Many are unclear about whether a Tennessee personal representative can be compensated. In fact, many believe that personal representatives are not compensated. This is not the case. Tennessee law provides that personal representatives are entitled to receive “reasonable” compensation for the services they perform to manage and settle estates of decedents. Perlberg v. Jahn, 773 S.W.2d 925 (Tenn. Ct. App. 1989). What is reasonable will vary from estate to estate, as estate vary by value and complexity. It is up to the Tennessee Chancery Court overseeing the proceeding to determine what is reasonable based on the services that the personal representative performed. Here’s a look at the major tasks that the law requires personal representatives perform.
Duties and Responsibilities of the Personal Representative
In simple terms, the personal representative’s job is to wrap up the affairs of a decent and settle their estate. However, typically the job of the personal representative is anything but simple. While there are three major steps in the estate administration process, each step has several sub steps and each step has the potential for becoming complicated.
Identifying estate property. Once appointed, one of the first tasks of the personal representative is to identify the property that is part of the estate. This is the property that the personal representative would have control over. There are many different types of property that may be part of a decedent’s estate and each estate is different. For example, estate property may include personal property such as the contents of the decedent’s home, real estate such as the decedent’s residence, vehicles, and bank accounts. There may some property that is in someone else’s possession and it may be challenging for the personal representative to access it.
In addition, the personal representative will be required to determine the value of the property as of the date of the decedent’s death and create an inventory of the property. The inventory must be submitted to the court. Tenn. Code Ann. § 30-2-301.
Paying the decedent’s debt and expenses of administration. Contrary to what some may believe, a person’s debt does not go away when they die. In fact, one could argue that the first priority of the estate administration process is to ensure that the debts that the decedent left behind are paid. The debt payment process requires the personal representative to publish a notice to creditors that provides the process and deadline for filing claims. Tenn. Code Ann. § 30-2-306. Only claims that are timely filed and that substantiated will be paid. The debt payment process can become contentious and time consuming if there are contested creditor claims. In fact, the result may be litigation, requiring significantly more work for the personal representative.
The personal representative must also pay expenses related to administration including court costs and fees for professional services.
Transferring estate assets to beneficiaries and heirs. Asset distribution is what many believe estate administration is all about. It is indeed one of the primary goals of administration. However, the personal representative must make sure that the estate is in a position for distribution. This means that that estate debt and expenses must be paid or assets put aside to pay for such debt and expenses. They then must get approval from the court.
If the decedent left a will, it will direct asset distribution. Otherwise, the law of intestate succession will apply and the personal representative must distribute the assets to the decedent’s next of kin. Problems may arise for the personal representative if there are hard to find heirs or if beneficiaries argue over property ownership.
Compensation for a Tennessee Personal Representative
In order to get paid, the personal representative must file a petition with the court requesting payment. The court will decide whether the request amount is reasonable based on the size of the estate, the work the personal representative performed, and whether they had to perform any extraordinary services.
Examples of extraordinary services includes complex tax returns, lengthy litigation, sale of real estate, or managing the business of the decedent. If the decedent performed any of these services, they may be entitled to a higher fee.