Attorneys' Fees and Fiduciaries' Commissions in Estate Administration in Connecticut
| Publication year | 2021 |
| Pages | 179 |
79 CBJ 179. ATTORNEYS' FEES AND FIDUCIARIES' COMMISSIONS IN ESTATE ADMINISTRATION IN CONNECTICUT
Volume 79, No. 3
I. INTRODUCTION
This article initially analyzes Connecticut authorities dealing with fees and commissions in estate administration, followed by practical suggestions to persuade both beneficiaries and probate courts of the reasonableness of a fee.
II. LEGAL AUTHORITIES
Connecticut is one of the many states with no statute governing fiduciary compensation.(fn1) "The probate court has exclusive jurisdiction over the . . . determination of . . . fees . . . nor are there [any] official guidelines promulgated by the Probate Court Administrator. . . ."(fn2)
A. Compensation Must Be Reasonable
Except where an executor's compensation has been previously fixed,(fn3) Connecticut allows reasonable compensation for services rendered.(fn4)
"In some cases the compensation or the manner of computing compensation is fixed in advance, either by . . . will,
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* Of the Hartford Bar; Senior Topical Editor, Connecticut Bar Journal.
1 CONNECTICUT PROBATE PRACTICE BOOK (4th Ed., Rev. 2000), Part I, Chapter IV, Page I-38, hereafter cited as PRAC. BK.
2 John Berman, Compensation in Probate, 1 CONN. PROB. L. J. 205 (No. 2, Spring 1986); hereafter cited as Berman. Judge Berman is a retired probate judge of the West Hartford Probate Court.
3 At least one case has ignored an agreement fixing compensation. Andrews v. Gorby, 237 Conn. 12, 675 A.2d 449, 13 Conn. L. R. 602 (1996), stated that where the attorney who drafted a will had named himself executor, the Probate Court could depart from the will's fee schedule and award him a lesser amount as reasonable compensation, with the burden of proof on the attorney to prove the reasonableness of the compensation by a preponderance of evidence. Subsequently, the Fairfield County Superior Court, acting on a remand, held an executor who incurs legal expenses to attempt to increase his fiduciary and thus his legal fees could not be reimbursed from the estate, because actions to obtain fiduciary or legal fees do not benefit the estate in any manner and thus must be a personal expense of the claimant. Andrews v. Gorby, 33 Conn. L.Rptr. 201, 2002 W.L. 31126312 (Conn. Super. Ct. 2002), aff'd. 78 Conn. App. 441, 826 A.2d 1267 (2003).
4 Berman, supra, note 2, at 206.
by . . . agreement between the testator and the executor, or . . . between the fiduciary and all . . . beneficiaries. The right of a testator to fix by his will the compensation of his executor is generally recognized . . . [because of] testator intention, estoppel, election or implied contract."(fn5)
Connecticut courts are usually silent on the issue of whether a testamentary provision for compensation of the executor is binding on the probate court.(fn6)
"A Connecticut probate court would not be bound by a provision for compensation in a testator's will if there were facts or policies justifying departure from the provision such as objections by heirs or creditors."(fn7) The Department of Revenue Services "is not unaware of the more stringent position" of increased scrutiny of fees by the probate court.(fn8)
"The compensation of a fiduciary may be fixed by an agreement between him and other persons beneficially interested in the estate or between him and the testator.(fn9) In the case of an agreement between a testator and the executor named by him, it is questionable whether the contract would be strictly enforced since one of the parties is dead.(fn10) This type of contract would also be subject to the same policy considerations as a will provision, such as the rights of creditors and satisfaction of heirs and beneficiaries.
"An agreement between those interested in the estate and the fiduciary may bind those parties but [not] the probate court . . . .11 To the extent that it is relevant to the determination of reason-
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5 Berman, supra, note 2, at 211, citing Comment, Executors and Administrators - Effect of Testamentary Provisions on Executor's Fees, 38 MICH. L. REV. 381, 385 (1940); hereafter cited as Comment.
6 See DiSesa v. Hickey, 160 Conn. 250, 278 A.2d 785 (1971), where the court did not reach the issue of whether it would be bound by a provision in the will fixing the fee of the executor at 15% of the estate's gross inventory, but held that this provision was not clear and, therefore, the executor was entitled to "reasonable" fees.
