As a Fiduciary, Am I entitled to Compensation in Virginia? | Ryan C. Young | Virginia Attorney

As a Fiduciary, Am I entitled to Compensation in Virginia?

In Virginia, when you accept the responsibility of becoming a fiduciary for someone, you may be surprised by the amount of work that it entails. Serving as a fiduciary requires a lot of time and energy, not only to manage accounts, but also to properly report and account for your management choices. Your time is valuable, and you are entitled to compensation. However, there are different rate schedules for different types of fiduciaries. The term “fiduciary” covers executors, administrators, trustees, and conservators.

Reasonable Compensation for Fiduciaries in Virginia

Every case is unique, and according to Virginia Code § 64.2-1208, the Commissioner of Accounts may allow “reasonable compensation” for the time and effort put into safe-guarding the financial integrity of another. Fiduciaries are split into two basic categories: Fiduciaries for Deceased Individuals (Estate Executor/Administrator) and Fiduciaries for a Living Person (Trustee, Conservator, or Guardian). The below schedules are provided as a guideline. Each case may have unique circumstances. If you have questions, you should speak with a local attorney. Also, the Commissioner of Accounts is different for each Virginia locality. Each Commissioner of Accounts may have their own approach or style.

Executors and Administrators

1. Income – 5% of income receipts (not including capital gains) realized during each accounting period.
2. Principal – A fee based upon the inventory value, including amended inventories, of the decedent’s probate assets in accordance with the following schedule:
First $400,000.00 5%
Next $300,000.00 4%
Next $300,000.00 3%
Balance over $1,000,000.00 2%
Balance over $10,000,000.00 By agreement with the Commissioner (prior consultation is required)
3. Fiduciary compensation may be forfeited if a proper account is not timely filed. § 64.2-1217.

Trustees

For those overseeing trusts, it is important to remember that the terms of the trust might specify the rates to be charged by the trustee. Further, some corporate trustees have their own rate structures that they make their clients agree to in advance. The compensation here is just a general guideline.

1. Total Assets at Beginning of Accounting Period – A fiduciary may take compensation on an annual basis, based on the fair market value of the estate assets (i.e., principal and undistributed income) at the beginning of the accounting period. No compensation is to be calculated on income received and disbursed during the year. The percentages below should be applied annually to the beginning fair market value of the account; for the initial account, the beginning fair market value is the principal amount shown on the inventory:
First $500,000.00 1% (.01)
Next $500,000.00 ¾ of 1% (.0075)
Balance over $1,000,000.00 ½ of 1% (.005)
Balance over $10,000,000.00 By agreement with the Commissioner (prior consultation is required)
2. Fiduciary compensation may be forfeited if a proper account is not timely filed. § 64.2- 1217.

Conservator for Incapacitated Adult

1. Total Assets at Beginning of Accounting Period – A fiduciary may take compensation on an annual basis, based on the fair market value of the estate assets (i.e., principal and undistributed income) at the beginning of the accounting period. The percentages below should be applied annually to the beginning fair market value of the account; for the initial account, the beginning fair market value is the principal amount shown on the inventory:
First $500,000.00 1% (.01)
Next $500,000.00 ¾ of 1% (.0075)
Balance over $1,000,000.00 ½ of 1% (.005)
Balance over $10,000,000.00 By agreement with the Commissioner (prior consultation is required)

2. Income – An additional fee of 5% should be allowed on non-investment income received during the account period (for example, periodic retirement payments). No compensation is to be calculated on investment income received during the year.
3. Fiduciary compensation may be forfeited if a proper account is not timely filed. § 64.2-1217.

Special Rules also apply to each type of Fiduciary.

For further clarification, it is advisable to contact your local Commissioner of Accounts. Even better, speak with a local attorney who regularly does estate administration. The Commissioner of Accounts may deviate from the guidelines on a case-by-case basis to assure that each fiduciary receives “reasonable compensation.”

If you have questions about your duties as a fiduciary, please feel free to contact our office. We provide a wide range of assistance tailored to fit your family’s needs.

Estate Administration & Probate | Young Law | Richmond, Virginia

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