How do I know fees subtracted from my brother’s estate are legit? Nj.com’s recent article entitled “My brother died. Are these fees taken from his estate legal?” says it’s stressful and tense when family members ask about how an estate is being handled by another relative. Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC, LLC, has witnessed many family dynamics, including greed, when it comes time to settle a family estate.
Let’s say you are a beneficiary to your brother’s estate in New Jersey, and your younger brother is the executor. He’s also a real estate broker. When he sold two properties from the estate, the younger brother paid himself real estate commissions of $75,000. However, he didn’t account for the rents on the real estate for the two years he managed the properties. Is that legal?
In every state, the beneficiaries of a decedent’s estate are entitled to an accounting of the income, expenses, assets, liabilities and distributions of the estate.
Before getting a distribution, a beneficiary is usually asked to sign a “Refunding Bond and Release,” or similarly titled document agreeing to make a refund to the estate, if more taxes or debts are owed and releasing the executor from any liability for actions taken during administration of the estate.
If a beneficiary isn’t satisfied with the administration of the estate and/or wants more information, they shouldn’t sign the Refunding Bond and Release or a like document, until they get the information needed.
When a beneficiary requests a formal or an informal accounting, and if the executor retains a professional to prepare the accounting, those fees will be charged to the estate. That will decrease the distribution to the beneficiaries. The accounting will show the rents received and if it doesn’t, and the executor fails to address the issue, legal action may be necessary.
Executors are entitled to a commission on both income and principal that comes into the hands of the executor, including a commission on the sale of property held by the estate. These fees are usually set by state statute. An executor can ask for additional fees, by showing the court that he or she provided unusual or extraordinary services for which they should receive extra compensation. The court may decrease a commission where an executor’s actual pain, trouble and risk were less for a comparable estate.
Depending on the specifics, the executor may have breached his fiduciary duties, was involved in self-dealing, or other conflicts of interest in acting as both the realtor and executor and taking both an executor’s commission and realtor’s commission. Here, if the younger brother took both a real estate commission and an executor’s commission, the beneficiary could ask the court to reduce the executor’s commission because his real estate firm did the work and reduced his burden.
The estate planning attorney who handled the legal documents will often invite the Executor or Trustees in for a complimentary meeting to review basic steps in settling the estate. The beneficiaries are usually not included in that, according to Beck, Lenox & Stolzer. As a beneficiary, if you are still asking yourself, “How do I know fees subtracted from my brother’s estate are legit?”, you may need to seek an attorney who does probate litigation. We hope, for everyone’s sake, that you conclude they are legit.
On a related topic, here is information on probate and trust administration offered by Beck, Lenox & Stolzer. https://beckelderlaw.com/probate-estate-administration/
Reference: nj.com (Feb. 2, 2021) “My brother died. Are these fees taken from his estate legal?”