An executor of an estate is faced with many responsibilities, oftentimes having to manage risks and liabilities that may impact the estate. As a result, it’s common for an executor to be compensated for their work. Generally, an executor may expect to be paid an amount equal to 5% of the value of the estate. But what happens in the case of extremely wealthy estates? The executors of a wealthy American individual’s estate were recently awarded payment equal to 5% of the estate’s value, but it wasn’t easy for them to secure that.
The deceased in question was the billionaire real estate investor Leona Helmsley, who passed away in 1997. Most of her fortune was slated to go to charity, though the New York Post reported that she left $12 million to her dog. Even before the estate had settled, the executors were sued on behalf of the charities who were slated to receive the bulk of the estate.
By the time the estate had been settled, more than ten years had passed. New York’s Attorney General at the time refused the four executors’ request for payment of $100 million, claiming it was “astronomical” when compared to the 15,535 hours they logged worked for the estate. This would have worked out to more than $6,000 per hour. The Attorney General suggested their rate be cut to as little as $10 million.
Additionally, as reported by the New York Post, the deceased’s will specifically said they should not be paid a standard 4% fee, which would have amounted to $200 million.
Meanwhile, the executors said that their work went beyond the hours they logged, with the Post quoting them as stating the hours did not include “an unending sea of experts and candidates for services, reading of documents, reading and sending of emails and other correspondence.”
The issue ultimately went to court, with a decision ruling in favour of the four executors. The court agreed with the executors’ position that the hours alone are not reflective of the work they did, writing, “a single hourly rate [cannot] accurately reflect the many varied services executors perform and the inevitable risk they incur in performing them.” The court also highlighted the “magnitude and complexity.” According to another story on the matter, the court also credited the executors with increasing the value of the estate by $400 million in a challenging economic environment.
The experienced estate lawyers at NULaw provide executors, trustees, and attorneys with fulsome advice on their responsibilities and obligations, and will help them mitigate any legal risks and liabilities, so that they are protected and the best interests of the beneficiaries and estate are maintained. Contact us online or at 416-481-5604 for a consultation.