Should You Name a Bank as Your Personal Representative? – Summer 2018

Before naming a bank in your will as your personal representative, there are some things that you should consider, chief among which is whether the complexity of your estate warrants the size of the fees likely associated with the bank’s service. The following 2013 Massachusetts probate case illustrates the matter.

That case involved the estate of a 91-year-old woman who died with a $5.5 Million net worth. The estate required minimal work to complete probate, but the bank serving as personal representative charged a fee of $88,000, based on the bank’s standard estate settlement fee schedule applied to the assets of the estate. Most of the probate work was done by an attorney who charged a separate hourly fee of about $25,000. When its fee was challenged in a probate court proceeding, the bank agreed to reduce its fee by 50% because its services to the estate were minimal.

Often our clients want to name a bank to serve as personal representative at the client’s death. For serving as a personal representative, banks generally charge fees that are calculated from fee schedules. In Massachusetts, the reasonableness of estate settlement fees is subject to review by the courts. M.G.L. c. 215, Sec. 39.

Bank fee schedules typically apply to the gross value of an estate’s assets that would be includable on an estate tax return, regardless of what assets make up that value and what challenges may be involved in settling the estate. Some estates hold assets that may require very little work. Others require active management and problem resolution because of anticipated beneficiary disputes, complex assets (such as business interests or investment real estate), or other issues that will benefit from bank management and oversight. In all cases where probate work is required, banks engage the services of lawyers for probate in Massachusetts, because banks cannot practice law and are not permitted to file their own probate documents. Legal fees and probate expenses are paid separately by the estate, not by the bank. Legal fees are in addition to, and do not reduce, bank fees.

When choosing whether to name a bank as personal representative, it makes sense to consider the nature and complexity of your assets, the age and capacity of your beneficiaries, and even the personalities involved, to understand the work that your estate will entail. Seek advice from an experienced professional who will help you to compare the costs of bank estate settlement services with the work that is likely to be needed. Remember that individuals working with experienced counsel can handle most probate situations.

There are some estates for which banks undoubtedly earn their estate settlement fees and others for which the expense of bank services is not be warranted. Failing to think through whether a bank or one or more individuals is best can result in fees that unnecessarily diminish your estate.

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