How Personal Representative’s and Trustee’s Fees are Paid

By Lane V. Erickson, Idaho Estate Planning Attorney

Let’s face it, nothing in this life is free. If it were, then none of us would have anything to worry about. Everything costs either time or money or both. This is especially true when it comes to having a personal representative take care of your estate after you pass away or having a trustee administer your trust either while you’re alive or after you die.

Estate planning is all about making sure that your money, property, and other assets, are used for your benefit while you’re alive, and then distributed to your family members, or loved ones after you die based on the directions you leave in your documents. These things don’t happen automatically. Rather, there is someone who needs to be in charge of doing these things for you.

When you create your estate plan, it may include a last will and testament, and one or more trusts. In these documents you spend some time naming who you want to be appointed as your personal representative in your Will. You also spend some time deciding who you want to appoint as the trustees of your trust. The people you choose are usually either family members or close friends. You have chosen these people because you know that you can count on them to do what you want them to do. You are also asking them to use a good deal of their time to get these things done for you. Because of this, they are entitled to be paid for the time and work they do on your behalf.

The purpose of this article is to describe what personal representative and trustees’ fees are and how they are paid. Understanding how this all works gives you additional information that may help you in determining who you want to appoint as your personal representative or trustee.

Let’s start with administrative costs. Idaho law determines these to be the actual costs of completing the administration of a probate or a trust. The reason it is important to know what these things are is because there are instances where the estate assets are not adequate to pay all of the creditors and bills that exist for the person who died.

When this occurs, the personal representative is required to classify the claims in different order based on Idaho statutes. Specifically, the applicable Idaho statute states as follows:

Idaho Code 15-3-805. CLASSIFICATION OF CLAIMS.

(a) If the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order:

1. costs and expenses of administration;
2. reasonable funeral expenses;
3. debts and taxes with preference under federal law;
4. reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him;
5. debts and taxes with preference under other laws of this state;
6. all other claims.

(b) No preference shall be given in the payment of any claim over any other claim of the same class, and a claim due and payable shall not be entitled to a preference over claims not due.

Because of this statute, administrative claims which would include personal representative fees or trustee fees have the highest level of priority of being paid before any other claims from the estate. The reason for this is to make sure that the administration of the estate is actually done. By assuring that a personal representative or trustee gets paid for their work done to benefit the estate, then people are more willing to fulfill these roles and responsibilities.

Specifically, a personal representative is entitled by Idaho law to charge a fee for the work that they do when they are administering the probate estate. How this is done is controlled either by applicable law or by the written last will and testament itself.

When it comes to the written Will, an individual who creates the Will can state a specific dollar amount the personal representative is entitled to be paid as a fee. Alternatively, the person creating the Will can assign a fee that is a percentage of the estate. Additionally, the person creating the Will can state a specific dollar amount per hour that the representative is to be paid for the time spent working on the estate. However, it is done, whenever the Will says is what will be paid to the personal representative for their work.

If the Will is silent on how much the personal representative is to be paid, then the personal representative can look to Idaho statutes. Specifically, Idaho Code 15-3-719 states that “A personal representative is entitled to reasonable compensation for his services. If a will provides for compensation of the personal representative and there is no contract with the decedent regarding compensation, he may renounce the provision before qualifying and be entitled to reasonable compensation. A personal representative may also renounce his right to all or any part of the compensation. A written renunciation of fee may be filed with the court.”

I have personally seen Idaho courts determine that hourly rates up to $25 an hour are reasonable for non-professionals. If a professional such as an accountant, or an attorney is appointed, they are entitled to be paid whatever their reasonable hourly rates are for their profession.

Likewise, a trustee can be paid in a way similar to that of a personal representative. The trust document itself can be specific about the compensation that will be paid to a trustee for serving in that capacity. This can be done based on a flat fee, a percentage of the trust, or an hourly rate for the time span administering the trust.

If a trust is silent on how much a trustee can be paid, then Idaho statutes again apply. In this case it is Idaho Code 68-103 which states, “When a declaration of trust is silent upon the subject of compensation, the trustee is entitled to the same compensation as an executor (personal representative). If it specifies the amount of his compensation, he is entitled to the amount thus specified and no more.”

If you have been asked to serve as a personal representative or a trustee for a family member or loved one, and you have questions about how to go about doing this job and how you will be compensated for doing it, we can help. We have helped numerous personal representatives and trustees administer estates and trusts and we are confident that we can help you too!

Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We can schedule a time to answer your questions and help you solve your Idaho estate planning problems.