Serving as a personal representative (executor or estate administrator) and carrying out a loved one’s final wishes is a lot of work. “You have the power of attorney for the deceased person’s estate. You need to handle their real estate, settle any estate tax, communicate with their loved ones, and hire a law firm for legal advice, among other things,” explains Patrick O’Brien, executor.org. But did you know that a personal representative is entitled to a fee for their work? And these fees differ by state. So, we are often asked: What is the estate administration fee in Maryland?
What is the Estate Administration Fee in Maryland?
“There’s nothing wrong with accepting compensation for handling an estate,” says O’Brien. “You are entitled to receive compensation for your work.”
In some instances, executor payment is explicitly stated in the deceased’s will. However, in many cases, it is not. In many states, such as Maryland, it is still acceptable in these instances for an estate administrator to be paid a “reasonable” fee for their work. “The rules for fees are found in Section 7-601 of the state [of Maryland’s] Estates and Trusts statutes,” says Beverly Bird, Legal Beagle.
- If the Value of the Estate is Under $20,000, reasonable compensation is not to exceed 9%.
- If Value of the Estate is Over $20,000, reasonable compensation is $1,800 plus 3.6% of the excess over $20,000.
“If the fee is higher [in the will] than that provided for in the statutes, the personal representative would nonetheless receive the greater fee,” explains Bird. “If the probate judge thinks the amount in the will is unreasonably low, the court can raise it.”
Should You Receive Payment as a Personal Representative?
A personal representative absolutely has a right to accept compensation. However, they also have the right to take a lower fee or refuse compensation altogether.
“In some cases, a family member who is both a beneficiary and the personal representative will forgo any executor fees because the fee would be considered taxable income,” explains Bird. In most cases, the money you inherit is not subject to taxes. So, in certain cases, a beneficiary/personal representative might be better off waving the fee. If you are unsure what makes the most sense, consider consulting an estate and trust administration attorney or tax expert.
“In other cases, the personal representative may simply [feel] he’s honoring his loved one by settling the estate and that no compensation is necessary,” says Bird. The decision to accept a fee is ultimately up to the personal representative.
What Does an Estate Administrator Do?
“An administrator is an individual appointed to dispose of the assets of the estate, manage any creditors, and pay fees out of the estate for any required attorneys, appraisers, or accountants,” explains Cynthia Gaffney, PocketSense. Every estate is different and, therefore, the specific duties of the administrator can vary drastically from estate to estate. However, regardless of the circumstances, here are some of the common duties of an estate administrator.
- Filing the Will: If there is a will, the executor must first file it with the probate court to determine whether or not probate is required.
- Managing Assets: “Anyone who accepts the job of personal representative has a fiduciary duty to place the interests of the beneficiaries over her own,” explains Bird. “Even if she is one of the beneficiaries, she can’t favor herself over the others.” The estate administrator should create an inventory of assets and have them appraised if necessary. They are also responsible for notifying creditors, banks, and government agencies (such as Social Security) of the death and pay any outstanding bills and debts from the estate, including funeral expenses, as well as state and federal taxes. If there is not enough cash to pay these expenses, assets may be sold to generate the necessary funds. Once any outstanding expenses have been paid, the remaining assets can be distributed to heirs and beneficiaries. If the deceased doesn’t have a will, the property will go to the decedent’s relatives, according to Maryland Law (Md. Code, Estates and Trusts §§ 3-101 to 3-112).
- Closing the Estate: Once all assets have been distributed, the personal representative will petition the probate court to release them from office and close the estate.
An Experiences Estate & Trust Administration Attorney in Maryland
Administering an estate is a big job and most people thrust into the role are unfamiliar with the responsibilities and nuances of the position. So, it’s only natural that they should have questions. How is an estate administrator appointed? What are a personal representative’s duties? What is the estate administration fee in Maryland? What is the difference between an executor and an estate administrator?
PathFinder Law Group can help answer these questions and more! We are an estate planning law firm in Towson, Maryland with over 15 years of experience. Our team provides legal guidance that comes from the heart and our solutions are tailored to fit your individual needs.
To contact PathFinder Law Group about your Estate Administration needs, please complete our Contact Us form, call (443) 579-4529 or email firstname.lastname@example.org. We are here to guide you through life’s milestones in a way that is compassionate and reassuring.
- Bird, Beverly. “The Typical Fee for an Executor of Estate in Maryland.” Legal Beagle, 18 May 2020, https://legalbeagle.com/8592482-typical-fee-executor-estate-maryland.html.
- O’Brien, Patrick. “Executor Fees by State.” Executor.org, 17 Sept. 2020, https://executor.org/resource/executor-fees-by-state/.