7.0 Fees and Commissions
7.1 The Statute:
” § 7-601. Compensation of personal representative and special administrator
(a) Right to compensation. — A personal representative or special administrator is entitled to reasonable compensation for services. If a will provides a stated compensation for the personal representative, additional compensation shall be allowed if the provision is insufficient in the judgment of the court. The personal representative or special administrator may renounce at any time all or a part of the right to compensation.
(b) Computation of compensation. — Unless the will provides a larger measure of compensation, upon petition filed in reasonable detail by the personal representative or special administrator the court may allow the commissions it considers appropriate. The commissions may not exceed those computed in accordance with the table in this subsection.
If the property subject to administration is: The commission may not exceed:
Not over $ 20,000…………………………………………………………………………….9%
Over $ 20,000…………………………………………………………………… $ 1,800 plus 3.6% of the
excess over $ 20,000
(c) Appeal. — Within 30 days a personal representative, special administrator, or unsuccessful exceptant may appeal the allowance to the circuit court, which shall determine the adequacy of the commissions and increase, but not in excess of the above schedule, or decrease them.
(d) Commission on sale of real property. — If the personal representative retains the services of a licensed real estate broker to aid in the sale of real property, the commissions paid to the real estate broker are an expense of administration and may not be deducted from the commissions allowed by the court to the personal representative in accordance with subsection (a) of this section.”
” § 7-602. Compensation for services of an attorney
(a) In general. — An attorney is entitled to reasonable compensation for legal services rendered by him to the estate and/or the personal representative.
(b) Petition. — Upon the filing of a petition in reasonable detail by the personal representative or the attorney, the court may allow a counsel fee to an attorney employed by the personal representative for legal services. The compensation shall be fair and reasonable in the light of all the circumstances to be considered in fixing the fee of an attorney.
(c) Considered with commissions. — If the court shall allow a counsel fee to one or more attorneys, it shall take into consideration in making its determination, what would be a fair and reasonable total charge for the cost of administering the estate under this article, and it shall not allow aggregate compensation in excess of that figure.”
” § 7-603. Expense of estate litigation
When a personal representative or person nominated as personal representative defends or prosecutes a proceeding in good faith and with just cause, he shall be entitled to receive his necessary expenses and disbursements from the estate regardless of the outcome of the proceeding.”
7.2 Personal Representative’s Commissions.
Est. & Trusts § 7-601 sets out certain rules governing personal representative’s commissions: (1) commissions set out in a will shall govern unless too low, (2) a personal representative is entitled to “reasonable compensation for services”, (3) upon a petition “in reasonable detail” the court may allow commission it considers appropriate but not to exceed certain statutory limit (the “9 + 3.6” provision).
These commissions are to be divided among joint personal representatives and/or successive personal representatives and special administrators. St. Mary’s Female Orphan Asylum of Baltimore v. Hankey, 137 Md. 569 (1921). This division of commissions, at least as between co-personal representatives, seems to be held equal regardless of the allocation of work. Hohman v. Orem, 169 Md. 634 (1936); Crothers v. Crothers, 123 Md. 603 (1914); Richardson’s Adm’x v. Stansbury, 4 H.&J. 275 (1817). See, also, Cearfoss v. Snyder, 182 Md. 565 (1943) (equal shares even when one joint personal representative did all of the work). These are old cases, however, and the statutory authority to allow commissions as the court “considered appropriate” may give it latitude in apportionment.
7.3 Relationship of Attorney’s Fees to Commissions
There is a direct relationship between attorney’s fees and personal representative’s commission for those fees an attorney charges for normal administrative tasks. Est. & Trusts § 7-602 provides that an attorney is entitled to reasonable compensation but such fees along with the commissions should not exceed the aggregate compensation under Est. & Trusts § 7-601.
There are important limitations on the interplay of these two sections. Attorney fees that represent charges for necessary services not encompassed in the normal administrative tasks are not included in the calculation. Thus, attorney compensation for tax filings (final 1040, fiduciary income tax returns and estate tax returns) are seen as additional services if stated separately. Riddleberger v. Goellen, 263 Md. 44 (1971) (distinguishing between “routine” matters and “extraordinary” matters such as the work required associated with tax filings). Riddleberger makes clear that the Orphans’ Court is not determining whether a lawyer’s fee is appropriate just how much can be a charge against the estate: “The laborer is worthy of his hire. By this opinion we are not to be understood as in any way setting the total compensation to which the attorney may be entitled.”
Aside from the “routine ministerial” vs. “extraordinary” distinction, Est. & Trusts § 7-603 entitles the personal representative to receive his or her attorney fees from the estate whenever he or she defends or prosecutes a proceeding “in good faith.” The good faith test is not whether he or she wins the suit. See Piper Rudnick LLP v. Hartz, 386 Md. 201 (2008) (the personal representative was entitled to attorney fees and costs to defend his removal, including an appeal to the circuit court).
7.4 Payment of Attorney’s Fees
Generally, attorney’s fees should not be paid from the estate without prior court approval. Beyers v. Morgan State University, 139 Md. App. 609 (2001), off’d, 369 Md. 335 (2002); Attorney Grievance Comm’n v. Owrutsky, 322 Md. 334 (1991).
7.5 Consent to Compensation to Personal Representative or Attorney
Court approval may be avoided if all interested persons consent and the combined commissions and fees do not exceed the limits in Est. & Trusts § 7-601. Est. & Trusts § 7-604. Once a consent is entered, the amount is listed as the payment of an expense.
Consents do not govern amounts in excess of Est. & Trusts § 7-601 (to pay an attorney for extraordinary services, for example) or for litigation expenses.