Expenses of Probate Administration and Compensation of Personal Representative and Attorney’s Fees
The expenses of probate administration of estates varies depending on many factors, only one of which is the size of the estate. The expenses of administration may include court fees, attorneys fees certification fees, surety bond premiums, the California probate referees’ fees, agency fees, insurance premiums, expenses of selling assets, and the personal representative’s, and accountants’ compensation. The largest costs or usually the compensation of the personal representative and the attorneys fees.
Compensation for Ordinary Services of Personal Representative and Attorneys Fees
As personal representative, you are allowed compensation for your services. Unless the will makes special provision for your compensation, the amount of compensation for your “ordinary” services is fixed by California statute and is based on the value of the estate accounted for. This value generally includes the inventory value of the probate estate and income received during the period of administration. Compensation can be paid only after the court orders payment.
Compensation for ordinary services is calculated based on the amount of the estate accounted for as follows:
- 4% on the first $100,000 or fraction thereof;
- 3% on the next $100,000 or fraction thereof;
- 2% on the next $800,000 or fraction thereof;
- 1% on the next $9,000,000′
- 1/2% on the next $15,000,000; and
- A reasonable fee on the excess over $25,000,000
Thus, the compensation for an estate of $1,150,000 would be calculated as follows:
- 4% on $100,000 $ 4,000
- 3% on $100,000 $ 3,000
- 2% on $800,000 $16,000
- 1% on $150,000 $ 1,5000
The same schedule is used to determine the compensation paid in attorneys fees for their “ordinary” services.
Unlike an individual, an estate is entitled to an income tax deduction for amounts of income or principal paid or distributed to certain beneficiaries during the year, who must in turn include those amounts in their income tax returns for that year. Significant income tax savings maybe possible by proper planning probate planning.