In Virginia, the job of a personal representative is not a volunteer position, but a paid position. Under Virginia law, the personal representative is entitled to reasonable compensation for the work they do which includes the tasks required to settle the estate of a deceased person. VA Code § 64.2-1208. Those tasks include identifying and inventorying the property in the decedent’s probate estate, paying the decedent’s debt and expenses of estate administration, and distributing estate assets. The personal representative’s fee is based on either what the decedent included in their will or what is required under Virginia law.
Compensation Based on Decedent’s Will
When it comes to compensating the personal representative, the terms of the will take precedence. Testators have a great deal of leeway as to what they include in their will. Unless a term is illegal, the court will honor the testator’s wishes. Thus, a testator can state exactly the amount of compensation the personal representative is to receive. While in some instances they may specify an exact dollar amount, it is more common for them to specify a percentage of the value of the probate estate.
Compensation Based on the Statute
Unlike many other state statutes, Virginia’s personal representative commission statute is vague and states only that the personal representative is entitled to a “reasonable” compensation on “receipts or otherwise.” VA Code § 64.2-1208. In determining whether a requested fee is reasonable, the court may look at the amount of assets that came into the estate during administration and base the fee on a percentage. Or, the Commissioner of Accounts can look at other factors to determine if the requested fee is reasonable. Factors that the Commissioner may consider include:
- Value of the probate estate
- Length of the estate administration proceeding
- Number of hours worked by the personal representative
- Whether there was litigation during the process such as a will contest
- Whether there were contested claims
- Whether there were complicated tax matters
- Whether the personal representative had to deal with any other extraordinary services such as temporarily operating the decedent’s small business
- Whether the personal representative was derelict in performing their duties
- Amount of fee paid to other personal representatives in the same geographic area for work on similar sized estates
Also, many local Commissioners of Accounts have set guidelines for personal representative commission for estates that come under their jurisdiction. For example, for Fairfax County, the fee is based on the value of the estate as follows.
- 5% of income receipts (not including capital gains)
- 5% of the first $400,000
- 4% of the next $300,000
- 3% of the next $300,000
- 2% of the balance over $1,000,000
- For the balance over $10,000,000, by agree with the Commissioner
Fairfax County includes additional rules for compensation based on special circumstances.
Approval of Fee
Note that the fee paid to the personal representative is a “cost of administration.” It is an expense that is paid out of estate assets. Because it is considered a cost of administration, like other costs of administration, it is among the first bills that the estate must paid. After costs of administration, the order of payment of other debt and expenses is as follows:
- Family and homestead allowances
- Funeral expenses
- Taxes and debt owed to the federal government
- Medical and hospital expenses related to the decedent’s last illness
- Taxes and debt owed to the Commonwealth of Virginia
- Debts due where the decedent was acting as a fiduciary to another person
- Debts and taxes owed to localities in Virginia
- All other debt
In other words, the commission owed to the personal representative takes top priority and is paid even if there is not enough money in the estate to pay other debt or to distribute to beneficiaries or heirs. However, the personal representative can “pay” himself until their fee is approved by the Commissioner of Accounts.