4.1.2 Commissions and Legal Expenses

4.1.2.1 The personal representative is entitled to “reasonable compensation for services.” Statutory commissions for personal representatives are expressed as a maximum: not to exceed $1,800 plus 3.6% of the excess over $20,000 unless a larger amount is provided by the will. Sec. 7-601, Estates and Trusts Article.

4.1.2.1.1 Often a family member who is the primary heir is named as personal representative (e.g. the spouse) thereby adding planning potential. The top marginal rate for federal estate tax purposes is substantially higher than the top marginal income tax rate.

4.1.2.1.2 If there is a separately stated attorney fee, the Orphans’ Court shall permit such a fee but 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.” Sec. 7-602, Estates and Trusts Article.

4.1.2.1.2.1 In practice this usually caps the combined total at the “statutory rate” under Sec. 7-601 unless extraordinary circumstances merit special consideration.

4.1.2.1.2.1 Note that a separate provision authorizes litigation expenses – including counsel fees. Sec. 7-603, Estates and Trusts Article.

4.1.2.2 Trustees are likewise entitled to commissions for their services in administering a trust. These commissions are two-fold: an income based commission and a commission based on corpus. The income portion is graduated from 6.5% on the first $10,000; 6% on the next $10,000; 4% on the next $10,000 and 3% thereafter. Commissions on managing real estate rentals, mortgages or ground rents, however, is a flat 6%. The corpus commissions are also graduated: 0.4% on the first $250,000; 0.25% on the next $250,000; 3/20ths of 1% on the next $500,000 and so on.

4.1.2.3 Regardless of the statutory scheme, professional advisors are going to seek compensation for services.

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