7 Berman, supra, note 2, at 212, citing Comment, supra, note 5 at 386.
8 GAYLE WILHELM, DEATH TAXES IN CONNECTICUT (3d Ed., 2005), § 2:34 , hereafter cited as DEATH TAXES.
9 37 C.J.S. Executors and Administrators§ 870 (1942).
10 Berman, supra, note 2, at 211, citing Comment, supra, note 5, at 385.
11 Berman, supra, note 2, at 212, citing DiFrancesca v. Rousseau, 36 Conn. Supp. 33, 409 A.2d 1252 (1979); In re Barnes Estate, 20 Conn. Supp. 179, 129 A.2d 257 (1956). Appellant has no right to appeal as creditor of the estate from the settlement of the accounts where she entered into an agreement with the administrator
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ableness, the court takes into consideration whether those beneficially interested in the estate are satisfied with the manner in which the estate was handled and with the fees charged. An agreement between the parties might be evidence that the heirs and beneficiaries understood the fee arrangement.
"Most financial institutions which act as fiduciaries have formulated and published fee schedules. These published fee schedules are generally based on percentages of the value of the assets in the estate or of the income from a trust. Since the fees are published, it could be presumed that the testator, in naming the bank or trust company as executor or trustee of their estate or trust, was aware of its charges or was at least aware of the method of computing the fee."(fn12)
While these fee schedules are ordinarily accepted by most Connecticut probate courts (unless they are based on New York's statutory fees, which are usually considered excessive for Connecticut estates), at least one court stated that "use of a fee schedule by the fiduciary in and of itself is not approved by the court since it is constructed upon an assumption that the degree of services to an estate corresponds closely to the asset value of the estate, whereas each estate has its own peculiar problems, difficulties and requirements of skill and judgment."(fn13) Additional percentage charges in certain corporate fiduciary schedules, made for special services to the estate, such as managing and selling real estate, have been discounted, certainly in contested cases, whether by corporate or individual fiduciaries, relying on the reasonableness standard.(fn14)
The concept of reasonable compensation is discussed in Hayward v. Plant,(fn15) Connecticut's landmark case about executors' commissions and attorneys' fees. Reasonable executors' and administrators' commissions, as well as attorneys' fees in representing estate fiduciaries, should be based on a combination of responsibilities assumed and services
performed, both before and after being appointed or retained.
"[Thus, compensation is based on] what is fair in view of the size of the estate, the responsibilities involved [to all the beneficiaries], the character of the work required, the special problems and difficulties met in doing the work, the results achieved, the knowledge, skill and judgment required of and used by the executors, the manner and promptitude in which the estate has been settled, the time and service required, and any other circumstances which may appear relevant and material to the determination."(fn16)
"Special problems and difficulties . . . could justify higher fees. Examples . . . include difficulties in gathering the requisite heir information, marshalling estate assets, preparing real property for sale, handling disputed claims against the estate or on behalf of the estate, defending a will contest, and handling tax problems. [They] . . . often require more effort, expertise, administrative time and additional court hearings. . . . Results achieved are a factor but the fee should not be adjusted primarily on the basis of the results achieved without due consideration of other factors. . . ."(fn17)
Besides the above, dealing with closely held operating businesses, any difficulties obtaining their performance information, even before a fiduciary's appointment, his(fn18) expertise in analyzing financial statements and handling assets requiring special attention, in this author's opinion should all be considered in determining reasonableness.
While the reasonableness standard is used as a benchmark when determining whether a claimed fiduciary fee is appropriate, the fee itself must be set "in good faith and . . . [justified] if its reasonableness is challenged by an interested party or the court . . . by complete and accurate records of all time spent and actions taken in carrying out his or her duties, so that charges can be directly related to the tasks performed."(fn19)
Hayward v. Plant's reasonableness standard also applies
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16 Id. at 385, 119 A. at 345.
17 Berman, supra, note 2 at 206-207.
18 Author's note re use of gender terms: wherever the words "he," "his," "him." "man," "men" or comparable words or parts of words appear, they have been used solely for literary purposes in the interest of having a smooth reading text. No discrimination is intended nor should any be inferred.
19 PRAC. BK., I-38, supra, note 1.
to attorneys' fees.(fn20) Although no Connecticut Supreme Court decisions address directly what hourly rates are reasonable for compensating...
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