How Much to Pay An
Adminstrator, Executor or Exectrix
Michael H. Marks
Linda Law Carroll412-421-8944
In Pennsylvania, there is no fixed formula or fee schedule to determine how much the Executor or Administrator of an estate is allowed to be paid .
Generally, someone appointed to that position, and who works to settle the affairs of an estate, is entitled to be compensated for services rendered to the estate. If the issue becomes a matter of dispute – for example, if the heirs or beneficiaries object that the Executor or Administrator has been paid too much – the judge will decide the appropriate amount for the Executor’s fee.
Pennsylvania law requires that compensation be “reasonable and just” and permits the fee to be calculated on a graduated percentage. Thus, the most common method for determining the Executor or Administrator’s fee (and the attorney fee) is based on the size of the estate. It makes common sense – for a bigger estate, more work and responsibility is likely, and for a smaller the estate the less work and responsibility might be required.
Clearly, though, this can be a crude tool and imprecise method for measuring the amount of work to be done. There can be a large estate that is simple, or a smaller estate that is more complicated. Many factors affect or determine the extent and complexity of the executor or administrator’s job:
- The proportion of probate assets versus nonprobate assets (generally, nonprobate assets are automatically transferred to beneficiaries or joint owners and require less work on the part of the executor or administrator).
- Whether there is real estate to be maintained or sold, or multiple properties;
- The number of separate financial institutions and separate assets or accounts;
- The number of individuals involved, either as co-Executors or Administrators, or as multiple heirs or beneficiaries;
- Whether the participants get along and are agreeable, or whether their interactions are more like arguments, disagreements and disputes.
Lawyers, judges and others often use a graduated compensation schedule that was used and allowed in a case called "In re:Johnson Estate". Because the judge in that estate determined that the schedule was reasonable it is often used as a guideline in other estates although it has never been formally adopted under Pennsylvania law. The "Johnson Estate" schedule appears below. It is based on the size of the estate, the different types of assets, and, importantly, on a declining percentage of the assets.
|Dollar Value of the Probate Estate||%||Amt of fee per column||Running Total|
|$00.01 to $100,000.00||5%||$5,000.00||$5,000.00|
|$100,000 to $200,000.00||4%||$4,000.00||$9,000|
|$200,000 to $1,000,000.00||3%||$24,000.00||$33,000.00|
|Type of Asset||Percentage|
|Real Estate Converted with Aid of Broker||3%|
|Pay on Death Bonds||1%|
|Real Estate: Specific Devise||1%|
Here is an illustration of how the "In Re:Johnson" estate fee schedule results in a suggested fee amount for different
size estates, and with different proportions of probate and nonprobate assets.
|Probate Assets||Non_Probate Assets||Fee Guideline Amount|
|$100,000||$100,000 (joint accounts)||$6,000|
|$500,000||$250,000 (real estate sold)||$25,500.00|
|$1 million||$500,000 (trust funds)||$38,000.00|
Another rough rule of thumb that is sometimes cited is that an Executor or Administrator is entitled to 5% of the assets of the estate. This does not address the difference in work required between probate and nonprobate assets, but can help in estimating a fee that will later be determined by the Johnson Estate schedule.
At Marks Elder Law, we generally consider the amount calculated according to the chart as a guideline, and often discount and round down from that amount. Note: an agreed upon fixed fee never covers the cost of any litigation. If a dispute, argument or disagreement arises that may require litigation, Marks Elder Law will be quoted sepataely prior to your making the decision to litigate.
Recently, in a Pennsylvania case that received widespread attention, a Judge criticized the "In Re Johnsen’s Estate" fee schedule as being out of date and no longer well suited for its purpose. In the case of Estate of James R. Donofri, the Judge proposed a simpler arrangement:
|Type of Asset||Type of Fee||Fee Amount|
|Probate||Attorney Fee||6% - Non-graduated|
|Probate||Executor Fee||5% - Non-graduated|
|Non-Probate Subject to Penna. Inheritance Tax||Attorney/Executor Fee||3% - Non-graduated|
|Non-Probate: Small Estates||Attorney/Executor Fee||Up to 10%|
If a proposed fee amount for an Executor or Administrator is challenged by the heirs or beneficiaries as excessive, it is very helpful for the fiduciary to be able to produce records of what they did in order to show that they have earned the compensation they are requesting. The ideal record would be a diary or log of activities and hours of work in sufficient detail to show the extent of work performed.
Finally, since an hourly rate for an Executor or Administrator must be reasonable and just, a judge might refer to the hourly rate that the person makes in their regular employment as a guideline, or refer to the hourly cost for labor or skilled services in the commercial marketplace (i.e. what would it cost to hire someone else to do the job). A skilled career professional would, therefore, be entitled to a higher “just and reasonable” hourly rate for services requiring or utilizing their skills, judgment, and expertise.
At Marks Elder Law, fees are always quoted in advance.
Generally, you never owe a fee until after we’ve agreed on one. Your fee reflects the time we spend working for you; the difficulty of your case; the value to you; the scale and scope of the matter; and the risk involved. Generally, we do not charge a Contingent Fee.