The Pennsylvania orphans’ court ultimately determines how much a personal representative is paid and compensated for his or her work. The guiding question for the Pennsylvania orphans’ court is whether the personal representative’s compensation is reasonable and just under the circumstances. 20 Pa. C.S § 3537.
Section 3537 also states that the court “may calculate the personal representative’s compensation on a graduated percentage.”
What Is the Graduated Percentage For a Pennsylvania Personal Representative’s Compensation?
The Pennsylvania case of Johnson’s Estate sets forth a graduated percentage schedule that many Pennsylvania attorneys and courts will follow and use as a guide to determine reasonable compensation.
Pennsylvania orphans’ courts will often approve a personal representative getting paid compensation in accordance with the Johnson’s Estate compensation schedule if the personal representative has administered the estate accurately and faithfully.
The below table is borrowed from a Pennsylvania opinion and contains the percentage fee schedule set forth in Johnson:
Exhibit A
Johnson Estate, 4 Fid.Rep.2d 6, 8 (O.C. Del. Co. 1983)
COMMISSIONS
Per Col. | Per Total | ||||||
$ | 00.01 | to $ | 100,000.00 | 5% | 5,000.00 | 5,000.00 | |
$ | 100,000.01 | to $ | 200,000.00 | 4% | 4,000.00 | 9,000.00 | |
Executor or | $ | 200,000.01 | to $ | 1,000,000.00 | 3% | 24,000.00 | 33,000.00 |
Administrator | $ | 1,000,000.01 | to $ | 2,000,000.00 | 2% | 20,000.00 | 53,000.00 |
$ | 2,000,000.01 | to $ | 3,000,000.00 | 1½% | 15,000.00 | 68,000.00 | |
$ | 3,000,000.01 | to $ | 4,000,000.00 | 1% | 10,000.00 | 78,000.00 | |
$ | 4,000,000.01 | to $ | 5,000,000.00 | ½% | 5,000.00 | 83,000.00 |
1% | Joint Accounts | 1% | P.O.D. Bonds | 1% | Trust Funds |
3% | Real Estate Converted with Aid of Broker | 5% | Real Estate: Non-Converted | 1% | Real Estate: Specific Devise |
The Johnson compensation schedule is a guide, not a fixed percentage for personal representative compensation in Pennsylvania. Even with the schedule set forth in Johnson, the fees paid to a Pennsylvania personal representative must be reasonable and just under the circumstances.
Indeed, the Johnson’s Estate compensation schedule for personal representatives has been criticized in large estates. In Re Estate of Preston, 560 A.2d 160 (Pa. 1989). In Preston, the Pennsylvania Supreme Court stated:
Egregious error is committed when a court awards commissions and fees simply on a percentage basis without inquiry into the reasonableness of the compensation, especially when the award is based, in part, on property not included in the decedent’s estate, i.e. jointly-owned property.
The Pennsylvania orphans’ court always has the final say and reviews each case on an individual basis.
What Is Reasonable And Just Compensation Under the Circumstances?
Reasonable and just under the circumstances for purposes of a Pennsylvania personal representative’s compensation has been defined by the Pennsylvania Supreme Court in In re Estate of Sonovick, 541 A.2d 374 (Pa. 1988) as follows:
A fiduciary is entitled to “reasonable and just” compensation for the services he provides. In Re Ischy Trust, 490 Pa. 71, 415 A.2d 37, 42 (1980); Williamson Estate, 368 Pa. 343, 349, 82 A.2d 49 (1951); 20 Pa.C.S.A. § 7185(a). Thus, the fiduciary’s entitlement to compensation should *57 be based upon actual services rendered and not upon some arbitrary formula. In Re Estate of Breyer, 475 Pa. 108, 379 A.2d 1305, 1311 (1977); In Re Ischy Trust, supra, 415 A.2d at 42; In Re Reed, 467 Pa. 371, 357 A.2d 138, 142 (1976). (emphasis added) . . . “It is fundamental that an attorney seeking compensation from an estate has the burden of establishing facts which show that he or she is entitled to such compensation.” Estate of Wanamaker, 314 Pa.Super. 177, 460 A.2d 824, 825 (1983) (citing) Hempstead v. Meadville Theological School, 286 Pa. 493, 134 A. 103 (1926).
The Personal Representative’ s Compensation Is Determined Case-By-Case
Sometimes a Pennsylvania personal representative is required to go above and beyond to faithfully administer an estate, and other times a personal representative simply does a terrible job. The wide array of personal representative skills and behavior is another reason why a one-size-fits all compensation schedule is not the law in Pennsylvania.
When there is evidence that the personal representative’s services are worth more or less than the percentage guidelines, the Pennsylvania orphans’ court may adjust the amount of compensation paid to the personal representative.
What If Decedent’s Will Sets Forth What The Personal Representative Should Be Paid?
Pennsylvania law also provides that provisions in a testator’s will that provide for the personal representative’s compensation may be enforced if the personal representative accepts appointment with knowledge of the provision in the will that sets forth what the personal representative is to be paid.
Even when the will of the Pennsylvania testator sets forth what the personal representative is to be paid, the compensation must be fair and reasonable under the circumstances.
A Pennsylvania probate lawyer can help you determine what is a reasonable personal representative’s fee and guide you through the probate process.
