Is a Personal Representative Entitled to Compensation in Minnesota? The Answer is Yes.
One of the most common questions that I get is whether a Minnesota personal representative is entitled to compensation. A personal representative is the person who administers your estate after you have passed away. If you create a will, you will name a personal representative as well as two or three back-up personal representatives just in case the person who you have named is unable to act or carry out the administration of your estate. The person you have named will then likely be the one serving as personal representative.
A Minnesota personal representative has numerous responsibilities and duties. A Minnesota personal representative has a duty to settle and distribute the estate of the decedent in accordance with the terms of any probated and effective will as well as applicable law. The personal representative must do so as expeditiously and efficiently as is consistent with the best interests of the estate and successors to the estate.
Included in these duties for a Minnesota personal representative is that he or she must file the probate petition with the Court, including all appropriate supplemental documentation, arrange for notice of the scheduled court hearing to be published with a newspaper, and notify all beneficiaries, creditors and other interested parties of the hearing. As if that wasn’t enough, the personal representative also has to prepare and file an inventory with the Court within 6 months following the personal representative’s appointment (or 9 months after the date of death if longer). A personal representative is also responsible for filing the decedent’s final income tax returns, estate tax returns, fiduciary income tax returns and any other tax related documents. Finally, a Minnesota personal representative must distribute the assets of the estate to the proper parties.
There are many other duties and responsibilities that go along with being a personal representative in Minnesota and they are not limited to only what is listed above. If you ever catch yourself thinking that it is unfair that Mom and Dad named your older sibling as personal representative, you may wish to reconsider. It is a lot of work, and it is a thankless job.
Minnesota Personal Representative Compensation Must Be Reasonable
Not all is lost if you are a personal representative. Under Minnesota law, a personal representative is entitled to reasonable compensation for services. The compensation must be reasonable. What is reasonable compensation depends on the specific situation. In determining what is reasonable compensation for a personal representative in Minnesota, a court will give consideration to the following factors:
(1) the time and labor required;
(2) the complexity and novelty of problems involved; and
(3) the extent of the responsibilities assumed and the results obtained.
There is room for argument over what is deemed reasonable compensation for a Minnesota personal representative. If you attempt to charge the estate $300 per hour to clean out the decedent’s garage when you could have paid someone $20 per hour to do it for you, that is probably not reasonable. On the other hand, if the beneficiaries of the estate are arguing that you should only receive $15 per hour for the final income tax return that you prepared when you are a CPA and you normally charge $200 per hour, that is also unreasonable.
One thing that many personal representatives fail to recognize is that any compensation received as personal representative is taxable income. If you are a family member of the decedent who is also inheriting part of the estate, that should be a consideration as to whether you wish to be compensated for serving as a Minnesota personal representative.
If you have questions regarding whether a personal representative is entitled to compensation in Minnesota, or if you have any other Minnesota probate questions, contact our office today for a free initial probate consultation. For more information about Minnesota Probate, click here.
Zach Wiegand is a Burnsville, Minnesota estate planning attorney and the owner of Gold Leaf Estate Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that handles probate and trust administration in Minnesota. We serve the Twin Cities metropolitan area with a focus on estate planning for clients in Burnsville, Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie and the South Metro. The firm also handles probate in Dakota County, Washington County, Scott County, Hennepin County, and Ramsey County. Zach was named a Minnesota Super Lawyer – Rising Star for both 2017 & 2018 and he is a member of WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at firstname.lastname@example.org or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337.