Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
Under Iowa law, a personal representative (formerly called an executor or administrator) may seek compensation for services rendered to the estate, including administration of assets and sale proceeds. However, the court must review and approve all fees. There is no automatic “commission” on gross sales unless the court grants it as part of a reasonable fee.
1. Statutory Basis for Compensation
Iowa Code § 633.254 authorizes the allowance of “reasonable compensation” to personal representatives for ordinary services. The statute does not establish a flat percentage or formula. Instead, the court evaluates factors such as the size and complexity of the estate, the time expended, and the results achieved. For “extraordinary services,” the personal representative may petition for additional fees under Iowa Code § 633.255.
2. Filing a Fee Petition
To request approval of fees and commissions, the personal representative files an application or report of receipts and disbursements with the probate court. That filing must include:
- A detailed description of tasks performed (e.g., asset collection, creditor negotiations, tax filings).
- Time records or other evidence of effort.
- The proposed fee calculation (hourly rates or percentage basis).
The court clerk sets a hearing, and the representative provides notice to all heirs, devisees, and interested parties. At the hearing, the judge approves, modifies, or denies the requested amount.
3. Application to Sale Proceeds
Proceeds from real estate or personal property sales become part of the estate’s assets. Under § 633.254, the personal representative’s compensation may include time spent marketing, negotiating, and closing those sales. The fee must still be reasonable in light of the overall administration. If the representative is also a licensed real estate broker and performed brokerage services, they must disclose dual roles and segregate fiduciary fees from brokerage commissions under Iowa Real Estate Commission rules.
4. Limitations and Best Practices
- Compensation is not self-executing. Court approval is mandatory before disbursement.
- Fees must reflect actual work performed, not a mere percentage of assets.
- Personal representatives may advance out-of-pocket costs, but must document and seek reimbursement separately from compensation.
Helpful Hints
- Keep detailed time logs and records of every administrative task.
- File your fee application early to avoid delays in estate settlement.
- Provide clear notice to heirs and beneficiaries about your compensation request.
- Be prepared to explain why requested fees are reasonable compared to estate value.
- Work with a probate attorney to draft and present your petition effectively.