Estate of Rolfe


Procedural: Beneficiaries under will appealed from decree of the Merrimack County Probate Court, Cushing, J., awarding executor's and attorney's fees.

Facts: Rolfe (T) died testate, leaving the bulk of his estate, valued at $ 1.189.270.50, to his wife and three daughters. After First Capital Bank ("Bank") was named executor. Bank named Edmunds as the trust officer. Bank hired Upton, T's long-time attorney, as counsel for the estate. All of T's affairs had been taken care of, his land and posses¬sions had been sold, and most of his assets were in a custodial account at Bank, which paid his bills. There were no complex issues to be handled. When the daughters asked Bank and Upton about the potential costs of administration, instead of an estimate, they were given a copy of probate fee guidelines, which based fees on the value of the estate, and were told that the court would set the fee. In reviewing the guidelines, one of T's daughters estimated that the fees could be more than $30,000 and formally requested detailed information about the fees, but to no avail. After more inquiries were made by the daughters. Bank told them that it was too early to discuss fees be¬cause it was not known how much work would have to be done. Ultimately, when pressed, Bank agreed that the fees could be based on the work done rather than being set by the court. Additional inquiries were made to get a "ballpark" estimate of the fees, but no actual fees were discussed. In May 1988, Edmunds wrote to one of T's daughters, indicating that because T had been Upton's friend, they hoped to make the daughters happy. Later, testimony revealed that this assured the daughters that the fees would be kept down and that they did not take action to have Bank removed as execu¬tor. The daughters did not know that a week before Edmunds's letter. Bank had sent a letter to Upton telling him it would be seeking the maximum amount allowable under the guidelines. After the first account was filed. Bank and Upton sought fees of $17,000 and $ 13,000, respectively. The daughters objected, and the fees were reduced by $7,000, but this was still more than the $10,000 the daughters thought sufficient. The daugh¬ters challenged the fees in probate court, and the fees were set at a total of $26,000. The daughters appeal.

Issue: Did the probate court apply the correct standards in the determination of reason¬able compensation for the executor and the attorney?

Holding: The Supreme Court, Brock, C.J., held that: (1) Supreme Court expressly disapproves of use of probate court fee guidelines for establishing reasonableness of executor's and attorney's fees in estate cases; (2) size of estate is but one factor to be considered in determining reasonable executor's fees, with final executor's fee determination being based on actual work performed and concomitant articulable risks and responsibilities in particular case; (3) fiduciaries and attorney should keep detailed records of time expended and work performed; and (4) better practice is for fee agreement to be reached in advance.
Reversed and remanded.


Analysis: The fee guidelines were adopted by the probate courts in 1973 but were never formally approved by this court. Under the guidelines, fee calculations are based on the estate's value. The guidelines, which now appear to be the cornerstone of all estate executor and attorney fee valuations, present many potential problems. For example, the guidelines allegedly establish the maximum fee allowed, but executors and attorneys are naturally predisposed to seek the maximum. This tends to make the maximum fee under the guidelines actually the average fee. especially since the fiduciary can petition the court for an award above that set in the guidelines in an extraordinary case. Here, the probate court did not separate the fees awarded; there were no separate findings of fact regarding the work attributable to each fiduciary. The attorney and executor agreed between themselves how they would split the award.