I need to calculate the executor fee but I don't know if all debts are to be deducted before the calculation or if the fee is based on the gross value of his estate.
The key is the value of the services rendered. 3% has been recognized as a rule of thumb, but it's not automatic. 20 Pa.C.S. § 3537, says:
The court shall allow such compensation to the personal representative as shall in the circumstances be reasonable and just, and may calculate such compensation on a graduated percentage.
In a series of cases, culminating in Wallis Estate, 421 Pa. 104, 218 A.2d 732 (1966), the Pennsylvania Supreme Court approved a general rule that an executor's fees of 3% of the estate under administration was "prima facie fair and reasonable." However, the Supreme Court later pointed out that the rule was not hard and fast:
" This [3%] test, however, is merely a "rule of thumb," the true test being what the services actually were worth. Therefore, it follows that where there is evidence that the services are actually worth more or less than what is prima facie reasonable, as, for example, where the fiduciary performed extraordinary duties [citations omitted] or where the performance falls below accepted norms [citations omitted] the amount of compensation may be increased or decreased accordingly.
In re Reed's Estate, 462 Pa. 336, 340-341, 341 A.2d 108, 110-111 (1975).
The Supreme Court has also held that compensation of executors is a matter "peculiarly within the discretion" of the Orphans' Court, and that the determination of compensation will not be disturbed by an appellate court unless the discretion is "clearly abused." Strickler Estate, 354 Pa. 276, 277, 47 A.2d 134, 135 (1946)."
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Under PA law the fee is based on the gross estate, debts and expenses are not taken into account.
Also, with all due respect to the prior attorney, the controlling case in most situations is the Johnson estate. Although 3% is generally accepted, the Johnson case is looked to. For example on the first $100,000 a 7% commission is allowable. However as the estate size increases the percentages go down. Also, if the estate is really large a 3% commission may not be warranted. Get the case or get with an estates attorney to see what is appropriate.
Hope this helps.
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Divorce / Separation Lawyer
To support Attorney Fromm's response. The fees are calculated on the entire gross estate before any deductions. The Johnson estate is what I believe almost every attorney uses for the fee standard.
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Criminal Defense Attorney
In PA, the Court shall allow such compensation to the personal representative as shall in the circumstances be reasonable and just ... See 20 Pa.C.S. 3537. The test is what the services actually were worth. In order to determine the value of the services rendered, the courts look to the responsibility incurred and the service and labor performed. Compensation shall be fair and just based upon the extent and character of the labor and resonsibilities involved.
Courts in PA differ, the local court in my county is inclined to award 3% of the gross estate to the personal representative on a "normal estate". This fee may be increased upon the services actually renderred.
Legal disclaimer: Please note: Robert Cronin is licensed to practice law in Pennsylvania. Nothing in this article is to be taken as legal advice. No communication between Robert Cronin and readers of this article is to be inferred to cause an attorney client relationship. If you require legal assistance please contact an attorney who is licensed in your jurisdiction and knowledgeable in the area of law in which you require help.