Monitoring

Fees and Services

The amount of fees for various types of services performed by guardians/conservators and attorneys have become the topic of a number of media articles. For example, in Nebraska, a series of newspaper articles highlighted cases in which a respondent's estate was destroyed through guardian and attorney fees. Fees for guardians/conservators and attorneys serving the respondent remain highly unregulated in most jurisdictions. Generally, the responsibility of setting and determining appropriate fees is at the discretion of each local jurisdiction and can even vary from judge to judge. In many courts, guardians/conservators receive little to no guidance on what level of fees and services are appropriate. Similarly, information on fees is seldom documented in a database that would allow courts to easily identifier fees that are higher than average.

Third National Guardianship Summit Recommendations

Recommendations from the Third National Guardianship Summit (2011) include an entire section on fees (Recommendations #3.1 - #3.8):

Recommendation #3.1: The court should promote sound administrative practices relating to guardianship fees by:

  • Encouraging the continuity of judicial experience and expertise on the probate bench, and encouraging specialization of probate courts in accordance with the National Probate Court Standards
  • Actively monitoring the reasonableness of fiduciary fees
  • Creating and maintaining training programs for participants in the guardianship process
  • Collecting data regarding fiduciary fees and costs
  • Promoting timely review and approval of fees
  • Promoting electronic filing.

Recommendation #3.2: Guardians should be entitled to reasonable compensation for their services. The court should consider these factors in determining the reasonableness of guardian fees:

  • Powers and responsibilities under the court appointment
  • Necessity of the services
  • The request for compensation in comparison to a previously disclosed basis for fees, and the amount authorized in the approved budget, including any legal presumption of reasonableness or necessity
  • The guardian's expertise, training, education, experience, professional standing, and skill, including whether an appointment in a particular matter precluded other employment
  • The character of the work to be done, including difficulty, intricacy, importance, time, skill, or license required, or responsibility undertaken
  • The conditions or circumstances of the work, including emergency matters requiring urgent attention, services provided outside of regular business hours, potential danger (e.g., hazardous materials, contaminated real property, or dangerous persons), or other extraordinary conditions
  • The work actually performed, including the time actually expended, and the attention and skill-level required for each task, including whether a different person could have better, cheaper or faster rendered the service
  • The result, specifically whether the guardian was successful, what benefits to the person were derived from the efforts, and whether probable benefits exceeded costs
  • Whether the guardian timely disclosed that a projected cost was likely to exceed the probable benefit, affording the court an opportunity to modify its order in furtherance of the best interest of the estate
  • The fees customarily paid, and time customarily expended, for performing like services in the community, including whether the court has previously approved similar fees in another comparable matter
  • The degree of financial or professional risk and responsibility assumed
  • The fidelity and loyalty displayed by the guardian, including whether the guardian put the best interests of the estate before the economic interest of the guardian to continue the engagement
  • The need for and local availability of specialized knowledge and the need for retaining outside fiduciaries to avoid conflict of interest.

Recommendation #3.4: In the event estate funds are exhausted and the guardian has failed to address the anticipated exhaustion, the court is justified in requiring the guardian to remain serving at least until a succession plan is in place.

Recommendation #3.5: The court and court-appointed counsel should actively and timely monitor fiduciary fees.

Recommendation #3.6: The court should support any rejection or reduction of fees with a statement of explanation.

Recommendation #3.7: The court and all parties should respect the privacy and dignity of the person when disclosing information regarding fees.

Recommendation #3.8: The court should resolve fee disputes through a process that is fair, expeditious, and economical, for example, through:

  • A court-ordered alternative dispute resolution or mediation process;
  • A referral to a regulatory body responsible for reviewing fees; or
  • A master or a special judicial resolution process.

Court Development of Fee Schedules

Courts that have established set fees and/or services have tended to use one of two formats: (1) fees are based on a percentage of estate, or (2) a range of acceptable fees are provided based on years of professional experience and services performed.

The Superior Court of California, County of San Francisco, Uniform Local Rules of Court (Rule 14) allows fees to be based on the percentage of assets or income. The Court offers the following compensation guideline for management of the estate:

All requests for fees based on an hourly rate must be accompanied by a declaration of the guardian, conservator or trustee with supporting time records. Alternatively, fees may be requested based upon a guideline of one percent (1%) of the fair market value of assets at the end of the accounting period or six percent (6%) of income, in the Court's discretion. (Rule 14.91)

While the use of a flat percentage of the estate or income provides a straightforward guide for fees, those respondents with large estates and/or incomes may end up incurring fees that are disproportionate to the services provided.

Another approach that tries to avert overcharging the estate for services is the establishment of pay scales, based on level of experience. Florida's 13th Judicial Circuit has a Guardian Fee Workgroup that used a statewide fee survey to establish pay scales, based on level of experience. The Workgroup also established a monthly cap for services such as paying bills, clerical work and shopping. Texas's Travis County Probate Court took a similar approach in its Standards for Court Approval of Attorney Fee Applications. The Standards outline court-approved fees for a fiduciary's attorney, attorney ad litems and guardian ad litems, fees when an attorney is also the fiduciary, and paralegal/legal assistant charges. The document also provides guidelines for specific types of charges, including travel, legal research, preparation of fee applications, conversations with court and clerk staff, copies and faxes, and deliveries. This approach generally requires local participation and surveys to determine the appropriate levels of fees, which will vary from one jurisdiction to another.

In 2011, the Arizona Supreme Court's Committee on Improving Judicial Oversight and Processing of Probate Court Matters issued its Final Report. The Report includes a number of recommendations for cost monitoring and control (see Judge Mroz's PowerPoint presentation), including statewide fee guidelines. In September 2012, Arizona is expected to adopt statewide fee guidelines that may incorporate a cap on fees based on the size of the estate and billing guidelines. New rules require conservators to file budgets, accountings, and sustainability calculations on standardized forms. (See State Task Forces.)

Resources