My family members have nominated me as PR for our mothers probate estate case.
As we know it is a time consuming task with little recognition. So I'm curious on who decides compensation rate if anyone and what is considered a fair rate.
I would strongly suggest that subject be brought up to the other heirs and agreed to before you accept the position. Any compensation is insufficient if it costs you your future family relationships.
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In Michigan. A Personal Representative is entitled to a reasonable rate of compensation. Unfortunately "reasonable rate" is not defined but can be anywhere between $15-$35 an hour.
The answer depends on a number of factors. Compensation is required to be "reasonable," but there is no statute or guidelines that determine what that means. I have seen judges use an "opportunity cost" theory. In other words, whatever the PR's normal compensation would be for their time, that is deemed to be reasonable. So a doctor would be entitled to a higher fee than a minimum wage worker.
Practically, there are two considerations. 1) Compensation is taxable and your inheritance is largely NOT. So if there are only 2-3 family members and you would be getting 1/2 of the estate anyway, it is probably not a good idea to turn your tax-free inheritance into taxable compensation. 2) As long as no one complains about what you are charging, you can charge whatever you want to. If you agree on a price ahead of time, that will not be a problem, as far as the court is concerned.
Courts generally tie compensation to time spent performing services for the estate. So if you intend to charge for your time, you should keep very careful records, documenting everything that you do.
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Reasonableness is the test. I would also be above board with everyone, letting them know your suggestion. For example, if you need to mow the law or sort out knick knacks of your mother, you might suggest a rate of $10 per hour. On the other hand, if you are talking making financial investments, the scale might start at something like $75 per hour, based upon sophistication of investments. Anywhere in between might be your proposal for a "blended rate". I emphasize: ask your family members to agree ahead of your undertaking. The final account will be soooooo much easier. Engage probate legal counsel immediately...... as I have advised you previously. Good luck.
This commentary does not result in any attorney/client relationship nor constitute legal advice as to a particular fact situation or status of a reader. Consult and retain legal counsel in the State of Michigan for pursuit of such a relationship.
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