Probate commissions are fees paid to executors and administrators for their services in managing and distributing an estate. However, what constitutes “normal” probate commissions can vary widely and is often misunderstood.
Probate commissions, also known as executor fees or personal representative fees, compensate individuals responsible for overseeing the probate process. These individuals, typically named in the deceased’s will or appointed by the court if there’s no will, handle tasks such as gathering assets, paying debts, filing tax returns, and distributing property to beneficiaries.
Under California Probate Code, the estate is not liable to an agent or broker under a contract for the sale of property if certain conditions are met. These conditions include scenarios where the agent or broker is the purchaser of the property or has any interest in the purchaser. Additionally, the amount of compensation for agents or brokers involved in a probate sale is subject to court discretion, ensuring fairness and reasonableness.
Determining Agent or Broker Compensation
The amount of compensation for agents or brokers involved in a probate sale depends on several factors. If the agent or broker holds an exclusive right to sell the property, their compensation is typically determined by the terms of their contract.
However, if there is no exclusive right to sell, compensation is based on whether the agent or broker procured the purchaser to whom the sale is confirmed.
Under California Probate Code section 10161(a)(b) “Subject to the provisions of this article, whether or not the agent or broker has a contract with the personal representative, the fee, commission, or other compensation of an agent or broker in connection with a sale of property shall be the amount the court, in its discretion, determines to be a reasonable compensation for the services of the agent or broker to the estate.
Unless the agent or broker holds a contract granting an exclusive right to sell the property, an agent or broker is not entitled to any fee, commission, or other compensation for services to the estate in connection with a sale except in the following cases:
(1) Where the agent or broker produces the original bid which is returned to the court for confirmation.
(2) Where the property is sold on an increased bid, made at the time of the hearing on the petition for confirmation, to a purchaser procured by the agent or broker.”
Factors Affecting Probate Commissions
- Estate Value: In general, the larger the estate, the higher the potential probate commissions. However, some jurisdictions may cap the maximum commission regardless of the estate’s value.
- Complexity of the Estate: Estates with complex assets, multiple beneficiaries, or disputes among heirs may require more time and effort from the executor, potentially justifying higher commissions.
- Executor’s Responsibilities: Executors who take on additional responsibilities, such as managing investments or selling real estate, may be entitled to higher commissions to reflect the extra workload.
- Jurisdictional Laws: Each jurisdiction has its own rules and regulations regarding probate commissions, so it’s essential to consult local laws or seek legal advice to understand what’s considered normal in a particular area.
- Negotiation: In some cases, beneficiaries and executors can negotiate the terms of probate commissions, especially if there’s ambiguity or disagreement about what constitutes fair compensation.
Scenarios and Compensation Distribution
Several scenarios dictate how compensation is distributed among agents, brokers, and auctioneers involved in the probate sale:
- Exclusive Right to Sell Contract: If an agent or broker holds an exclusive right to sell contract and the sale is confirmed to a purchaser named in the contract, no compensation is payable to the agent or broker holding the contract.
- Non-Exclusive Right to Sell: When there is no exclusive right to sell, compensation is determined based on whether the purchaser was procured by an agent or broker. If the purchaser was procured by another agent or broker, compensation is divided accordingly.
- Auctioneer Compensation: Auctioneers involved in probate sales are compensated at the court’s discretion, with limits set by any existing contracts with the personal representative.
Under California Probate Code 10162(a)(b) (a) “Subject to subdivision (b), where the bid returned to the court for confirmation is made by a person who is not represented by an agent or broker and the successful bidder is represented by an agent or broker, the compensation of the agent or broker who procured the purchaser to whom the sale is confirmed shall not exceed one-half of the difference between the amount of the bid in the original return and the amount of the successful bid. This section does not limit the compensation of the agent or broker who holds a contract under California Probate Code Section 10150 granting him or her the exclusive right to sell the property”.
Ensuring Fairness in Probate Sales
The regulations outlined in California Probate Code aim to ensure fairness and transparency in probate sales. By establishing guidelines for agent, broker, and auctioneer compensation, these rules protect the interests of both the estate and the parties involved in the sale process.
Conclusion
Probate commissions are an integral aspect of the probate process, compensating executors and administrators for their time and effort in managing an estate. While there’s no universally “normal” rate for probate commissions, understanding the factors that influence them and seeking legal guidance can help ensure fair compensation for all parties involved. Remember, these regulations may be subject to change, so it’s essential to consult legal professionals for the most up-to-date information regarding probate commissions in California. At the Underwood Law Firm, we handle only partition actions, but the law in related fields, like Probate, informs our approach to the matters we handle. If you have a co-owned home you inherited, and you need help facilitating the sale because of an uncooperative home owner, please do not hesitate to contact us.