A personal representative, sometimes called an executor, is the person appointed by the probate court to manage a decedent’s estate during the administration process. Wis. Stat. Ann. § 851.23. Just like any other job, in Wisconsin the job of being a personal representative is a paid position. Wis. Stat. Ann. § 857.05. The personal representative’s job typically requires a substantial amount of time and work. The job description for the personal representative includes:
- Inventorying and manage the decedent’s property
- Collection income and rent from decedent’s estate
- When reasonable, maintain in force or purchase casualty and liability insurance
- Pay estate debt out or estate assets and contest claims believed to be invalid
- Pay expenses of administration out of estate assets
- Render accurate accounts
- Distribute estate assets
Wis. Stat. Ann. § 857.03
If the decedent’s will does not outline the fee that the personal representative is to receive, for their services they would be entitled to receive reasonable compensation as defined by Wisconsin law.
Wisconsin Will-Based Compensation
In their wills, testators can specify who they want to serve as their personal representative as well as how much that person should get paid. For example, the will may name two people to serve as co-executors and may state that each person is to receive $10,000 for their services. Or, the will can state the fee in terms of a percentage of the value of the probate estate. Some testators state only that the fee should be reasonable, while other testators are silent on compensation.
In order to receive payment, personal representatives must submit their bill along with a petition to the probate court. When determining to approve the requested fee, the court will first look to the terms of the will. If the will is silent, they will look to the statute to determine if the requested fee is consistent with the statutory framework.
Wisconsin Statutory Compensation
If the decedent’s will is silent on compensation or if there is not will, then the personal representative’s compensation is based on the requirements of the statute based on one for the following:
- 2% of the net value of estate assets. The personal representative’s compensation will be 2% of the value of the decedent’s estate as stated in the inventory the personal representative completes, minus any mortgages or liens on that property, plus the net principal gains during administration. For example, if the value of the probate estate was $100,000, there were encumbrances of $50,000, and gains of $5,000, the personal representative’s compensation would be ($100,000-$50,000+$5000) x 2%= $1,100.
- The rate agreed upon by the personal representative and the decedent. In some instances the personal representative and the decedent executed a contract that memorialized the agreed upon compensation.
- The rate agreed upon by the majority of the heirs.
Note that regardless of how the fee is determined, it cannot be paid until the court approves it.
Increase in compensation. It may be reasonable to pay the personal representative more if the personal representative performed “extraordinary services. An example of an extraordinary service include continuing the run the decedent’s small business pursuant to an order for the court. Other examples include handling litigation such as a will contest or a contested creditor’s claim or dealing with complicated tax issues. Because the work involved with extraordinary services would be beyond what a personal representative is typically required to do, it is only fair that they would receive additional compensation.
Reduction of compensation. On the other hand, if the personal representative was derelict in their duties, the court has the discretion to reduce or even deny compensation. For example, failure to follow an order of the court may result in a reduction of fee. In In Matter of Estate of Huehne, 175 Wis. 2d 33 (Ct. App. 1993), failure of the person representative to communicate with one of the heirs as ordered by the court, was an appropriate basis for reducing the personal representative’s fees. Other examples of reasons to reduce or deny compensation include:
- Breach of a fiduciary duty
- Mismanagement of the estate assets
- Theft of estate property
- Leaving the state
Expenses. In addition to being entitled to receive compensation for their work, the personal representative is entitled to be reimbursed for expenses required for the care, management, and settlement of the estate.