Making plans for after your death can be challenging. After all, you won’t be there to make sure that what you say is executed to your liking. It is up to you, while alive, to rely on gut instinct to pick people you trust to represent you well after you’re gone.
Personal representatives are people dictated by a will to help execute it. Some of the responsibilities of a representative include identifying assets, paying the bills, and closing out the estate in accordance with the will.
Recently, in Bullock County, in Wehle v. Bradley, the Court addressed the issue of personal representatives and their compensation from the deceased’s estate. Robert Wehle died in 2002 and his will was admitted to probate. Bradley, McGowan, and Grady served as the personal representatives for the estate. As part of their representation, they petitioned the court for final settlement of the estate and also filed an accounting of their administration. The personal representatives paid themselves close to $2 million, which was about 5% of the value of Wehle’s estate.
Wehle’s three daughters filed an objection to the accounting arguing (1) that the representatives needed court approval before paying themselves out of the estate and (2) that the amount of compensation was unreasonable. The circuit court approved the fees submitted by the personal representatives but the Supreme Court reversed, agreeing with Wehle’s daughters that the personal representatives needed court approval.
There were additional sets of appeals, the bottom line being the Supreme Court instructing the circuit court to award interest against the personal representatives. The circuit court, instead, tried to award the daughters the profit the representatives had gained. Because this directly contracted the Supreme Court’s ruling, the Court, yet again, instructed the circuit court to award the daughters interest – not profit.
Though somewhat of a procedural jungle gym, the takeaway here is pretty straightforward. Personal representatives cannot compensate themselves from the estate without permission from the court unless the will explicitly says so. Here, Wehle’s will made no mention of allowing the representatives to pay themselves, which meant they needed to go to the court first before paying themselves.
This also lends itself to the next takeaway which is that whatever a personal representative pays himself must be reasonable. In this case, 5% of the estate was a significant and much too large percentage. However, teh Alabama code states that a representative may receive 5% of an estate as compensation. The good thing is that by going to court to ask permission for compensation, this is an opportunity to determine if the fee is reasonable.
Ingram Law LLC has represented many people probating estates. If you find yourself in a situation involving probate law, you should have an experienced, knowledgeable attorney on your side to ensure that you make the best arguments. Contact INGRAM LAW LLC at (205) 656-0044 for an attorney with the experience and knowledge that can make all the difference.