Because the job of the personal representative is often performed by spouse, adult child, or another closed family member of the decedent, many do not see it as a compensated role. It is. South Dakota law states that personal representatives are entitled to receive “reasonable” compensation for their work.
The work that a personal representative is required to do incudes tasks related to settling a decedent’s estate. It starts with identifying estate property and inventorying it. Estate property may include real estate, vehicles, personal property, and financial accounts. Next the personal representative must notify creditors and pay debt. The last major step is distributing assets to the decedent’s beneficiaries and heirs. In South Dakota the process typically takes about 6-12 months.
Provisions in Will
In South Dakota, some wills state how the fee for the personal representative is to be determined. The compensation framework in the will governs. However, the personal representative can choose to renounce the provision in the will. For the renunciation to be effective, they must submit it to the probate court in writing and they must do so prior to qualifying. If a personal representative renunciates the provision in the will, they will receive a fee based on the statutory fee structure.
The statutory fee structure will apply if there is no will, if the will does not include a fee provision, or if the personal representative renounces the will-based fee. The statute allows commissions based on the value of the personal property as follows:
- On the first $1,000- 5%
- On all sums in excess of $1,000 and not more than $5,000- 4%
- On all sums in excess of $5,000- 2.5%
As for real property that is part of the probate estate, the personal representative is entitled to reasonable compensation as determined by the court.
However, the commission paid must be reasonable based on the services rendered by the personal representative. In determining whether the fee is reasonable, the court will consider the following factors:
- Time and effort. The court will look at the timeframe of the administration proceeding, as well as the actual time the personal representative spent working on the matter. The court will also consider the amount of work that the personal presentative did during that time.
- The level of difficulty of the work involved. The difficulty of the issues involved, and the skill needed to deal with them. For example, challenging issues may include probate disputes, tax matters, and contested claims.
- Forgoing other opportunities. Because of the time and effort involved in the administration process, a personal representative might have to give up other opportunities. The court will consider whether the personal representative had to give up other employment opportunities.
- The customary fee. The court will look at the fee that is typically paid to similarly situated personal representatives in the same geographic area.
- The value of the estate. The personal representative is required to protect the estate and ensure that its value does not decrease. Taking steps that result in its valuing increasing is even better. Thus, the court will take into consideration not only the value of the assets in the estate at the time of the decedent’s death, but also the income earned by the estate while under the personal representative’s control
- Time constraints. The court will consider any time constraints the personal representative faced
- The experience and skill of the personal representative. A personal representative who is experience and possesses skills that help with the administration tasks would likely receive a higher fee than novice who lacked special training.
It is up to the personal representative to keep detailed records of their time, the actions the took on behalf of the estates, and the results of their actions in order to support the fee requested.
In addition to receiving compensation for their work, the personal representative is entitled to receive reimbursement for their out-of-pocket expenses related to estate administration. SD Codified L § 29A-3-720