In Oregon executors, also referred to as personal representatives, are entitled to be compensated for the work that they do in managing estates of decedents. In order to receive payment, the personal representative must submit a petition to the probate court and any fee paid to a personal representative must be approved by the court. Or. Rev. Stat. §§ 116.173 In determining the amount of compensation to approve for a personal representative, the court is guided by the decedent’s will and by the Oregon statute.
When drafting their wills, testators generally indicate who they want to serve as their executor (personal representative). They also often include a clause indicating how much that person should be compensated. In such a case, the fee structure in the will is controlling. However, the personal representative can reject the fee described in the will. For such a renunciation to be effective, the personal representative must inform the court in writing and prior to appointment. Or. Rev. Stat. §§ 116.173(3)
There are a variety of reasons that a personal representative may choose to reject the fee described in the will. For example, they may feel that it is less than they would receive under the statutory scheme. Another reason is that they may not want to receive any compensation. Some feel that it is their duty to settle a loved one’s estate or for other reasons do not feel good about accepting compensation for managing the affairs for the decedent. Because compensation received for performing estate administration duties would be considered taxable for personal income purposes, others may decide to decline any compensation—will-based or statutory. A tax professional should be consulted about tax consequences.
The statutory framework for determining the appropriate compensation for a personal representative will apply if the personal representative renunciates what the will requires for compensation, if the will is silent on compensation, or if there is no will. Statutory compensation is based on the gross value of the probate estate as follows:
- 7% of any sum not more than $1,000.
- 4% of all above $1,000 and not more than $10,000.
- 3% of all above $10,000 and not more than $50,000.
- 2% of all above $50,000
Additional compensation. If a personal representative performs services that are deemed “extraordinary and unusual,” the court can authorize additional compensation beyond the general statutory amount. The amount of additional compensation would be amount that is “just and reasonable” considering the services rendered by the personal representative. Or. Rev. Stat. §§ 116.173(2)
For example, if the personal representative had to defend the estate in an estate litigation proceeding, the work that they may need to do may significantly increase. If the estate has a lot of beneficiaries, there may be added work. If the personal representative believes that the amount of work that the put into the estate warrants compensation beyond the normal percentage-based commission, they would have to support their request with evidence that it would be reasonable and fair based on the work performed.
On the other hand, if the personal representative does a poor job of managing the administration process or breaches their fiduciary duty, an interested party may object to their fee, resulting in the personal representative getting paid a lower amount or none at all.
More than one personal representative. With some estates, there is more than one person serving in the role of person representative. Note that if compensation is paid based on the statutory framework, only one compensation is permitted. Thus, for example, if the compensation is $5000 based on gross value of the probate estate and there is one personal representative, that personal representative would receive $5000. If there are 2 personal representatives, the two of them would receive $5000 and would presumably divide it equally so that each of them would receive $2500. However, the personal representatives can decide on how the sum should be divided or the court can issue an order as to how it should be divided.