Compensation for personal representatives is governed in Florida by Chapter 733, Section 617 of the Florida Statutes, which begins by stating, “[a] personal representative shall be entitled to a commission payable from the estate assets without court order as compensation for ordinary services. The commission shall be based on the compensable value of the estate, which is the inventory value of the probate estate assets and the income earned by the estate during administration.” The statute then provides numerical calculations and further specifications, which will be explained below.
What Is a Personal Representative?
An estate is an aggregation of property that belonged to a person who is now deceased, and it needs someone to administer and supervise it. This individual is called a personal representative. The formerly used term for personal representative was “executor” (male noun) or “executrix” (female noun). A personal representative can be designated in a will or appointed by a court. This person is a fiduciary who has the duties to manage and administer the assets of the estate, which must be done prudently and reasonably. An important responsibility of a personal representative, as a person entrusted to manage a potentially large amount of money, is not to steal or misappropriate any of the estate’s funds. A personal representative is also the designated individual who may file a lawsuit on behalf of a deceased.
How Is a Personal Representative’s Compensation Calculated in Florida?
The Florida statutes provide rates for which a personal representative’s compensation is presumed to be reasonable, based on the total value of the estate. These reasonable rates are as follows: 3% for the first $1 million of an estate’s value, 2.5% for all above $1 million and not exceeding $5 million, 2% for all above $5 million and not exceeding $10 million, and 1.5% for all above $10 million. Therefore, for example, for an estate valued at $1 million, the personal representative can be compensated at 3 percent of the first $1 million dollars, which equates to $30,000.
Why Are Personal Representatives Compensated?
As explained above, personal representatives are tasked with the important responsibility of administering a decedent’s estate. This responsibility can entail the following: (1) selling real or personal property, (2) conducting litigation on behalf of or against the estate, (3) being involved in proceedings for the adjustment or payment of any taxes, (4) carrying on the decedent’s business, (5) dealing with protected homestead, and (6) performing any other special services which may be necessary to manage the estate.
In addition to the percentage calculations based on the value of the estate, a personal representative can receive additional compensation for handling the tasks and services listed above.
Moreover, managing and settling an estate typically can take over a year, which translates to hundreds of hours of work. For estates worth millions of dollars, settling the estate can take, on average, more than three years, which can equate to over 1,000 hours of work. Therefore, personal representatives are entitled to be compensated for what is commonly considered stressful work.
Can Compensation for a Personal Representative Be Specified in a Will?
Yes, the will of a decedent can specify the criteria and terms in which a personal representative may be compensated. However, a personal representative may renounce those terms and be entitled to compensation according to the payment schedule provided by the Florida statutes. A personal representative also has the ability to renounce any or all compensation for administration of the estate.
Can the Compensation of a Personal Representative Be Altered?
Courts can step in to modify a personal representative’s compensation in certain circumstances. For example, if a personal representative is not completing his or her duties in a timely or satisfactory manner, another heir can petition that the court reduce the personal representative’s compensation. In contrast, a personal representative may also request increased compensation as a result of settling a uniquely complex estate.