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What can I charge to the estate as Personal Representative?

New Hope, PA |

Small estate, $30,000, at most. mother lived in MI, I live in PA. At present I am only reimbursing myself for tolls and gas for the 1300 mile round trip, have made 4 trips to date since April 2012. Estate is complicated by the fact that my disabled sister lived with her and must be resettled. Disabled sister was supported by my Mother and her survivors SS from my deceased Father. Sister has no personal assets to live of otherwise since Mother's death. Are the reimbursements noted income to me for tax purposes? What can I also charge, meals, etc. that is not regarded as income?

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Attorney answers 4

Posted

There is no percentage or figure that is required in Michigan. You are entitled to "reasonable compensation." Ideally, you have kept a time log of the time you have spent working on the estate. You are entitled to reimbursement for actual expenses, but not for things like meals that you would normally require, otherwise. Anything that you take as compensation is taxable income to you. Anything received as your inheritance is tax free.

James Frederick

*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.

Posted

Mr Frederick offers sound advice and his comments are generally consistent with PA law. However, under the Johnson's Estate case if memory serves me correctly you are allowed up to a 7% commission on the first $100,000 of assets. This will be taxable income to you and will be subject to social security taxes to boot. The reimbursements are not taxable income to you, but food is generally not deductible for PA inheritance tax purposes.

Hope this helps.

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Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336, his email address is sjfpc@comcast.net , for more tax, estate and business articles visit his website www.sjfpc.com. and blog

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

James P. Frederick

James P. Frederick

Posted

It *sounds* like this would be a Michigan estate, but it is not entirely clear.

Posted

Michigan law may differ from Pennsylvania Law.

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.

Though even 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.

James P. Frederick

James P. Frederick

Posted

Robert~ I think the bottom line is probably the same in both states, that compensation needs to be "reasonable" under the circumstances. We do not have a fee schedule that judges use. But a fee along the lines of what you suggest would probably not be considered unreasonable.

Posted

I agree with the other responders. Expenses must be reasonable and must be explainable if asked. I would say you are fine with the tolls and gas, but I wouldn't risk calling meals an expense because you would eat regardless. You woudln't necessairly travel 4 x to Michigan over 1300 miles since April if you were not doing the Estate. Generally, if it passes the sniff test, you are okay..if not, it's not worth it to put things that are questionable...if you aren't sure, then you are better not putting it.

If you found this answer helpful, let me know by clicking the "Mark as Helpful" button at the bottom of this answer. It’s easy and appreciated. This answer does not create an attorney/client relationship and is for informational purposes only. More importantly, the information contained in this answer should not be relied on without first consulting with an attorney who practices in the related area in the related jurisdiction.

James P. Frederick

James P. Frederick

Posted

Especially since it is taxable compensation if received as a PR fee and tax free if inherited. It will also require at least one more 1300 mile trip, if someone objects to the fee. The gas alone would offset whatever additional fee asker might get.

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