Probate and the Personal Representative, A Series: Part IV, Does the Personal Representative Fee Get Taxed?

A Minnesota Probate Attorney Verifies That Payments to Compensate a Personal Representative (Executor) Are Taxable

You agree to act as the Personal Representative of your sister’s Estate. After a few months you realize that serving as her personal representative takes a lot of time. You have to take time off work to clean out her home, meet with the lawyer, go to her banks and call institutions, creditors and utility companies.

As a result, you’re thinking of charging the estate for the time spent on these tasks. I know it’s family but you are spending a lot of your own time and there’s plenty of money in the estate. At least pay yourself some time for the money missed at work.

As appealing as that can be, your attorney and tax person can help you consider all the consequences of this decision. One consequence that is often overlooked is that fees paid to the personal representative are taxable and must be included in your gross income. As a result, the estate may be required to generate a 1099. If so, it seems you still benefit in the money you keep after taxes versus not charging at all. 

Contact a Minnesota Probate Lawyer to discuss your rights and obligations as executor.