Estate Planning Newsletter – March 2016 Issue

COURT OF APPEALS ESTABLISHES STANDARD FOR EXECUTOR’S FEES

In the Estate of Marie Anderson Young, the Court of Appeals set forth the procedures, guidelines, and standards a Probate Court should use in establishing Executor’s fees.  In the Young Estate, the value of the assets were relatively small.  The Bureau of TennCare filed a claim for over $200,000.00.  After all expenses of the estate were paid, only $3,881.00 remained in the Estate account.  The Executor filed a Motion to set attorney’s fees, submitting that she had spent 47 hours on administration of the Estate and requesting payment at $80.00 per hour for a total of $3,760.00 with $286.00 in expenses.

The Trial Court denied the amount requested by the Executor and instead followed the Court’s Local Rules Fee Schedule based on the size of the gross estate.  Under the Local Rules’ Fee Schedule, the fee was five percent (5%) of the first $20,000.00.  As such, the Court ruled the Executor was entitled to a fee of only $242.25 (which considered the gross estate).

The Court of Appeals reversed the Trial Court and remanded the case back to the Trial Court to consider “all relevant circumstances,” including “the extent of the personal responsibilities rendered, the promptness and adequacy of the services, and the value of the benefits conferred.”  In reaching its decision, the Court of Appeals pointed out a recent case from 2012 dealing with a request for attorney’s fees based on a percentage of the estate, following a Probate Court’s Local Rules.  In the attorney’s fee case, the Court of Appeals ruled that using a percentage of the estate may not be used strictly as the standard for setting attorney’s fees.

MY RECOMMENDATION:  Tennessee Courts have now ruled that attorney’s fees and Executor’s fees based on the size of the estate are not in accordance with Tennessee law.  Executors should be prudent and keep up with the details of the services rendered and the amount of time they expend.  Also, they should keep accurate records of the complexity and difficulty of matters in which they are involved on behalf of the estate.

Yours very truly,

RAINEY, KIZER, REVIERE & BELL, P.L.C.

William C. Bell, Jr., Attorney at Law