensation the personal representative received. This includes asking the court to remove the personal representative and order that the amounts be reimbursed to the estate, contesting the judicial discharge, and bringing a civil suit against the personal representative.
Any monies owed to the government also has to be considered. Medicaid is a prime example. Medicaid benefits may have to be paid back. This brings us to our next topic. Click here to continue reading >>>>
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