Under New Mexico estate law, personal representatives are entitled to reasonable compensation for services rendered. A personal representative, also referred to as an executor or estate administrator, is the person who is appointed by the probate court and who is responsible for the estate administration tasks required to finalize the affairs of someone who has passed away.
While the probate court has jurisdiction over matters related to estates of deceased persons, the personal representative is tasked with caring for the steps required to settle an estate. However, the personal representative is answerable to the probate court and must get approval from the court before moving forward with many of the administration tasks.
- Inventory estate assets. Because the personal representative is responsible for caring for estate assets, one of the first things that they must do is identify the assets that are in the estate. Asset may include real estate, vehicles, jewelry, home furnishings, other personal property, financial accounts, and intellectual property. The personal representative must make sure these items are secure, determine their value, and make a list of them. The inventory must be filed with the probate court. NM Stat § 45-3-706
- Notify creditors. An important part of the estate administration process is paying creditors. First, the personal representative must notify the creditors of the claims period and the process.
- Pay estate debts. Creditors only have a certain period of time to attempt to collect money owed to them by the decedent. In addition, in order to get paid, creditors must file a claim. The personal representative must review claims and pay only those that have been filed on time and that have been substantiated. The personal representative can only pay claims to the extent there are assets available to do so. They are not required to come out of pocket to pay estate debt.
- Distribute estate assets. The final major step in the administration process is asset distribution. Asset distribution can only occur after debt and expenses are cared for. If debt and expenses take up all estate assets, with limited exceptions, the unfortunate result is that beneficiaries and heirs receive nothing.
Personal Representative Compensation
For the work described above, personal representatives are entitled to reasonable fees. While many state statutes provide compensation structures for personal representatives, New Mexico does not. Instead, the statute provides that, “A personal representative is entitled to reasonable compensation for his services.” NM Stat § 45-3-719
In order to receive compensation, the personal representative must submit their bill to the court along with a petition requesting payment. The court will approve payment as long as it deems the among requested reasonable. The has discretion in determine what is reasonable. Factors that it may consider include:
- Compensation customarily charged. While each estate is different, there is administration work that is common or similar across most estates. Thus, the court will look at the range of fees that have been paid for similar work, for similar estates, in a similar geographic area. If the fee requested is within that range, the court will likely sign off on it.
- We work involved. The court will look at the type of work that the personal representative completed, the time it took, and the expertise it involved. If the work is unusual or extraordinary, the court is more likely to approve payment that is above the norm.
- Size of the estate. The size of the estate can impact the amount of work required of the personal representative. Larger estates tend to involve more work and are more likely to have added complexities.
- Experience and capabilities of the person. The court will also consider the experience and expertise of the personal representative. If the personal representative has experience settling other estates or has an expertise in some of the tasks required to settle the estate, the could may approve a higher fee.
If the will provides for compensation, the personal representative has the right to renounce it. They can renounce it and instead petition for reasonable compensation as determined by the court. Or, the personal representative can chose to work for free. A personal representative is not required to accept a fee for their work.